# P. BHOOMA REDDY v. STATE OF MYSORE & ORS

- **Citation:** [1969] 3 S.C.R. 14
- **Court:** Supreme Court of India
- **Decided:** 1968-12-05
- **Bench:** S. M. Sikri, R. S. Bachawat, K. S. liEGDE
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/p-bhooma-reddy-v-state-of-mysore-ors-4842
- **Pages:** 14

## Headnote

My.sore Excise (Disposal of Privl'kges of Retail Vend of Liquors)
Ruks, 1967, rr. 12, 17(2)(4) and 19(1)(3) and (4)-Liquor shops in
more than one tehsU-Whether r. 19(1), (3) and (4) applicable-'At
once' meaning of-Whether Divisional Commissioner can revise his own
order-R. 12 Scope of-R. 17(4), scope of-When next highest bid can
be accepted.
The appellant was the highest bidder for the exclusive privilege of
retail vend of toddy and arrack for·the year 1968-69, in a
group
of
1168 shops situated in 19 tehsils iri the districts of Raichur and Gulbarga,
He lllllde the deposits of money required under rr. 7(f) and 10 of the
Mysore Excise (Disposal of Privileges of Retail Vend of Liquors) Rules,
1967 made under s. 71 of the Mysore Excise Act, 196S. The highest bid
of the appellant was accepted and confirmed by the Divisional Commissioner of Gulbarga under r. 17(1) on June 4, 1968. Thereafter, the
appellant made further deposits required by rr. 17(S) and 19(2).
Jn
all he deposited about Rs. 40 lakhs by June IS. On June 18 he applied
to the Divisional Commissioner for the issue-licence. He however, did not
comp!) with r. 19(1) and (3) which required that a statement of immovable eroperties should be furnished and that he should furnish
security
or sureties, respectively. The Divisional Commissioner Gulbarga issued a
notice to the appellant to show cause why the sale should not be cancelled
and the deposits already made forfeited under r. 20(2). The appellant
prayed for two months' time, .for compliance with the requirements of
r-' 19~ but the Divisional Commissioner rejected the application and cancelled the sale. He did not pass any order forfeiting the deposits.
The appellant filed a writ petition in the High Court for quashing the
order and under directions of the Court deposited another Rs. SO lakhs.
The 4th respondent, who was the next highest bidder applied to be made
a party to the petition and contended that the. appellant was a benamidar
for other persons and so acceptance of his tender was forbidden by r. 12.
The Hi~h Court dismissed the
writ petition holding
( 1)
that the
_ appellant did not comply with the mandatory requirements of r. 19 · in
that he did not furnish the statements and apply 'at once' for licences
,as required by r. 19(1); (2) the appellant was a benamidar; and (3)
the authorities should consider the advISability of accepting the bid of the
4th respondent. On the very next day after the judgment of the Hl~h
Court, the respondent.State issued licences in respect of 1168 shops to
the 4th respondent.
In appeal to this Court.
HELD : The licences issued to the 4th respondent should be cancelled
and a writ of mandamus should issue for the grant of licences to the
appellant. [26 A]
A
B
c
D
E
F
G
B
B
c
I
D
.G
BHOOMA REDDY V, MYSORE
15
(l)(a) The opening part of r. 19(4) requires the purchaser to furnish
to 'the tehsildar' the location of shops and the boundaries of the shop
sites. that is to the tahsildar within whose tehsil lhe shops are situated.
U the shops arc situated in more than one lehsil, the details can be fur·
Dished to the several tahsildars, but in such a case it is not possible
to give effect to the last part oil the sub-rule and also to the provisions of
sub-rr. (3) and (4). The statement of immovable properties under the
last part of sub-r. (l) can be furnished to only one tahsildar so that he
can peruse the same; and on such perusal or on independent inquiry
ascertain under .sub-r. (3) whether or not
purchaser is of doubtful
solvency and satisfy himself under sub-r. ( 4) whether or not the value of
the immovable property tendered as security is adequate, Sub-rr. (3)
and ( 4) do not contemplate findings by more. than one tahsildar nor do
they provide any machinery for resolving the conflict of opinion, if any,
betw00.11 two or more tahsildars. The last part of sub-r. (I) and suf>.rr.
( 3) ud l 4) do not apply where the shops are situated in two or more
tahsils.
Consequently, those provisions were

## Text

P. BHOOMA REDDY
v.
STATE OF MYSORE & ORS.
December 5, 1968
[S. M. SIKRI, R. S. BACHAWAT AND K. S. liEGDE, JJ.]
My.sore Excise (Disposal of Privl'kges of Retail Vend of Liquors)
Ruks, 1967, rr. 12, 17(2)(4) and 19(1)(3) and (4)-Liquor shops in
more than one tehsU-Whether r. 19(1), (3) and (4) applicable-'At
once' meaning of-Whether Divisional Commissioner can revise his own
order-R. 12 Scope of-R. 17(4), scope of-When next highest bid can
be accepted.
