Bhupendra Singh Dawar vs State of M.P. and Others

P.K. Jaiswal, J—By this writ petition under Article 226 of the Constitution of India, the petitioner is challenging the re-auction notification dated 24.6.2015 (Annexure P/4), whereby, ALR/F-2 group license for the foreign liquor shops at Aambua, Bhabhra and Sejawada and the country liquor shop at Bhabhra, which has been allotted to the petitioner had been put for their auction and fresh allotment and order of allotment license has been made in favour of respondent No. 4. He has also challenged the order dated 30th June, 2015 (Annexure P/8), by which license granted to him for ALR/F-2 group has been cancelled by the respondent No. 3.

Brief facts of the case are that the respondent No. 1 in exercise of the power conferred upon it by M.P. Excise Act, 1915 and Rules made there-under, a notification was issued that shops of group ALR/F-2 (foreign liquor at Aambua, Bhabhra & Sejawada and country liquor shop at Bhabhra) would be auctioned for 2015 - 16.

In the preceding year, ie., 2014 - 15, the contract was awarded for Rs. 9,04,17,084 and as per Clause 8 of the conditions of policy dated 21.1.2015, reserve price is to be 15% higher than the allotment price of the preceding financial year, ie., 2014-2015. As per liquor policy of the State Government, reserve / up- set price for the 2015-16 was Rs. 10,39,79,647/-.

The petitioner - Bhupendra Singh Dawar, participated and gave the highest bid for sale of shops of ALR/F-2 group in the amount of Rs. 38,85,00,077/- for 2015 -16. He being the highest bidder and his bid was more than three and half times of the up-set price amounting to Rs. 38,85,00,077/-. The presiding officer accepted the highest bid of the petitioner. After adjusting 5% of the earnest money, which was submitted at the time of offer and by depositing the rest of the 5% amount, his bid was finalized and agreement to this effect was executed. Clause 35 of the terms and conditions, which was published in M.P. Gazette on 21.1.2015 is relevant which reads as under :-

As per Clause 35.1, he has to deposit 30% of the amount in the first quarter, 20% of the amount in the second quarter, 25% of the amount in the third quarter and 25% of the amount in the fourth quarter, apart from 12% as security deposit. The petitioner as per Clause 22 gave security of Rs. 5,57,75,000/- in the shape of bank guarantee. After executing the agreement, he started contract w.e.f. 1st April, 2015. The license was issued on 30th March, 2015 and from 1st April, 2015, he started foreign liquor and country shops of group ALR/F-2. He was regularly depositing license fee monthly, as per installment, as fixed by the respondents. As per terms of the license, he has to deposit monthly installment in first and second quarters of the month. The license was given to operate the shops for the year 2015 - 16, in accordance with the Rules/Conditions made vide notification dated 21.1.2015. In the month of April and May, 2015, there was delay in depositing the dues of basic license fees, but the same was deposited by the petitioner. Due to delay in payment of license fee notice was issued and a fine of Rs. 500/- and Rs. 800/- was imposed in the month of April and May, 2015 respectively.

For the month of June 2015, a notice was issued by the authorities intimating him that he has arrears on 17.6.2015 of the dues of basic license fee and duty, which was payable upto 15.6.2015, amounting to Rs. 1486340/-. The petitioner submitted the reply to the show cause notice vide letter dated 24.6.2015 and stated that he has deposited Rs. 20,81,410/- vide challan No. 13/22.06.2015 and may be given two days time to deposit the balance amount. As he has not taken any steps to deposit the dues in terms of his reply on 24.6.2015 (Annexure P/2), demand notice was issued to pay the balance amount upto 30th June, 2015, which comes to Rs. 2,99,87,011/- (Rs. 96,59,509 duty + 2,03,22,502/- basic license fees) and that if he does not pay the same, the license would be cancelled, the shops would be re-auctioned. Simultaneously, on the same day, i.e., 24.6.2015 (Annexure P/4), a fresh bid was invited for the same group i.e., ALR/F-2 for the rest of the period from 1.7.2015 to 31.3.2016. As per, condition No. 8 of notification dated 21.1.2015, the respondent No. 3 fixed the up-set/reserve price of Rs. 27,40,69,800/-. Relevant part of the notice inviting bid Annexure P/4 reads as under :-

