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PETITIONER: RAJENDRA SINGH

       Vs.

RESPONDENT: THE STATE OF MADHYA PRADESH& OTHERS.

DATE OF JUDGMENT:       08/08/1996

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) SEN, S.C. (J)

CITATION:  JT 1996 (7)   216        1996 SCALE  (5)793

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T B.P.JEEVAN REDDY.J.      Leave granted.      These appeals  are preferred  against the judgment of a Division Bench  of the  Madhya Pradesh.  High Court allowing the Letters  Patent Appeal  preferred by the State of Madhya Pradesh against  the judgment  of a learned Single Judge who had allowed  the writ petition filed by the appellant. While we agree  fully with  the reasoning  and conclusion  of  the Division Bench,  we think  it necessary  at the same time to emphasise a  few  aspects  relevant  in  the  case  of  such contracts. First, the relevant facts briefly.      For the  excise year  1994-95, the  appellant  was  the highest bidder  for certain  number of liquor shops. His bid in a  sum of  Rs.11,67,00,000/-  was  accepted,  payable  in monthly instalments of Rs.97,25,000/- each. After making the necessary  deposits   and   after   complying   with   other conditions, licences  were granted  to him  and he commenced the business with effect from 1.4.1995. He failed to pay the monthly rental  (licence fee)  for the  months of  July  and August, 1994.  Thereupon a notice dated 9.8.94 (exhibit R-3) was issued  by the authorities intimating him that he was in arrears of the licence fee for the months of July and August and that  if he  does not  pay the  same, the shops would be reauctioned.  The   appellant  was   asked  to   be  present personally  on  23.8.1994  for  showing  cause.  Though  the appellant received the said notice, he did not appear before the specified  authority. He  thus filed  to  avail  of  the opportunity of personal hearing afforded to him. (Though the appellant  disputed   this  fact,  the  Division  Bench  has accepted the respondent’s contention and has found as a fact that the  appellant did  fail  to  appear  on  the  date  of hearing.  We   accept  the   said  finding.)  On  2.9.94,  a notification was  issued - communicated to a large number of excise officers  and other  departments and  a copy of which was also sent to the appellant stating that if the appellant

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did not  clear the  arrears on  or before 12.9.94, the shops would be  sold by  reauction to  be held  at  2.00  p.m.  on 12.9.94. The  said notification  is marked  exhibit R-12. It was also published in the daily newspaper, Nav Bharat Tixes, The notification mentioned the precise amount of arrears due from the  appellant and  stated that  on the reauction being held, the  existing licence in favour of the appellant shall stand  cancelled.   Since  the   appellant  failed  to  pay, reauction was held on 12.9.94, whereafter, a demand was made upon the  appellant  for  loss  of  revenue  resulting  from reauction, as  provided by  sub-section (4)(b) of Section 31 of the Madhya Pradesh Excise Act. We may set out sub-section (4) of Section 31 this stage:      "(4) Where  a licence  is cancelled      or  suspended   under  Clause  (a),      clause (b),  clause (c)  or  clause      (e) of sub-section (1),           (a) the  fee payable  for  the           balance  of   the  period  for           which such  licence would have           been  current   but  for  such           cancellation  or   suspension,           may be  recovered from the ex-           licensee as excise-revenue;           (b) the Collector may take the           grant  under   management   or           resell it at the risk and loss           of the  ex-licensee,  but  any           profit   realised    by   such           management or  resale which is           not in  excess of  the  amount           recovered under clause (a) for           such period  shall be  paid to           the ex-licensee."      The appellant  questioned the  said demand  by way of a writ petition in the Madhya Pradesh High Court. He submitted that he  was not given due opportunity before cancelling the licence as required by sub-section (1-A) of Section 31, that there was  no order  of cancellation  of licence as such and that  there  was  no  proper  publicity  for  the  reauction conducted. He  submitted that  on account  of  lack  of  due publicity, only  one bidder was present at the reauction and that the  shops were sold at a low price. The learned Single Judge was  impressed by the said contentions and allowed the writ  petition.  On  appeal,  however,  the  Division  Bench rejected all of them. Before we set out the reasoning of the Division Bench,  it would  be appropriate  to set  out  sub- section (1-A) of Section 31. It reads:      "(1-A)  Before   making  an   order      cancelling ok suspending a licence,      permit or  pass  under  sub-section      (1), the  authority aforesaid shall      record in  writing the  reasons for      the proposed action, furnish to the      holder thereof a brief statement of      the   same   and   afford   him   a      reasonable  opportunity   of  being      heard."      The Division  Bench held  that as held by that Court in an earlier decision, "the court cannot take a hypertechnical view of  the provisions  and must  understand the  same in a reasonable   manner.   Substantial   compliance   with   the requirements of  the  provisions  would  meet  the  ends  of justice. Where  a specific  order of cancellation of licence is not  passed but  if the  requirements  are  substantially