The appellant was the highest bidder for the exclusive privilege of
retail vend of toddy and arrack for·the year 1968-69, in a
group
of
1168 shops situated in 19 tehsils iri the districts of Raichur and Gulbarga,
He lllllde the deposits of money required under rr. 7(f) and 10 of the
Mysore Excise (Disposal of Privileges of Retail Vend of Liquors) Rules,
1967 made under s. 71 of the Mysore Excise Act, 196S. The highest bid
of the appellant was accepted and confirmed by the Divisional Commissioner of Gulbarga under r. 17(1) on June 4, 1968. Thereafter, the
appellant made further deposits required by rr. 17(S) and 19(2).
Jn
all he deposited about Rs. 40 lakhs by June IS. On June 18 he applied
to the Divisional Commissioner for the issue-licence. He however, did not
comp!) with r. 19(1) and (3) which required that a statement of immovable eroperties should be furnished and that he should furnish
security
or sureties, respectively. The Divisional Commissioner Gulbarga issued a
notice to the appellant to show cause why the sale should not be cancelled
and the deposits already made forfeited under r. 20(2). The appellant
prayed for two months' time, .for compliance with the requirements of
r-' 19~ but the Divisional Commissioner rejected the application and cancelled the sale. He did not pass any order forfeiting the deposits.
The appellant filed a writ petition in the High Court for quashing the
order and under directions of the Court deposited another Rs. SO lakhs.
The 4th respondent, who was the next highest bidder applied to be made
a party to the petition and contended that the. appellant was a benamidar
for other persons and so acceptance of his tender was forbidden by r. 12.
The Hi~h Court dismissed the
writ petition holding
( 1)
that the
_ appellant did not comply with the mandatory requirements of r. 19 · in
that he did not furnish the statements and apply 'at once' for licences
,as required by r. 19(1); (2) the appellant was a benamidar; and (3)
the authorities should consider the advISability of accepting the bid of the
4th respondent. On the very next day after the judgment of the Hl~h
Court, the respondent.State issued licences in respect of 1168 shops to
the 4th respondent.
In appeal to this Court.
HELD : The licences issued to the 4th respondent should be cancelled
and a writ of mandamus should issue for the grant of licences to the
appellant. [26 A]
A
B
c
D
E
F
G
B
B
c
I
D
.G
BHOOMA REDDY V, MYSORE
15
(l)(a) The opening part of r. 19(4) requires the purchaser to furnish
to 'the tehsildar' the location of shops and the boundaries of the shop
sites. that is to the tahsildar within whose tehsil lhe shops are situated.
U the shops arc situated in more than one lehsil, the details can be fur·
Dished to the several tahsildars, but in such a case it is not possible
to give effect to the last part oil the sub-rule and also to the provisions of
sub-rr. (3) and (4). The statement of immovable properties under the
last part of sub-r. (l) can be furnished to only one tahsildar so that he
can peruse the same; and on such perusal or on independent inquiry
ascertain under .sub-r. (3) whether or not
purchaser is of doubtful
solvency and satisfy himself under sub-r. ( 4) whether or not the value of
the immovable property tendered as security is adequate, Sub-rr. (3)
and ( 4) do not contemplate findings by more. than one tahsildar nor do
they provide any machinery for resolving the conflict of opinion, if any,
betw00.11 two or more tahsildars. The last part of sub-r. (I) and suf>.rr.
( 3) ud l 4) do not apply where the shops are situated in two or more
tahsils.
Consequently, those provisions were not attracted to the sale in
the ~- "8se and the appellant was not required to comply with those
provisio111. (22 El
(bl In the absence of an independent enquiry under sub-r. (3), the
appellant could not be regarded as a person· of doubtful solvency.
(c) Under the Mysore Excise Licences (General Conditions) Rules,
1967, a Jicen~ee is required to commence his
business on July 1.
The
expression 'at once' in r. 19(1), means within a reasonable time before
July 1. ln the present case, the appellant sufficiently complied with sub·
rule •. (23 D-E)
(d) Under r. 17(2) it is only the exciae commissioner or the State
Govemment that could revise the order of . the divisional commissioner
conllrming a sale and the divisional commissioner himself was not authorised to re\ise his own order or cancel it. [23 OJ
Therefore, the High Court was in error in holding that the appellant
. committed breaches of r. 19.
[Rule" 19 is clumsily drafted, its import is not clear, its tight timeschedule works hard-ship and its procedure is · cumbersome.
The Gov·
emment should immediately consider the question of redrafting the rule.]
