24 May 1954
Supreme Court


Case number: Appeal (civil) 212 of 1953






DATE OF JUDGMENT: 24/05/1954


CITATION:  1954 AIR  592            1955 SCR  305  CITATOR INFO :  D          1960 SC 350  (8,16)  R          1963 SC 264  (5)  R          1965 SC1992  (10)  R          1973 SC 205  (3,4)  D          1974 SC 651  (18)  RF         1977 SC1496  (18)  D          1984 SC1030  (17)  R          1985 SC1147  (14)  RF         1988 SC 157  (8)

ACT: Constitution  of  India, Art.  226-Writ  of  mandamus-Mysore Excise  Act, 1901, rules.T (1 and 2), II(8 and  10)--Auction of  liquor shops-Sale knocked down to highest  bidder  -Sale subject   to   confirmation  by   Deputy   Commissioner-Sale cancelled  by Excise Commissioner  on a higher  offer-Deputy Commissioner directed to accept the tender-Tender  accepted- Whether wrong--Whether a writ of mandamus should issue under the circumstances.

HEADNOTE: The  appellant  G  and the fourth respondent  T  were  rival liquor contractors for the sale of a liquor contract for the year  1953-54  in  the State of Mysore.   The  contract  was auctioned  by  the Deputy Commissioner under  the  authority conferred  upon  him by the Mysore Excise  Act,  1901.   The appellant’s bid was the highest and the contract was knocked down  in his favour subject to formal confirmation  by  the, Deputy  Commissioner.  The fourth respondent was present  at the auction but did not bid.  Instead of that he went direct to  the  Excise Commissioner and made a higher  offer.   The Excise  Commissioner cancelled the sale in favour of  G  and directed  the Deputy Commissioner to take action under  rule II.  10.  The latter accepted T’s tender.   The  appollant’s application for a writ of mandamus was dismissed by the High Court but he was granted a certificate under article  133(L) of the Constitution. Held, (i) that the appollant’s prayer for a writ of mandamus could  not be granted as the Excise  Commissioner  exercised



his  authority  (though  a little  irregularly  because  the matter did not reach him through the proper channel) and the cancellation  of  sale by him under  the  circumstances  was proper. (ii)The  subsequent  action of the  Deputy  Commissioner  in granting  the contract to T was wrong because the  arbitrary improvisation of an ad hoc procedure to meet the  exigencies of  a  particular case adopted in the secrecy of  an  office cannot be accepted. (iii)What  the Legislature has insisted on is that  wherever there is a departure from the methods of auction and  tender provided for in the Rules, the departure must be  sanctioned by Government and must be "notified".  The matter cannot  be left to the arbitrary discretion of some lesser authority. (iv)The relief of a writ prayed for by the appellant to can. cel  the  contract given to T could not be  granted  in  the present case as barely a fortnight was left for the contract to  expire  and  the  grant of a  writ  would  therefore  be ineffective end meaningless. 306 The relevant sections of the Mysore Excise Act and the rules made thereunder &re given in the judgment. State  of  Assam v. Keshab Prasad Singh’and  Others  ([1953] S.C.R. 865) and Commissioner of Police, Bombay v. Gordhandas Bhanji 19521 S.C.R. 135) referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION            Civil Appeal No. 212 of 1953. Under  article 133(1) of the Constitution of  India  against the  Judgment  and Order dated the 10th July, 1953,  of  the Mysore High Court in Civil Petition No. 116 of 1953.   M.C.  Setalvad Attorney-Generalfor India, (H.  J.  Umrigar and Rajinder Narain, with him) for the appellant. Nitoor  Sriniva8a  Rao,  Advocate-General  Of  Mysore,   (R. Ganapathy Iyer, with him) for respondents Nos.  1 to   3. M. S. K. Aiyangar for respondent No. 4. 1954.  May 24.  The Judgment of the Court was delivered by BOSE  J.-We are concerned in this appeal with the sale of  a liquor contract for the year 1953-54 in the State of Mysore. The   appellant,  Guruswamy,  and  the  fourth   respondent, Thimmappa,  are rival liquor contractors.  The contract  for the  City and Taluk of Bangalore was auctioned by the  third respondent,  the Deputy Commissioner, on 27th  April,  1953. The  appellant’s  bid  of  Rs., 1,80.000  a  month  was  the highest,  so  the contract was knocked down  in  his  favour subject to formal confirmation by the Deputy Commissioner. n le same ay the appellant deposited RS. 1,99,618-12-0. The fourth respondent, Thimmappa, was present at the auction but  did  not bid.  Instead of that he went  direct  to  the Excise Commissioner behind the appellant’s back and made  an offer of Rs. 1,85,000. On  11th  May,  1953, the  Excise  Commissioner  passed  the following order:- " The highest bid received in the recent auction sale is Rs. 1,80,000 per mensem.  As Sri Thimmappa 307 has  now offered Rs. 1,85,000 per mensem, the sale  held  by the   Deputy   Commissioner  is   cancelled.    The   Deputy Commissioner,  Bangalore  District,  is  requested  to  take further action under rule 10 of the Rules regulating the the sales of Excise Privileges. The tender given by Sri Thimmappa is herein enclosed."