As per Column No. 8, the respondent No. 3 fixed the reserve/upset price around Rs. 27.40 Crores. Clause 8 of notification dated 21.1.2015 reads as under :-

From notice inviting auction dated 24.6.2015 (Annexure P/4), it is very clear that the respondent No. 3 on the basis of Clause 8.1 and 8.2 fixed the up- set price for re-auction of group ALR/F-4 for the period from 2.7.2015 to 31.3.2015 amounting to Rs. 27,40,69,800/-.

The petitioner failed to deposit the dues for the month of June 2015 and, therefore, his license was cancelled from mid night of 30th June, 2015, under the power conferred under Section 31 of M.P. Excise Act, 1915 and Clause 35.7 of the notification dated 21.1.2015, by order dated 30.6.2015 (Annexure R/8) and they would run the shops in question departmentally till re-auction bid is finalized by the respondent No. 3. Relevant part of the order reads as under :-

On the basis of NIT dated 24.6.2015 (Annexure P/4), in respect of group ALR/F-2, the respondent No. 3, received single tender of respondent No. 5 - Firm Om Shivam Group, through Dhananjay Gupta, R/o., Balod, District Balod (Chhattisgarh) and his offer was Rs. 12,71,00,000/-, (Rs. 12.71 Crores), which was less than 60% of the up-set price of Rs. 27,40,69,800/- as fixed by the respondents No. 1 to 4.

The respondents No. 3 contrary to Clause 8 of notification dated 21.1.2015, decided to accept the bid of respondent No. 4 for a meager amount of Rs. 12,71,00,000/- and recommended the same to the respondent No. 2 - Excise Commissioner for accepting the aforesaid contract and made the following recommendations on 1.7.2015, which reads as under :-

The offer of the respondent No. 4, which is not co-related to reserve/up-set/base price as per Clause 8.1 & 8.2 of the conditions of notification dated 21.1.2015. The bid of the respondent No. 4 was at a price lower than up-set/reserve price. It is well settled that a welfare State as the owner of the public property has no such freedom while disposing of the public property. All its attempt must be to obtain the best available price while disposing of its property because greater the revenue, the welfare activity will get a fillip and shot in the arm.

It is not disputed by the respondents No. 1 to 3 that in the notice of auction, the up-set price was Rs. 27,40,69,800/- (approximately 27.40 Crores) and no corrigendum was issued that they have reduced the reserve/up-set price from 27,40,69,800/- to 10,39,79,647/- and without inviting fresh offer, they for the first time after receipt of offer of the respondent No. 4, secretly recommended the Commissioner (Excise), not co-related to any reserve price made by them to accept the offer of Rs. 12.71 Crores, without inviting fresh offer from the public. This shows the highhandedness of the respondent No. 3 in the matter of dealing with State largesse. If fresh publication was made fixing the up-set price of Rs. 10,39,79,647/- then, they could have received number of offers, but in order to give the contract to 4th respondent, they adopted a novel method and privately reduced the up-set price to give undue benefit to the respondent No. 5 and caused loss to the State exchequer. The respondent No. 3 made the aforesaid recommendation dated 1.7.2015, for awarding the contract to the respondent No. 4, not co-related to any reserved price fixed in Annexure P/4.

To our surprise, the respondent No. 2 accepted the aforesaid recommendation and awarded the contract to respondent No. 4 for a meager amount of Rs. 12.71 Crores. Whereas, as per the condition No. 8 of notification dated 21.1.2015, the State authorities rightly fixed the up-set price for valuation of contract of nine months of the total amount of Rs. 27,40,69,800/- + 15% over and above the contract value of nine months, but erred in awarding for a meager amount of Rs. 12.71 Crores. This shows the eagerness of respondents No. 3 and 4 to anyhow terminate the statutory contract of the petitioner, when more than Rs. 5.57 Crores is lying in the shape of bank guarantee, ie., 12% security deposit of total value of the contract, whereas, the dues of the month of June 2015, was only to the tune of Rs. 2,97,03,679/- much less than the aforesaid amount.