[24·0-D]
(2) The appellant was a retired inspector drawing a pension of about
Rs. 75 per month and is not an income-tax or wealth-tax assessee. He
evidently has the backing of powerful financiers, but the purchase is not
illegal merely because the appellant obtained necessary funds from some
financicl'!l. The onus of proving that apr:llant was a benamidar was on
the 4th respondent and from the materials on record it is not possible
to hold that he is a benamidar for some other person, (25 DJ
(3) Under r. 17(4), it is only who;n the highest bid i! rejected that
the next hlahest bid may be considered. Where there is an acceptance
of the hl8h•t offer and if for some reason it io revised, r. 17(4) cannot
be invobcl. In such a case there must be a fresh clispesal of the righ,t
. of relail vend of liq\IDf in accordance with the Ruleo. Therefore, the
Hlah Court erred in observing that the 'authorities should consider
the
adviaeblBtv of accepting the 4th reopondent's bid. [26 El
. Qvn. AP'PELLATE JUlUSI>ICTIDN : Civil Appeal No. 2095 of
1968.
16
SUPREME COURT REPORTS
(1969] 3 S.C.R.
Appeal from the judgment and order dated September 17,
A
1968 of the Mysore High Court in Writ Petition No. 1889 of
1968.
D. Narsaraju, M. C. Chagla, R. V. Pillai, Subodh Markendya
and M. Narayana. Reddy, for the appellant.
M. C. Setalvad, B. R. L. Iyengar and S. P. Nayar, for respon·
B
dents Nos. 1 to 3.
M. K. Nambyar, Shivaswamy and R. Gopalakrishnan,
for
respondent No. 4.
The Judgment of tlte Court was delivered by
Bachawat J. This appeal raises the question of the legality
C
of the cancellation of the sale to the appellant of the exclusive
privilege of retail vend of toddy and arrack for the year 1968-69
I
in a group of 1168 shops in Raichur and Gulbarga districts under
the Mysore Excise Act, 1965 and the Mysore Excise (Disposal of
Privileges of Retail Vend of Liquors) Rules, 1967. On May 10,
1968 the excise commissioner of Mysore published a notice stating
that the exclusive privilege would be sold by tender-cum-auction
D
by the divisional commissioner, Gulbarga on May 28 and inviting
tenders by May 27.
On May 27, the appellant made a tender
offering Rs. 9,99,999/- towards the monthly rental of the shops
and deposited the requisite earnest money amounting to Rs.
1,85,168/- as required by r. 7(f). Respondent No. 4 K.V.
Niranjan made a tender offering Rs. 9,69,999/-
towards the
E
monthly rental. The appellant was the only bidder present at the
auction on May 28.
His offer being the highest was accepted
by the divisional commissioner, Gulbarga, un,der r. 17(1). The
appellant deposited another sum of Rs. 8,14,831/- which together
with the earnest money made up one month's rent as required by
r. 17(5). On June 4, the divisional commissioner,
Gulbarga,
F
confirmed the sale under r. 17 (I).
On June 6, the deputy commissioner, Gulbarga, issued a
notice asking the appellant to make deposits according to r. 19
immediately and to obtain licences from the concerned tahsil officers after completing other formalities.
Under
r. 19(2)' the
appellant was required to deposit another one month's rent within
15 days from the date of the sale. By June 15, the appellant
deposited in all Rs. 39,99,996/- amounting to 4 months' rent.
By a Jetter (Ex. B-1) the appellant informed the excise commissioner that he had deposited. 4 months' rent as required by circular
No. EXE.1.1575 issued by the excise commissioner on December
12, 1967 and asked for permission to obtain licences from the
deputy commissioners of Raichur and Gulbarga. On June 18/19
he applied to the divisional commissioner, Gulbarga, for the issue
of licences.
On June 19, the divisional commissioner, issued a
G
H
A
B
c
I
D
E
F
G
H
BHOOMA REDDY v. MYSORE (Bachawat, J.)
17'
notice to the appellant. stating that as he had not su?mitted. a
solvency certificate of his property or the property of his surettes
he was required to deposit the balance to make up six months
rent as required by r. 19(3) (i) and to furnish security for six
months rental or sureties as required by r. 19 ( 3 )(ii) and (iii)
by June 25, and that in default action would be
tak~n under
r. 20(2). A notice to the same effect was given orally on June,
19, when he met the divisional commissioner at Bellary. On June
22, he presented a petition under s. 62 to the state government
asking for the issue of licences, as he had complied with the
conditions of the circular.
In '~ew of the subsequent writ ~ti
tion the government did not pass any orders on this petitton.
The notice dated June 19 was received by the appellant on June
23.
On June 25, he wrote to the divisional commissioner stating.
that he had complied with the conditions of the rules read with
the circular and was entitled to the licences, that he had reason
to believe that necessary orders would be passed by the state
government on his petition under s. 62 and that if necessary, the
terms for compliance with the requirements of r. 19 be extended.
by two months. On the same date the divisional commissioner,
rejected the application for extension of time, and issued a notice
to the appellant asking him to show cause before June 26, why
in view of the non-compliance with the notices dated June 6 and.
19, the sale should not be cancelled and the deposits already made
should not be forfeited to the govi;rnment.
