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High Court Of Madhya Pradesh
P. K. Tare, C. J. , G. P. Singh and S. M. N. Raina, JJ.
RAM RATAN GUPTA - Appellant
Versus
THE STATE OF MADHYA PRADESH - Respondents
Misc. Petn. 16 Of 1971
Decided On : 10/18/1973
There is no provision in the Act or the Rules whereby a formal deed of contract is contemplated to be executed between the licensee and the Government. What is done is that after the acceptance of the final bid by the authority concerned, a licence is issued in favour of the licensee. The licence is to be signed by the authority empowered to issue licences and there is no provision for counter signatures of the licensee. This is the procedure for grant, of excise licences as per the provisions of the M. P. Excise Act, 1915. 1966 RN 470=19661LJ 1012 and 1971 RN 132 distinguished. 1964 JLJ 242 relied on. [Para 9
(2) Constitution of India-Art. 299 - applies to contracts made in executive capacity -contract coming into existance by virtue of statutory provisions -Article 299 not attracted-Excise Act, 1915 (MP) - Ss. 17 and 18.
Per Tare, C.J. - Under the Madhya Pradesh Excise Act, 1915, a contract comes into existence by virtue of the statutory provisions and the rules and no formal deed of contract is required to be executed. In fact what is granted to the contractor IS a licence either to manufacture or to collect of to possess an excisable article and in lieu of consideration he is granted the necessary licence. There is no occasion for authorities of the Excise department to execute a formal deed of contract on behalf of the Government in exercise of executive powers. Thus, the cases relating to excise contracts will stand on a different footing and Article 299 (1) of the Constitution of India will be wholly inapplicable to such cases. [Para 14
The right of a person to selling intoxicants comes into existence by virtue of section 18 of the Act. Rule IV of the M. P. Excise Rules, framed under section 62 (2) (e), (f) and (h) empowers the Collector or any other officer to accept or reject any bid without assigning any cause. [Para 30
Per Singh, J.- The natural meaning of the words used in Article 299 as also the purpose behind it support the construction that contracts made by the Government in the exercise of a statutory power are included within it. [Para 41
When power is conferred by a statute on the State Government it gets vested in the Governor, for State Government in the General Clauses Acts is defined to mean the Governor. But when power is conferred by a statute on a subordinate authority it does not become a palt of the executive power of the Governor and it is to be exercised by the designated authority in accordance with the statute conferring the power A contract made by an authority Other than the State Government in the exercise of power derived from a statute does not, therefore, fall within Article 299 and is not to satisfy the requirements of that Article for its validity. [Para 43
The auction held by the Collector in the instant case was in exercise of a statutory power conferred on him by section 18 read with section 7 of the Excise Act and the notifications issued thereunder. He was also the authority empowered under the rules to accept the bids and issue the relevant licence. It is thus clear that the contracts resulting from the auction in the instant case were entered into by the Collector in the exercise of a power conferred on him under a tatute. For the reasons already indicated the provisions of Article 299 (I) are not applicable to such contracts. [Para 47
Per Raina, J. - So for as contracts made in the exercise of a statutory power are concerned, they are regulated by the provisions of the statute itself and, therefore, it would not be necessary to make any express provision in regard to them in the Constitution itself. It, therefore, appears that clause (I) of Article 299 was enacted to regulate contracts made in the exercise of the non-statutory executive power. [Para 59
(3) Excise Act, 1915 (MP) - S. 64-deficiency of amount on reauctiol1 of an excise licence-manner of recovery-Land Revenue Code, 1959 (MP) S.155.
So far as the M. P. Excise Act, 1915, is concerned, section 64 of the Act itself makes all dues to the Government recoverable as arrears of land revenue and it is not necessary to rely on any rules or orders. Thus, resort to the provisions of section 155 of the M. P. Land Revenue Code, 1959, is not necessary as the statutory authority has to be found in the M.P. Excise Act, 1915. The manner of recovery as provided by the M. P. Land Revenue Code, 1959, would be available to the Government in such cases. 1971 RN 132 distinguished. [Para 28
(4) Excise Act, 1915 (MP)-S. 18-hid offered by a person accepted contract complete-deposit by the bidder not a condition for completing the contract - Contract Act, 1872 - Ss, 7, 8 and 10.
