Judgment

RAMASWAMI, J.:- This appeal is brought by certificate from the judgment of the Division Bench of the Punjab High Court dated August 19, 1963 in Letters Patent Appeal No. 50-D of 1960.

2. An auction was held for the sale of licence of country liquor shop in Bela Road for the year 1949-50 on March 23, 1949. The auction took place in pursuance of the conditions of "Auction of Excise Shops in Delhi for the year 1949-50" Ex. D-28. Clauses 31 and 33 of the conditions were to the following effect:

"31. The Chief Commissioner is under no obligation to grant any license until he is assured of financial status of the bidder. At the conclusion of the auction an enquiry will be made into the financial position of any bidder not known to the excise staff and any such bidder shall if necessary be called upon to furnish security for the observance of the terms of his licence as required by sub-section (2) of Section 34 of the Punjab Excise Act I of 1914, as extended to Delhi Province.

33. All final bids will be made subject to the confirmation by the Chief Commissioner who may reject any bid without assigning any reasons. If no bid is accepted for any shop, the Chief Commissioner reserves the right to dispose it of by tender or otherwise as he thinks fit..............."

The respondent offered the highest bid of Rs. 4,01,000 for the shop. Under the Excise Rules the bidder had to deposit one-sixth of the purchase price within seven days of the auction but the deposit was not made by the respondent. In these circumstances the Chief Commissioner did not confirm the bid of the respondent and resale of the Excise Shop was ordered. On May 3, 1949 the shop was again auctioned when Messrs. Daulat Ram Amar Singh offered the highest bid of Rs. 2,20,000 which was confirmed by the Chief Commissioner, on July 7, 1949. Holding the respondent liable for the loss of Rs. 1,81,000 being the difference between the bid of the respondent and of Messrs. Daulat Ram Amar Singh the Collector of Delhi started proceedings for the recovery of Rs. 1,81,000. On July 22, 1949 the respondent filed a suit in the Court of Senior Subordinate Judge, Delhi praying for a permanent injunction restraining the appellants from taking any proceedings to recover the amount. The trial judge decreed the suit holding that the sale was subject to confirmation by the Chief Commissioner under Clause 33 and since the auction in favour of the respondent was not accepted by him there was no binding obligation between the parties. The decree of the trial court was upheld by the lower appellate court. In second appeal Falshaw J., took the view that Clause 33 was not in consonance with the statutory rules and the contract came into existence when the bidding was closed in favour of the respondent on March 23, 1949. The respondent was therefore held liable to make good the loss which the Government sustained in resorting to the resale of the excise shop. The respondent preferred an appeal under Letters Patent. The Division Bench allowed the appeal reversing the decision of the single Judge and restored that of the trial Court.

3. Clause 21 of Rule 5.34 states:

"A person to whom a shop has been sold shall pay one-sixth of the annual fee within seven days of the auction (any deposits already made shall be credited to this sum, and any excess shall be either returned to him or credited to future payments). By the 7th of the month in which he begins his business under his license and by the 7th of every subsequent month the licensee shall pay one-twelfth of the annual fee till the whole fee is paid. But he may at any time pay the whole amount due if he wishes. If the total amount due is less than Rs. 100 it shall be payable in one sum unless the Collector for special reasons, allows payment to be made in instalments. If any person whose bid has been accepted by the officer presiding at the auction fails to make the deposit of one-sixth of the annual fee, or if he refuses to accept the license, the Co