The notice was served·
on his advocate on June 25 at 7.40 p.m.
On June 26,
the·
appellant submitted a petition to the divisional commissioner stat-·
ing that he had complied with the terms of r. 19 and the circular,
that abrupt cancellation of the sale would result in irreparable
injury and that in any event the time to deposit the balance two•
months' rental be extended for a reasonable time.
By an order
dated June 26, (Ex. J), the divisional commissioner rejected the
application for extension of time and cancelled the sale stating
~at ( 1) . the appellant di~ not "at once" apply in writing for
licences m accordance with r. 19 (1); (2) thougil he deposited
two months' rent as required by r. 19 (2), he did not file a statement of his immovable properties in accordance with r. 19 (1) ;
and should therefore be considered as a person of doubtful
solvency; (3) he was, therefore, required to
deposit
another
2 months' rent under r. 19(3)(i) and to furnish securities for
six months' rental or surety under r. 19(3)(ii) and (iii); (4) he·
failed to comply with r. 19 in spite of notices dated June 6 and'
June 19; ( 5) the circular issued by the excise commissioner was
opposed to r. 19 and c6uld not be acted upon; ( 6) that even
under the circular he was required to give two months' collateral
security in addition to 4 months' cash deposit if he was a persorr
of doubtful solvency; and (7) that the sale conducting officer has
no power to extend the time for compliance with the fonnalities ..
18
SUPREME COURT REPORTS
(1969)
S.C.R.
On June 28, the appellant filed writ petition No. ! 889 of
A
1968 against the State of Mysore and others in the High
Coun c;if Mysore for quashing the order dated June 26,
(Ex. J.) and for the grant of licences to him to vend liquors
.in the combined groups of shops in Raichur and Gulbarga
.districts and for other reliefs.
The appellant submitted that
( 1) he· had complied with the rules read with the cirB
.cular; ( 2) he did not file any statement of his immovable ·properties under r. 19 ( i) as he had immovable propenies in Andhra
Pradesh; ( 3) as there was no inquiry nor finding by any tahsildar
that he was of doubtful solvency r. 19(3) was not attracted; (4)
the divisional commissioner, Gu!barga, was not competent to ask
for deposits and security under r. 19 ( 3), nor was he competent
to pass an order cancelling the sale; and (5) r. 19(3) was violative
C
-of Arts. 14 and 19 of the Constitution.
On June 28, the High Conn admitted the writ petition and
directed the state government to stay funher proceedings and to
issue licences to the appellant. Subsequently the High Coun
confirmed the stay order on condition that the appellant would
deposit another two months' rent. The appellant deposited about
Rs. 20,00,000/ - in accordance with the order.
On June 30, the
divisional commissioner granted licences to him. On July I, he
commenced his business in all the 1168 shops.
Thereafter he
duly deposited about Rs. 30,00,000/. on account of rent for the
months of July, August and September.
The state government,
the excise commissioner and the divisional commissioner filed
:separate affidavits disputing the appellant's contentions. The rival
tenderer, K. V. Niranjan was added as respondent No. 4 in W.P.
No. 1889 of 1968 on his own application under an order of the
High Coun dated July 7.
K. V. Niranjan filed an affidavit stating
that the appellant was a benamidar for other persons and the
acceptance of his tender was forbidden by r. 12.
K. V. Niranjan
also filed W.P. No. 2088 of 1968 for quashing the orders of the
-divisional commissioner dated May 28, and June 4, whereby the
appellant's tender was accepted and for a mandamus directing the
acceptance of his next highest tender under r. 17 ( 4) .
D
E
F
. The two writ petitions were heard together and were dismissed
G
by the High Conn by a common judgment delivered· on September 17.
The High Coun held that ( 1 ) the appellant did not
comply with tlie mandatory requirements of r. 19; (2) r. 19(3)
was not ultra vires the rule-making power under s. 71 nor violative of Ans. 14 and 19, and the appellant was estopped from
-challenging it; ( 3) the circular of the excise commissioner could
H
not modify r. 19; the appeftant could not rely on the circular
as he came to know of it long after the sale, nor had he complied
'With its terms by deposidng the entire four months' rent before
I
r
BHOOMA REDDY v. MYSORE (Bachawat, 1.)
19
A
1 une 12; ( 4) the appellant was a benamidar for other person or
persons and in view of r. 12 was incompetent to bid and ( 5 ) the
order dated June 26 (Ex. J) was. valid. On these findings the
High Court dismissed W.P. No. 1889 of 1968.
With regard to
W.P. No. 2085 of 1968 the High Court said that as the sale to
the appellant had been cancelled by Ex. J, it was not necessary
11
to set aside the order accepting and confirming his bid.
The High
Court held that under r. 17 ( 4) it was not obligatory on the officer
conducting the sale to accept .the next highest offer of respondent
No. 4.