The deposit is not a condition precedent, but is a condition which follows the acceptance of the bid. As such, the coming into existence of a contract by virtue of the statutory provision is not dependent on a deposit of the 1/6th amount as a condition precedent. The liability of the bidder arises on the bid being accepted by the authority empowered in that behalf. AIR 1973 SC 1164 distinguished. [Para 31
( 1 ) THIS is a petition under Articles 226 and 227 of the Constitution of India by an excise contractor Challenging the order, dated 22-12-1970 (Petitioner's Annexure p/1), passed by the Additional Tahsildar, Excise, Gwalior, and Recovery Officer, issuing notice to the petitioner to show cause as to why an amount of Rs. 4,905/should not be recovered from him as arrears of land revenue towards the loss suffered by the Government in re-auctioning the licence for a liquor shop.
( 2 ) THE case had come up for hearing before a Division Bench of this Court, presided over by one of us (namely, Raina, J. and Dwivedi, J.), which by order, dated 22-3-1972 referred the entire case for decision by a Full Bench, as interpretation of Article 299 of the Constitution of India was involved, on which different opinions have been expressed in some cases. We, therefore, propose to dispose of the entire case as question has been referred to us by the division Bench for our opinion.
( 3 ) THE facts leading to the present writ petition are as follows. The Collector, gwalior. In February, or the year 1970, in which the petitioner was the highes8,000/-in respect of Bhana and a bid of Rs. 3,500/- in respect of Bhangghota. He signed the bid lists dated 14-2-1970 and the auction in his favour was finalised by the Collector accepting the bid as also by the district Excise Officer, as per the respondents' Annex. R/1. Thus, the total auction price was Rupees 11,500/ -. Thereafter the petitioner did not turn up and consequently the excise licence was re-auctioned on 28-3-1970 in favour of one radheahyam Sharma for a consideration of Rs. 6,600/ -. The petitioner was, therefore, given a notice to show cause as to why the balance of Rs. 4,900/-, which was the loss suffered in the re-auction and Rs. 5/- as miscellaneous expenses -- total Rupees 4,905/-, should not be recovered from him. The petitioner, instead of approaching the higher authorities of the Excise department has filed this writ petition for a Writ of certiorari, seeking to quash the order of the recovery Officer (Petitioner's Annexure A/1) and also a Writ of Mandamus restraining the respondents from recovering the amount of the alleged loss.
( 4 ) ON behalf of the petitioner mainly three grounds are urged by the learned counsel for the petitioner. The first ground is that there was no concluded contract and, therefore, the liability is not legally enforceable. The second ground is that there was no written contract, as required by Article 299 (1) of the Constitution and, therefore, no liability arose on the basis of an unconcluded contract. The third and the last ground is that the petitioner had not committed any default and the default, If any, was on the part of the authorities constituted under the M. P. Excise Act, 1915, and, therefore, no recovery could, be made from the petitioner.
( 5 ) PRESENTLY, we shall deal with the questions in a serial order. But before that it is necessary to take note of the provisions of the Excise Act in the matter of auctioning excise licences and confirmation of sale and to ascertain if any written contract between the contractor and the Government is contemplated as per article 299 (1) of the Constitution of India.
( 6 ) SECTION 17 of the M. P. Excise Act, 1915, lays down that no intoxicant shall be sold except under the authority and subject to the terms and conditions of a licence granted in that behalf. We are not concerned with the three provisos, but the licence is to be granted on such terms and conditions as the Excise commissioner may determine under the Excise law for the time being in force. Section 18 of the Act provides that the State Government may lease to any person on such conditions and for such period as it may think fit the right- (a ). . . . . . . . . . . . . . . . . . . . . . . . (b) of selling by wholesale or by retail, or (c ). . . . . . . . . . . . . . . . . . . . . . . . any liquor or intoxicating drug within any specified
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