The same day the Deputy Commissioner informed the  appellant that the sale had been cancelled by the Excise  Commissioner and  on  16th May, 1953, he was given a copy of  the  Excise Commissioner’s order. On  12th  May,  1953,  the   Deputy  Commissioner  made  the following order: "  The Toddy sale held on the 27th April, 1953, in  which  a bid  of Rs. 1,80,000 per month was secured.  This  sale  has been  cancelled  by the Excise Commissioner in view  of  the fact that a higher tender of Rs. 1,85,000 per month has been received from Sri T.     Thimmappa. 2.   In these circumstances, the tender of Sri T.  Thimmappa is accepted." Protests  and appeals were made to various  autborities  but they  proved  infructuous,  so,  on  19th  June,  1953,  the appellant  applied to the State High Court at Mysore  for  a writ  of  mandamus.   The petition  was  dismissed  but  the appellant was granted a certificate under article 133(1)  of the Constitution and so has come here. The matter is governed by the Mysore Excise Act of 1901  and the  Rules made under it.  Section 15 of the  Act  prohibits the  sale  of  liquor  without a  licence  from  the  Deputy Commissioner.  Section 16 provides that- "It  shall  be  lawful for the Government to  grant  to  any person or persons on such conditions and for such period  as may     seem     fit     the     exclusive     or      other privilege............................. (2) of selling by retail any country liquor  within any local area. 308 No  grantee  of  any  privilege  under  this  section  shall exercise  the same until he has received a licence  in  this behalf from the Deputy Commissioner." Section  29  authorises  Government to make  rules  for  the purpose of carrying out the provisions of the Act. The notification containing the Rules is headed- "..........  the Government of His Highness the Maharaja  of Mysore are pleased to frame the following rules to  regulate the disposal of the privilege of retail vend of intoxicating liquors Then comes Rule I. 1. It runs- "The privilege of retail vend of excisable articles shall be disposed of either by auction or by such other method as may be notified by Government." Rule I. 2. is also relevant.  It says- "In  cases  where the right of retail vend is  permitted  by Government  to  be  disposed of by calling  for  tenders,  a notification calling for the same shall be pub lished by the Excise Commissioner in three successive issues of the Mysore Gazette,  after  obtaining  the  previous  approval  of  the Government therefor." Then follow a series of rules about auctions.  Out of  them, Rule II. 8 is all we need note.  It runs- ,, The shops will be knocked down to the highest bidder, but the  sale  will be subject to formal confirma. tion  by  the Deputy  Commissioner, who shall be at liberty to  accept  or reject any bid at his discretion.  Such formal  confirmation will  be  tantamount  to an acceptance  of  the  bid  unless revised by the Excise Commissioner for special reasons ". Finally, we come to Rule II. 10.  It is as follows: "Shops  remaining unsold at the first auction or shops,  the sales  of which have not been confirmed but cancelled,  will ordinarily  be  disposed of by re-auction or  by  tender  or otherwise at the discretion of the Deputy Commissioner later on."