The High Court, however, said "in th~ circumstances
of the case, it is necessary to observe that the authorities concerned
will consider the advisibi!ity of accepting the bid of the fourth
c
respondent, subject to his complying with all the requirements
of the Act and the Rules." With these observations the High
Court dismissed W.P. No. 2085 of 1968.
By a telegram dated September 18, the excise commissioner
instructed the divisional commissioner, Gulbarga, to direct the
tahsildars ·of Raichur and Gulbarga to issue licences to respondent
D
No. 4 on his complying with certain conditions.
On the same
date licences were issued to respondent No. 4.
On September
19, the High Court dismissed an application for stay of operation
of its order dated September 17, and on the same day granted
to the appellant a certificate under Art. 133 (1 )(b) of the Constitution.
On September 25, the appellant filed a stay application
E
in this Court.
On September 27, the Court passed an order
rC;Straining the respondents from forfeiting the deposits made by
the appellant.
It is convenient at this stage to refer to the relevant provisions
of the Mysore Excise Act, 1965 and the Mysore Excise (Disposal
.1
-0f Privileges of Retail Vend of Liquors) Rules, 1967.
Section
3 (1 ) of the Act provides that the excise commissioner, "shall be
the chief controlling authority, in al! matters connected with the
administration of this Act." Section 15 (1) provides that "no
intoxicant shall be sold except under the authority and subject
to the terms and conditions of a licence granted in that behalf."
Under s. 15(2) a licence for sale carrbe granted (a) by the deputy
G
commissioner if the sale is within a district or ( b) by the excise
commissioner if the sale is in more than one district.
Section
17 (1 )(b) empowers the state government to lease to any person,
on such conditions and for such period as it thinks fit the exclusive
or other right of selling by the wholesale or by retail any Indian
liquors within any specified area.
Contravention of the Act or
H
any Rules made thereunder is punishable under s. 32.
Section
71 empowers the state government to make rules. Rule 3 of the
Mysore Excise (Disposal of Privileges of Retail Vend of Liquors)
Rules, 1967 provides that the right of retail vend of liquors shall
20
SUPREME COURT REPORTS
[1969] 3 S.C.R.
be disposed of by tender or by auction or by tender-cum-auction.
The auction is conducted by the deputy commissioner or
the divisional commissioner under r. 5 and the tender has to be
made to them under r. 7 (i). The tenderer is required by r. 7 (f)
to deposit as earnest money an amount equal to 1/ 4 of the shop
rental of the previous year of the shop or groups of shops.
The
appellant complied with the requirement of r. 7 (f).
Rule 10
requires an intending bidder or tenderer to furnish a certificate
of his solvency or two sureties having similar certificates or bank
guarantee or cash deposit to cover four times the earnest money
fixed under rule 7 (f). It is not disputed that the appellant made
sufficient cash deposits in compliance with r. 10.
Rule 12 reads :
"Benami bids not allowed.
No person except a power of attorney
holder shall be entitled to bid for another person." The sale to
the appellant was not cancelled on the ground that he bid for
another person.
Rule 17 regulates
the procedure at sales.
Rule 17 ( 1) empowers the officer conducting the auction to accept
the highest offer.
The acceptance is subject to the condition of
confirmation by the deputy commissioner or by the divisional
commissioner.
The confirmation is effective unless revised by
the excise commissioner or the government.
Rule 17(2) empowers the excise commissioner or the government to revise the
order of confirmation .. Rule 17 ( 4) provides that if the officer
conducting the sale rejects the highest bid or offer, he may either
accept the next highest bid or offer or re-sell the shop.
Rule 17
( 5) requires the person whose bid is accepted to make
a further deposit which together with the earnest money would
make up one month's rent.
The appellant made the deposit
required by r. 17 ( 5). His bid was accepted and was later confirmed by the divisional commissioner.
Neither the excise
commissioner nor the state government passed any order under
r. 17(2) revising the decision confirming the acceptance of his
bid.
Rule 19 provides as follows :-
"19. Successful bidder to apply for licence: Every
person to whom the right of retail vend of liquors is sold
or whose tender in respect thereof has been· accepted
undet these rules and who has made deposits as hereinbefore provided shall :-
( 1 ) at once apply in writing for lic~nce for such
shop confirmed in his name and within a week thereafter
furnish to the Tahsildar the details of boundaries of the
site selected by him for the location of the shop and a
statement in the prescribed form annexed to the notification showing details of the immovable property possessed by him or in which he has an interest together with
accurate and full details of encumbrances, if any, thereon;
A.,
B
c
I
F
G
·-
B
A
B
c
D
E
F
G
H
BHOOMA REDDY v. MYSORE (Bachawat, J.)
21
('2) within 15 days from the date of sale he shall
make such further deposit as with the deposit already
made under sub. r. 5 of Rule 17 shall make up 2 months
khist of all the shops confirmed in his name unless such
amour..t or larger amount or larger amount has alreadv
been deposited by him.