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complied  with,   the  court   under  Article   226  of  the Constitution would  not ordinarily  interfere." The Division Bench referred to the notice exhibit R-3 and found as a fact that it  was received by the appellant. The Bench also found that the  notification (R-12)  was duly  communicated to all the Excise Officers, other departments, and to the appellant besides being  published in the newspaper, Nav Bharat Times. After referring  to the  contents of exhibit R-12, the Bench held that  the  said  notification  was  both  an  order  of cancellation of the appellant’s licence as well as notice of reauction. It  also found  that there was adequate publicity of the  said notification  and the fact that only one bidder appeared at  the reauction  was no  ground for  holding that there was  no proper  publicity. It  gave reasons why bidder generally do  not attend reauctions. The Division Bench also found as  a fact  that the appellant failed to appear on the date of  hearing specified  in notice (R-3). In the light of the said  findings, the  Division Bench  held,  and  in  our opinion rightly,  that the learned Single Judge way in error in  allowing   the  writ  petition.  We  fully  approve  the reasoning of the Division Bench.      It has  been held by a Constitution Bench of this Court in Har  Shankar &  Other etc.  etc.  v.  Deputy  Excise  and Taxation Commissioner  and Others  etc.  [A.I.R.  1975  S.C. 1121] that  "(T)he writ  jurisdiction of  High  Court  under Article  226   of  the   Constitution  is  not  intended  to facilitate avoidance  of obligations  voluntarily incurred." At the  same time, it was observed that the licences are not precluded from  seeking to  enforce the statutory provisions governing the contract. lt must, however, be remembered that we are  dealing with  parties to  a  contract,  which  is  a business  transaction,   no  doubt   governed  by  statutory provisions.  While  examining  complaints  of  violation  of statutory rules  and conditions,  it must be remembered that violation of  each and  every provision  does not  furnish a ground or  the Court  to interfere.  The provision  may be a directory one  or a  mandatory one. In the case of directory provisions, substantial  compliance would  be enough. Unless it is  established that  violation of  a directory provision has resulted  in loss  and/or prejudice  to  the  party,  no interference is  warranted. Even in the case of violation of a mandatory  provision, interference  does not  fellow as  a matter of  course. A  mandatory provision  conceived in  the interest of  a party  can be waived by that party, whereas a mandatory provision  conceived in  the  interest  of  public cannot  be  waived  by  him.  In  other  wards,  wherever  a complaint of violation of a mandatory provision is made, the Court should  enquire- in  whose interest  is the  provision conceived. If it is not conceived in the interest of public, question of  waiver and/or acquiescence may arise - subject, of course,  to the pleadings of the parties. This aspect has been dealt with elaborately by this Court in State ------------------------------------------------------------ *Reference may also be made to the decision of this Court in Assistant Excise Commissioner V. Issac Peter [1994 (4)S.C.C. 104]. Bank of  Patiala v.  S.K. Sharma [1996 (3) S.C.C 364] and in Krishanlal v. State of Jammu and Kashmir [1994 (4) S.C.C. 422]  on the  basis of  a large number of decision on the subject.  Though the  said decisions  were rendered with reference to  the statutory  Rules and  statutory provisions (besides the  principles of  natural justice)  governing the disciplinary enquiries  involving  government  servants  and employees   of   statutory   corporation,   the   principles adumbrated  therein   are  of  general  application.  It  is

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necessary  to   keep  these  considerations  in  mind  while deciding whether any interference is called for by the Court whether under  Article 226 or in a suit. The function of the Court is  not a  mechanical on.  It is  always a  considered course of action.      There is  yet another  fact. The  contract provides for payment of  monthly rental  on or before a, particular date. If the  amount of  monthly rental  not paid  before the  due date, the  licence is  liable to be cancelled as provided by sub-section (1)  of Section  31.  It  is  true  that  before cancelling the  licence, an opportunity of hearing should be given  as   provided  by   sub-section  (1-A).   While   the opportunity  to   be  given   should  be   reasonable,   the reasonableness or otherwise of the opportunity given must be judged keeping  in view  the time-frame  available. It  is a case of a contract stipulating monthly payments. If there is a default  in paying  a  month’s  rental,  notice  proposing cancellation may  follow. The  time given to the licencee to show cause  would naturally  be a  short one  for the reason that soon  thereafter the  next month’s rental (licence fee) falls due and if that is not paid, another show cause notice may have  to follow.  (It must  be remembered  that in  this case, the  default was  for two consecutive months, July and August. The authorities evidently did not act in haste. Even after one month’s default, they waited hoping that he should pay. But  when he  defaulted for  the next  month also, they issued the  notice proposing  cancellation.) What we wish to emphasise is  that  the  opportunity  contemplated  by  sub- section (1-A)  cannot be  operated in  a leisurely manner. A realistic view has to be taken while determining whether the opportunity given  was reasonable  or not. The object of all excise laws  is two-fold  viz.,  to  raise  revenue  and  to regulate the  trade in liquors which is a noxious substance. There is  no fundamental  right to  trade in  liquor (Khoday Distilleries Ltd.  v. State  of Karnataka  1995  (1)  S.C.C. 574). The  only right  of the licencee is to seek to enforce the terms of contract (which is statutory in nature) and the statutory   provisions    governing   the    contract.   The considerations aforementioned  should be  kept in mind while examining  complaints   of  violation  of  statutory  Rules, conditions add  terms of  contract as  well as complaints of jack of reasonable opportunity.      Lastly, it  is urged  the before forfeiting the advance amount or  the security  deposit,  a  fresh  opportunity  of hearing ought  to have  been provided. From a perusal of the judgment under appeal, however, we do not find that any such contention was  urged before it. For this reason, we decline to entertain  this plea,  which may involve investigation of factual aspects.      The appeals  accordingly fail  and are  dismissed  with costs. Advocate’s fee Rs.5,000/-.