It is well settled that the disposal of public property partakes the character of a trust in that in its disposal their should be nothing hanky panky and that it must be done at the best price so that large revenue coming into the coffers of the State administration would serve public purpose viz. the welfare state may be able to expand its beneficent activities by the availability of larger funds. The Hon''ble Supreme Court, time and again has said that where the Government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largess, the Government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion of the Government in the matter of grant of largesse including award to jobs, contracts, quotas, licences etc., must be confined and structured by rational, relevant and non- discriminatory standard or norm and if the Government departs from such standard or norm in any particular case or cases, the action of the Government would be liable to be struck down, unless it can be shown by the Government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.

As per terms and conditions of the agreement and notification dated 21.1.2015, the contract provides for payment of monthly excise duty and license fee 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 sub- section (1) of Section 31. It is true that before cancelling the license, 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 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. In the present case, the default was for payment of licence fee and excise duty for the month of June 2015. The authorities evidently acted in a haste. They on 24.6.2015, issued a notice to the petitioner to deposit the dues on or before 30th June, 2015 and simultaneously, issued notice for auction of the shops of which licence was granted to the petitioner and also proposed for cancellation of licence when 12% security amount of Rs. 5,57,75,000/- is lying with them. In the re-auction notice, they fixed the reserve price of Rs. 27,40,69,800/-, but after receipt of bid of respondent No. 5 bid of Rs. 12.71 Crore they privately reduced the reserve price from Rs. 27,40,69,800/- to Rs. 10.35 Crores and awarded the contract to the respondent No. 5 and recommended for reduction of reserve/up-set price to the respondent No. 2 - Commissioner Excise and granted approval of re-auction offer of the respondent No. 5. The object of all excise laws is two-fold viz., to raise revenue and to regulate the trade in liquors, which is anxious substance. The only right of the licensor is to seek enforcement of the terms of contract (which is statutory in nature) and the statutory provisions governing the contract. The consideration aforementioned should be kept in mind while examining complaints of violation of statutory Rules, conditions and terms of contract as well as complaints of lack of reasonable opportunity.

The impugned action is in violation of Clause 8.1 and 8.2 of notification dated 21.1.2014. The aforesaid violation of Clause 8.1 and 8.2 of condition is resulting in loss to the State exchequer. In all fairness, if authorities want to reduce the reserve price then, they have to invite fresh notification regarding re- auction to secure the best market price available in market economy.

For these reasons, we are of the view that the respondents No. 2 to 4 have no such freedom while disposing of the public property. The bid of the respondent No. 5 did not represent the market price, viewed from all angle. Thus, we quash licence granted in favour of the respondent No. 5. We are also of the view that no sufficient opportunity was given to the petitioner before cancelling his licence and before taking action under Section 31 of M.P. Excise Act, for realizing damages suffered by the State. Before forfeiting the security deposit, a fresh opportunity of hearing be provided to the petitioner within a period of two weeks from the date of the order and if he is ready to deposit the dues of June 2015 within the aforesaid period then, he be permitted to continue with the licence awarded to him for 2015 - 16, strictly as per the terms of the contract, failing which the authorities are free to forfeit the security deposited by encashing the bank guarantee of Rs. 5,57,75,000/- lying with them and also issue notification regarding re-auction after due publication in the daily news paper. The licence for the remaining period should be awarded strictly as per notification dated 21.1.2015.

In view of the aforesaid, we quash the order of cancellation dated 30.6.2015 and the licence awarded to the respondent No. 5. During the intervening period, the department would run the shops in question till re-auction bid is finalized by the authorities.

In the result, W.P. No. 4483/2015, is allowed to the extent as indicated herein above, but without any orders as to costs.