SUPREME COURT OF INDIA

Before:- S.P. Bharucha and B.N. Kirpal, JJ.

Civil Appeal Nos. 3797 of 1995 with 5359 of 1995. D/d. 29.4.1998.

M/s. Rishi Pal and Co. - Appellant

Versus

State of H.P. and others - Respondents

Punjab Excise Act, 1914, Section 34 - Liquor vend - Modes of auction, negotiations, private contract, tenders etc, to grant licenses - Expedient modes are provided under Section 34 - Apart form that, Financial Commissioner can decide to resort to negotiations instead - Financial Commissioner can also regroup the vends - The objective being to get the maximum revenue for the State - Appeal of state allowed.

[Para 5]

JUDGMENT

These are cross appeals against the judgment and order of a Division Bench of the High Court of Himachal Pradesh.

2. M. Rishi Pal and Co., the Contractor, made a bid for the auction of a liquid vend, being the Rampur Bushair unit, for the year 1994-95. The auction was held on 16th March, 1994. The Contractor's was the highest bid. He deposited 5 per cent thereof immediately and another 8.5 per cent within the stipulated 10 days. On 28th March, 1995 his bid was rejected.

3. At the same auction held on 16th March, 1994 no bid was received for the Shimla-1 and Shimla-II unit. The Deputy Commissioner wrote on 20th March, 1994 to the Excise and Taxation Commissioner that after the auction of the Rampur Bushair unit, the bidders had got together and had not made any bid for the auction of the Shimla-I and II units, even though these units had been clubbed together. What transpired on 16th March is also evident from the report of the auctions held on that date. The report speaks of the aforesaid pooling and states that no bids were offered; it recommended that "it is extremely essential to pass appropriate orders so that revenue could be kept secured . . . . . . . In this context holding negotiations appears to be a suitable alternative." The suggestion was accepted and invitations were sent to those who had participated in the aforesaid auction to participate in negotiations for the allotment of the Shimla-I and II unit. These negotiations took place on 25th March, 1994. It appears from the affidavit that was filed by the State before the High Court that an offer was made by one of the negotiating parties in the sum of Rs. 8.50 crores for the Shimla-I and II unit provided the Rampur Bushair unit was also tagged on. This was found attractive and the negotiations were adjourned to 3.30 p.m. At that time the parties were told that the Financial Commissioner had decided that the negotiations should be held for the combined Shimla I and II and Rampur Bushair units and that the parties should make offers accordingly. Three of these parties, including the Contractor, requested for half an hour's time to formulate their response. After this lapse of time these parties, including the Contractor, participated in the negotiations and made offers. The offer of Rs. 8.55 crores given by one of the parties (respondent No. 6) was found to be the highest and was recommended for acceptance, which the Financial Commissioner thereafter gave. Accordingly, the Contractor was informed on 28th March, 1994 that his bid for the Rampur Bushair unit had not been approved and that a refund of the amount deposited by him would be made.

4. The photostat copy of the proceedings annexed to the affidavit shows the signatures of the representatives of the Contractor both at the morning and the afternoon sessions on 25th March, 1994.

5. The Contractor filed the writ petition in the High Court challenging the validity of the rejection of his bid and for consequential reliefs. The High Court came to the conclusion that the Financial Commissioner had no power to regroup the vends and also that the proposed negotiations for the Rampur Bushair unit had not received due publicity. Since, by efflux of time, the High Court could grant no effective relief, it awarded "just and fair compensation" to the Contractor in the sum of Rs. 1 lac.

The relevant Rule reads thus :

"34(a) The Financial Commissioner reserved the right to grant all or any of the licences mentioned in rule-1, other than the licences granted on fixed fee, assessed fee or both, by auction or by negotiation or by private contract or by allotment or by calling tenders or by any other arrangement which he may consider expedient.

(b) The Financial Commissioner further reserves the right to change the mode of granting the licences mentioned in clause (a) of this rule, prior to the grant of such licences in a Financial year, and by an order in writing on record."

The Rule entitles the Financial Commissioner to grant licences by the modes of auction, negotiations, private contract, allotment, tenders and any other arrangement or mode which he considers expedient. It also entitles the Financial Commissioner, by order in writing, to change the mode of granting the licence prior to its grant for a financial year. We do not find in this Rule, or anywhere else, any restriction in regard to the regrouping of vends. If, for any reason, the bids at an auction cannot be accepted, the Financial Commissioner can decide to resort to negotiations instead. He can do so provided the bids at the auction have not been confirmed. The Financial Commissioner would then be entitled to negotiate for one vend or two vends combined, the objective being to get the maximum revenue for the State. A clause that relates to auctions and permits the Presiding Officer thereat to regroup vends does not imply that the power to do so does not exist in the Financial Commissioner.

6. The High Court's observations on the aspect of publicity for the negotiations aforementioned would appear to be uncalled for. We have already indicated what had transpired from 16th March, 1994 onwards. All those who had participated in the auction on the date had been given notice of the negotiations that were proposed for 25th March, 1995. It is true that those negotiations were originally proposed for Shimla-I and II unit but it became clear during the proceedings that the revenue of the State would be greater if the Rampur Bushair unit was combined with the Shimla-I and II unit. Therefore, the participants in the negotiations were told to return in the afternoon. When informed about the decision in this behalf they asked for some time, which was given, and it was thereafter that the highest amount offered by the other party (respondent No. 6) was accepted. There is irrefutable evidence in the form of a photostat copy of the record of the persons present at the negotiations that the Contractor was represented throughout. The Contractor was the highest bidder at the auction for the Rampur Bushair unit and its bid had not been accepted. It was given notice. In the circumstances, the authorities cannot be faulted at its instance for lack of adequate publicity, considering also the fact that the new financial year when the period of the licences would commence was fast approaching.

7. We conclude, in the premises, that there was no warrant for ordering the payment of compensation to the Contractor.

8. The appeal of the State of Himachal Pradesh is, accordingly, allowed and the judgment and order of the High Court under appeal is set aside. The writ petition filed by the Contractor is dismissed.

9. The appeal of the Contractor is, consequently, dismissed.

10. No order as to costs.

Appeal dismissed.