( 3) If on perusal of the statement of immovable
property furnished by the purchaser or on independent
enquiry, it is found that the purchaser is of doubtful
solvency:
( i) such purchaser shall make a deposit of 4
months rent besides the deposit of 2 months rent which
he has already made if he has not submitted solvency
certificate of his property or that of the property of his
sureties;
(ii) he shall execute a mortgage of his immovable
property in Mysore worth six months rentals of the
shops, in favour of the Governor of Mysore for all
moneys that may become due under the terms of the
contract with a power of sale in favour of the Governor
of Mysore to be exercised in default of payment thereof
by the purchaser; or
(iii) he shall get a surety or sureties who are residents of, and possess sufficient property in the Mysore
State, to execute a security bond for the due payment
of all money that may become due by him under the
terms of the contract and to execute a mortgage deed
,if his or their immovable property in favour of the
Governor of Mysore to be exercised in default of payment thereof by the surety or sureties or by the purchaser.
( 4) If the Tahsildar is not satisfied that the value
,f the immovable property rendered by the purchaser
as security is adequate, he may require such person to
produce in addition to mortgaging his property, a surety
or sureties to be approved by him. Such surety or sureties shall execute a security bond for the amount to
cover the deficiency as determined by the
Tahsildar
mortgaging his or their property in favour of the Governor of Mysore.
The sureties referred to above shall
submit to the Tahsildar -a statement in the Form annexed to these rules showing details of their immovable
property.
The purchaser shall be bound to fulfil the
aforesaid requirements within fifteen days from the date
of sale.
22
SUPREME COURT REPORTS
(1969] 3 S.C.R.
( 5 ) The purchaser shall get the bond
and
the
A
mortgage deed registered under the Indian Registration
Act, 1908 at his expense.
( 6) The purchaser or his surety shall proeluce an
encumbrance certificate-in cases where immovable property is mortgaged to the Governor of Mysore."
It is not alleged that the appellant did not furnish the. details of
the shop sites as required by r. 19 sub. r. ( 1) within 15 days of
the date of the confirmation of the sale.
The appellant made a
deposit of two months rent as require!l by r. 19 sub-r. (2). The
appellant did not furnish a statement of immovable properties
under r. 19 sub-r. (1), nor did not he furnish security or sureties under r. 19 sub-r. (3).
It is also alleged that he did not
apply for licences at once as required by r. 19 sub-r. (l). Rule
20(2) provides : "On failure to comply with the provisions of
rr. 17 and 19 the deposits already made shall be forfeited and
the right of retail venci of liquors in such shop or groups disposed
of in such manner under these rules, as the Excise CommissioneI
may direct".
No order was passed hy the excise commissioner
under r. 20(2).
In our opinion, the provision of r. 19 sub. r. ( 1) requiring
the successful bidder to furnish a statement of his properties to
the Tahsildar and the provisions of r. 19 sub-rr. (3) and (4)
do not apply where the shops in respect of which the right of
retail vend is sold is situated in more than one tahsil.
The opening part of r. 19 sub-r. ( l) requires the purchaser to furnish to
~the tahsildar" the location of the shops and the boundaries of
the shop sites.
The expression "the tahsildar" is not defined,
but it is reasonable to think that the details regardin~ the .shops
should be furnished to the tahsildar within whose tahs1l the shops
are situated. If the shops are situated in more than one tahsil,
the details can be furnished to several tahsildars.
But it is not
possible to give effect to the last part of sub-rule ( 1) and the
provisions of sub-rr. (3) and (4) in cases where the shops are
situated in more than one tahsil.
The statement of immovable
properties under the last part of sub-r. ( 1) can be furnished to
only one tahsildar so that he can peruse the same and on such
perusal or on independent inquiry ascertain
under
sub-r. ( 3)
whether or not the purchaser is of doubtful solvency and satisfy
himself under sub-r. ( 4 )whether or not the value of the immovable
properties tendered as security is adequate.
Sub-rr. (3) and ( 4)
do not contemplate findings by more than one tahsildar nor do
they provide any machinery for resolving the conflict of opinion,
if any, between two or more tahsildars.
In our opinion, the last
part of sub-r. (1) and the provisions of sub-rr. (3) and ( 4) do
not apply where the shops are situated in two or more tahsils.
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BHOOMA REDDY 11. MYSORE (Bachawat, J.)
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A
The right of retail vend sold to the appellant is in respect of shops
situated in 19 Tahsils in the districts of Raichur and Gulbarga.
Consequently, those provisions were not attracted to this sale and
the appellant was not required to comply with those provisions.
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The divisional commissioner, Gulbarga, could not record a
finding under r. 19 sub-r. ( 3) that the purchaser was of doubtful
solvency. Even a tahsildar could not record such a finding without making an independent inquiry where no statement regarding
immovable properties was furnished
under
sub-rule ( 1).
No.
independent inquiry under sub-r. (3) was made by any tahsildar.