This  Court  had occasion to observe in State  of  Assam  v. Keshab Prasad Singh and Others(1)-a fisheries case that  the sale of these licences forms such a lucrative (I) Civil Appeal No. 176 of 952. 309 source  of revenue that State Legislatures have  deemed,  it wise  not  to  leave the  matter  to  unfettered  executive; discretion; accordingly legislation has been enacted in most parts  of  India to regulate and control  the  licensing  of these trades; Acts are passed and elaborate Rules are  drawn up  under them.  It is evident that there is a policy and  a purpose  behind  it all and it is equally evident  that  the fetters  imposed by legislation cannot be brushed  aside  at the  pleasure  of either Government or  its  officers.   The Rules bind State and subject &like. The Act and the Rules make it plain that liquor licensing in the  State of Mysore can only be done in  certain  specified ways  and such discretion as is left to the  authorities  is strictly controlled by Statute and Rule. Rule  I.  I gives two options: the licences must  either  be sold by auction or "by such other method as may, be notified by  Government".  It is not by such other method as  may  be desired by Government or thought fit by it but by such other method  as  may  be notified.  The notification  is  of  the essence,  and for good reason : these are matters of  public concern  and  of  importance to the  State  because  of  the revenue  reaped.   It is necessary therefore  that  all  and sundry  should know what is what by public  notification  in the Gazette and it is important that this should not be left to arbitrary executive pleasure. Rule  I. 2 indicates one of the many shapes the  "otherwise" can  take one of the "otherwise" methods can be  by  calling for tenders.  But if that is selected, then a further fetter is  forged.  There must be a public call for the tenders  by publication  in no less than three successive issues of  the Mysore  Gazette,  and more, the approval of  the  Government must  first be, obtained.  The careful elaboration  of  this Rule  precludes us from holding that it can be by-passed  or ignored at the will and pleasure of an executive officer. But  the  authorities  are not tied down to  the  method  of auction and tender; that may be undesirable for a variety of reasons, the urgency of the situation being 310 one  of them; nor are they bound to follow Rule I. 2  as  an alternative.  They have a discretion under Rule I. I and can act  "otherwise".  But if they wish to do that, then  it  is essential  that  due notice and publicity be  given  of  the "otherwise" method in a Government notification as Rule I. 1 directs.   The  Gazette  is  issued  every  week  and  where necessary a special edition of the Gazette can be issued  at a  day’s  notice, so the urgency of the matter  is  no  real reason  for bypassing the Rules.  What the  Legislature  has insisted  on is that whenever there is a departure from  the methods of auction and tender provided for in the Rules, the departure  must  be  sanctioned by Government  and  must  be "notified".   The matter -cannot be left to  the’  arbitrary discretion of some lesser authority. In the present case, there has not been any notification  in the  Gazette to bring the "otherwise" portion of Rule  I.  I into play, nor have tenders been called for in the only  way which  Rule  I. 2 permits.  We are therefore left  with  the normal mode of sale contemplated by the Rules, namely public auction. It  is  admitted  that the contract was  auctioned  on  27th April, 1953; it is admitted that the appellant bid up to Rs.



1,80,000  and it is admitted that that was the highest  bid; it  is also admitted that the contract was knocked  down  in his favour.  But that was not final because under Rule II. 8 the sale was expressly subject to the formal confirmation of the Deputy Commissioner who is given a discretion to  accept or  reject a bid.  The Deputy Commissioner did not give  his sanction  but  equally he did not exercise  his  discretion. But  that  can be treated as an irregularity  in  this  case because  even if sanction had been given it was  subject  to revision  by the Excise Commissioner "for special  reasons". That  fact  distinguished  this case  from  Commis8ioner  of Police, Bombay v. Gordhandas Bhanji(1). Now  the  Excise Commissioner exercised his  authority  :  a little  irregularly  it is true because the matter  did  not reach  him  through the proper channel; but that  would  not call for interference -by way of a writ. (I)  [31952] S .C.R. 135 311 The  substance of the thing is there and as the  High  Court was not a Court of appeal-it could not have been called upon to  correct  a  mere technical error in the  exercise  of  a jurisdiction   which  was  otherwise  valid.   It  must   be remembered  that the Excise Commissioner was not a Court  of law whose seisin was dependent upon the filing of a  regular appeal.  The sale was cancelled and a reason was given;  and the  fact that Government would be able to get an extra  Rs. 5,000  a month as revenue is cer ainly a good  reason.   The cancellation  was  therefore  proper and  as  the  appellant obtained  no right to the licence by the mere fact that  the contract had been knocked down in his favour (the acceptance being  subject  to sanction) the  appellant’s  first  relief asking  for a mandamus to confirm his right to  the  licence for 1953-54 cannot be granted. We  now  pass  on to the subsequent  action  of  the  Deputy Commissioner  in giving the contract to Thimmappa.   It  was contended  that  the Deputy Commissioner  acted  within  the ambit  of  his  powers  because Rule II.  10  gives  him  an absolute, discretion either to re-auction or act "otherwise" and  no  fetters are placed upon the  "otherwise".   It  was argued  that the Rules which precede Rule 11. 10  deal  with the  initial stages; they require either an auction  or  the calling for tenders by notification under Rule 1. 2, or such other method as may have been duly notified; but once  there is  an auction and  it is cancelled under Rule II.  8,  then the authorities are no longer bound by any rules and have an absolute  and  unfettered discretion.  The  urgency  of  the situation at that stage is advanced as a reason.., We are unable to agree, The same word appearing in the  same section  of  the same set of Rules must be  given  the  same meaning  unless there is anything to indicate the  contrary. The full content of the "otherwise" is specified in Rule  I. 1.  It must be construed in the same sense in Rule  II.  10. But  that apart, this would, in our opinion, run counter  to the policy of the Legislature which is that matters of  such consequence  to  the  State revenue  cannot  be  dealt  with arbitrarily  and in the secrecy of an office.   Whatever  is done  must  be  done  either under  the  Rules  or  under  a notification 312 which would receive like publicity and have like force,  and of  which  the  people  at large  would  have  like  notice. Arbitrary  improvisation of an ad hoc procedure to meet  the exigencies of a particular case is ruled out.  The grant -of the contract to Thimmappa was therefore wrong. The  next question is whether the appellant can complain  of



this  by way of a writ.  In our opinion, he could have  done so  in  an ordinary case.  The appellant  is  interested  in these contracts and has a right under the laws of the  State to  receive the same treatment and be given the same  chance as anybody else.  Here we have Thimmappa who was present  at the  auction and who did not did not that it would make  any difference  if he had, for the fact remains that he made  no attempt  to outbid the appellant.  If he had done so  it  is evident  that the appellant would have raised his  own  bid. The procedure of tender was not open here because there  was no notification and the furtive method adopted of setting  a matter  of this moment behind the backs of those  interested and  anxious  to  compete is unjustified.   Apart  from  all else,thatinitself would in this case have resulted in  aloss to  the State because, as we have said, the mere  fact  that the  appellant has pursued this writ with such vigour  shows that  he would have bid higher.  But  deeper  considerations are  also at stake, namely, the elimination  of  favouritism and  nepotism and corruption not that we suggest  that  that occurred here, but to permit what has occurred in this  case would  leave the door wide open to the very evils which  the Legislature  in  its wisdom has endeavoured to  avoid.   All that  is part and parcel of the policy of  the  Legislature. None  of  it  can be ignored.  We  would  therefore  in  the ordinary course have given the appellant the writ he  seeks. But, owing to the time which this matter has taken to  reach us  (a consequence for which the appellant is in no  way  to blame,  for  he  has  done all he could  to  have  an  early hearing),  there is barely a fortnight of the contract  left to go.  We were told that the excise year for this  contract (1953-54) expires early in June.  A writ would therefore  be ineffective and as it is not our practice to issue 313 meaningless writs we must dismiss this appeal and leave  the appellant content with an enunciation of the law.  But as he has  in reality won his case and is prevented  from  reaping the full fruits of his victory because of circumstances  for which  he  is  not responsible, we  direct  that  the  first respondent, the State of Mysore, and the fourth  respondent, Thimmappa, pay the appellant his costs here and in the  High Court.  The other respondents will bear their own costs. Appeal dismissed.