For this reason also the appellant cannot be regarded as a person
of doubtful solvency and he was therefore not required to comply
with the proyisions of sub-r. (3). The appellant has so far deposited about Rs. 90,00,000/- and it is impossible to believe that
he is a person of doubtful solvency,
The remaining charge is that the appellant did not "at once"
apply for licences.
Rule 20 ( 2) provides for the forfeiture of the
deposits on failure to comply with the provisions of r. 19.
Under
the Mysore Excise Licences (General Conditions) Rules, 1967
a licensee is required to commence his business on July 1.
The
purpose of the Act and the Rules is achieved if the application for
licence is made within sufficient time so as to enable the issue of
licences before July 1.
Having regard to the object of the Act
and the Rules the expression "at once" in r. 19 sub.-r. ( 1) means
within a reasonable time before July l . It could not have been
intended that the deposits would be forfeited where the purchaser
applies for licence within a reasonable time. The appellant sufficiently complied with r. 19 sub-r. ( 1) by applying under Ex. B,
to the excise commissioner for permission to obtain licences and
by applying to the divisional commissioner on June 18
for the
issue of licences.
The divisional commissioner, Gulbarga was
not competent
to pass the impugned order (Ex. J) cancelling the sale.
Only
the excise comrnissioner or the state government could under
r. 17 ( 2) revise his previous order confirming the sale and on
such revision cancel the
sale.
The divisional
commissioner,
Gulbarga was not authorised by r. 17 (2) to revise his own order
or to cancel it.
In his notice dated June 19, the divisional commissioner, Gulbarga, stated that he would take action under
r. 20(2). In his noiice dated June 25, he asked the appellant to
show cause why the sale should not be cancelled and why the
deposits already made should not be forfeited to the government.
But he did not pass any order forfeiting the deposits. Nor was he
competent to pass any order under r. 20(2).
Only the excise
commissioner could pass such an order.
SUPREME COURT REPORTS
(1969] 3 S.C.R.
It foliows that the High Court was in error in holding that
A
.the appellant committed breaches of r. 19.
The finding of the
.divisional commissioner, Gulbarga, that the appellant committed
.such breaches is erroneous, nor was he competent to record the
.finding or to pass an order cancelling the sale.
In view of this conclusion it is not necessary to consider
whether r. 19 sub-r. (3) offends Arts. 14 and 19 of the Constitution and we express no opinion on the question. We cannot agree
with the proposition that the appellant is estopped from challenging the constitutionality and vires of the sub-rule. It is true that
I. 24 provides that the purchaser shall be bound by all the rules.
But if r. 19 sub-r. (3) offends Arts. 14 and 19 it is non est and
there can be no question of the appellant being bound by a rule
which does not exist. Though we express no opinion on the vires
<>f the sub-rule, we must observe that r. 19 is clumsily drafted, its
import is not cll".ar, its tight time-schedule works hardship and its
procedure is cumbersome. The government should immediately
-consider the question of re-drafting r. 19. It may be noted that
Mr. Narasaraju conceded that r. 19 is not beyond the rule-making
powers of the state government.
The appellant relied on the circular- No. EXE.1.1575/67
(Ex. E) dated December 12, 1967. Exhibit E is a letter from
1he excise commissioner to the deputy commissioner, Bangalore,
<>n the subject of securities to be furnished by the excise contractors. The letter stated that the procedure of r. 19 was cumbersome and not clear, that several deputy commissioners sought
clarifications on the subject and that the state government had
been moved to clarify and simplify the matter.
The excise commissioner directed that pending receipt of the government order
the following procedure should be followed :
In addition
to
-obtairiing two months' cash deposits, ( 1) two months cash security
might be accepted 3nd in the absence of cash security four months'
collateral security might be insistea; (2) if the deputy commissioner/tahsildar was doubtful about the solvency of the contractor
be could insist on six months' collateral security and (3) while
accepting the collateral securities care should be taken. to see that
·the contractor executed the necessary mortgage bond. Admitted1y, similar instructions were issued to other deputy commissioners
and were enforced in several districts. There is a dispute on the
question whether the circular was sent to the districts of Gulbarga
and Raichur. In so far as the circular attempted to modify r. 19
it was in-effective.
The excise commissioner, had no power to
abrogate or mi:>dify a rule framed under s. 71. On behalf of the
appellant it was argued that as the chief controlling autliority the
excise commissioner could frame regulations under..$. 3 read with
r. 24 and could issue general instructions on the subject of taking
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BHOOMA REDDY V, MYSORE (Bachawat, J,)
25
security in cases not covered by r. 19.
We express no opinion
on this question, as the government has already withdrawn the
circular.
But we must observe that relying on
this
circular
the appellant de,posited two months' rent as required
by
the
circular in addiuon to the two months' rent as required by r. 19
sub-r. (2) and that such deposits were duly made within 15 days
from the date of the sale. However, it is not necessary for the
appellant to rely on the terms of the circular. He has complied
with the provisions of r. 19 and the sale in his favour cannot t>e
cancelled.
On behalf of respondent No. 4 it is argued that the appellant
bought the right of retail vend as benamidar for some
other
person, that his benarni bid was opposed to r. 12 and could not
be accepted and that as the sale .of liquor by the real buyer without a licence in his favour was illegal iJll view of ss. 15 and 26,
the appellant was not entitled to any relief in view of the decision
in Venkata Subbayya v. Attar Sheik Mastan(1). The onus is
upon the respondent to prove that the appellant made a bena1ui
purchase.
It appears that the appellant is a retired inspector
drawing a pension of about R~. 75/- per month.
He is not an
income-tax or a wealth-tax assessee.
He does not own any property in Mysore State.
The appellant says that he owns immovable properties in Andhra Pradesh but he did not file the title deeds
in respect of them.
However, the appellant :ovlls in possession
of a large amount of ready ca>h.
Before June 25, he deposited
about Rs. 40 lakhs and thereafter deposited about Rs. 50 lalchs.
There can be no doubt that the appellant has the backing of
powerful financiers.
There is no specuic charge that some named
person is the real purchaser. From the materials on the record
it is not possible to record a finding that the appellant is a benamidar and thut that some other person is the real purchaser.
The
purchase is not illegal merely because the appellant obtained the
necessary funds from some financiers.
The government never
alleged that the appellant's bid was a benarni bid and opposed to
r. 12. His bid was accepted and such acceptance was subsequently confirmed.
Under r. 17 ( 1 J the confirmation is effective until
revised by the appropriate authority. It is neither alleged nor
proved that some person other than the appellant had been managing the shops and selling liquor in contravention of s. 15.
Respondent No . .4 has failed to establish contravention of either r. 12
or s. 15. The High Court was in error in holding that the appelant's bid was opposed to r. 12.
·
Having regard to the fact that the appellant
had
already
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deposited about Rs. 40 lakhs the divisional commissioner, Gulbarga, acted rather precipitately and harshly in cancelling the sale.
(I) A.l.R. 1949 Mad. 252.
7 Sup Ci/69:....3
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SUPREME COURT R.llPORTS
[I 969] 3 S.C.R.
.For the reasons already given, the order of cancellation (Ex. J)
A
is inv.alid. The order must be set aside and a writ of mandamus
musf'issue for the grant of licences to the appellant.
Some. complication arises out of the fact that the licences have
been granted to respondent No. 4 after the disposal of the writ
petitions by the High Court.
Licences cannot be given to both
the appellant and respondent No. 4 for retail vend of liquors in
respect of the same groups of shops.
In order to give effect to
our order for the issue of licences in favv.ir of the appellant it
is necessary to give the further direction that the licences issued
to respondent No. 4 should be cancelled.
We can give
this
direction as respondent No. 4 is a party to this appeal.
While holding that r. 17 sub-r. ( 4) did not compel the officer
conducting the sale to accept the next highest offer of respondent
No. 4 the High Court observed that the authorities concerned
should consider the advisibility of accepting his bid.
This observation is not in accordance with law and has given rise to unnecessary complications.
Rule 17 ( 4) provides that "if the officer conducting the sale rejects the highest bid or offer, he may
either accept the next highest bid or offer or re-sell the shop."
The sub-rule cannot be invoked if the officer conducting the sale
has accepted the highest offer.
In the present cas'e, the officer
accepted the appellant's highest offer and later confirmed it.
The
confirmation is still effective under r. 17 ( 1). If for some reason
the confirmation is subsequently revised or set aside, the officer
cannot act under r. 17 ( 4). In such a case there must be a fresh
disposal of the right of retail vend of liquor in accordance with
the Rules.
It follows that the bid of respondent No. 4 could not
be accepted under r. 17 ( 4) after the disposal of the writ petitions
on September 19.
It is rather surprising that the government acted so hastily
and issued licences to respondent No. 4 on or about September
18.
It is not quite clear how licences in respect of 1168 shops
could be issued on a single day.
The effect of this precipitate
action on the part of the government was that t.he appellant could
not on the next day obtain a stay of the operation 'of the High
Court's order.
There is ground for suspecting that the govern·
ment was favouring respondent No. 4.
•
In the result the appeal is allowed with cosis in this Court
and in the High Court.
The order passed by the High Court is
set aside.
Writ Petition No. 1889 of 1968
is
allowed.
The
order dated June 26. 1968 (Ex. J) is set aside.
Respondents 1
and 2 arc directed lo grnnt immediately licences to the appellant
to vend liqu0rs iu the combined groups of shops in Raichur and
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BHOOMA II.EDDY v. MYSORE ( Bachawat, I.)
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A
Gulbarga dlstricts for the remaining period of the year 1968-1969.
B
Respondents 1 and 2 are also directed to cancel forthwith the
licences issued to respon<lent No. 4 in respect of the aforesaid
groups of shops.
Y.P.
Appeal allowed.