Vijay Kumar and Company vs The State of Haryana and Others

G.S. Singhvi, J.—These, petitions have been filed by the licensees of country liquor and Indian Made Foreign Liquor of the States of Punjab and Haryana and the Union Territory of Chandigarh/ with almost an identical prayer to direct the Respondents to pay interest to them at the rate of 18 per cent on the security deposited by them and to adjust the amount of interest against the last instalment of licence fee payable by the Petitioners. Keeping in view the fact that the main prayer made in all the petitions is identical, we are deciding; them by a common order.

In response to the announcement made by the Government of Punjab and Haryana and Union Territory of Chandigarh for auction of licences for retail vends of country liquor and the whole-sale as well as retail vends of foreign liquor for the year 1995-96, the Petitioners gave their bids along with other competitors. Their bids were accepted by the the competent authorities. The Petitioners deposited the requisite license fee and they were granted L-14A licence for country liquor vends and L-2 licence for foreign liquor. Petitioners in writ petitions other than Civil Writ Petition Nos. 150 of 1996 and 1849 of 1996 have been given these licences for various districts of Haryana. Petitioner M/s Sat Pal Surinder Singh and Company (C.W.P. No. 150 of 1996) has been granted licence by the Licensing Authority of Chandigarh. Petitioners M/s Surinder Kumar and Company and two others (C.W.P. No. 1849 of 1996) have been granted licences for the district of Patiala. Each of the Petitioners deposited 16 2/3 per cent of the license fee both for the country liquor and the foreign liquor vends by way of security in order to get licences L-14A and L-2, respectively. By way of illustration, it may be stated that M/s Vijay Kumar and Company gave highest, bid of Rs. 4,07,00,000 for L-14A licence. It deposited a sum of Rs. 88,18,400 as security in terms and conditions of the auction. Similarly, it gave a highest bid of Rs. 2,60,56,226 for L-2 licence. A sum of Rs. 43,42,811 was deposited in terms of the auction. All the Petitioners have received country liquor as well as foreign liquor from the Respondents in accordance with the terms of the auction and the licences. Now they have sought a mandamus directing the Respondents to pay interest to them on the amount deposited by them with the Governments in accordance with the conditions of auction. The Petitioners have founded their claim on the premise that they are required to pay interest at the rate of 1.5 per cent per month for the whole amount of instalment in Case of delay in the payment of the instalment beyond 15th day of the month, apart from the threat of closure of the vend and, therefore, they should also be paid interest on the amount deposited by them before issue of the licences. The Petitioners have pleaded that once the Governments have transferred their right to sell liquor to them, the security money cannot be used by the Governments without payment of interest. The Petitioners have placed reliance on the ''directions given by the Departments of Forest. Food and Supplies and Local Bodies for levy of octroi etc. and have submitted that if in other contracts interest is payable on the security deposited, there is no reason why the Governments should not pay interest to them on the huge amount deposited by them in the form of security. Reliance has also been placed by the Petitioners on the provisions of the Interest Act, 1978, the Negotiable ''Instruments Act, 1881, Section 34 of the CPC and the common law principles. The Petitioners have contended that the Governments have been earning interest by retaining their money and, therefore, in equity also, they are entitled to receive interest on the security deposits.

In their reply to Civil Writ Petition No. 18432 of 1995, the Respondents have challenged the locus standi of the Petitioners to seek writ of mandamus on the ground that after having entered into a contract, the Petitioners cannot challenge the conditions incorporated in the contract or claim interest on the amount deposited by it. The Respondents have pleaded that the amount deposited by the Petitioner is in the nature of advance licence fee in respect of the liquor vends auctioned in its favour and no interest is payable either under the terms of the excise policy or under the terms and conditions of the auction. The Respondents have asserted that it would have been perfectly legitimate for the Government to call upon the bidders to pay the entire licence fee is advance before, the commencement of the business because the Government could insist on fulfilment of a particular condition as condition precedent to the transfer of its exclusive right to deal in liquor and after having entered into a contract with the Government, the Petitioner cannot claim that it has been subjected to discrimination. The Respondents have further stated that the total bid money is recoverable in eleven instalments out of which Licensee is required to pay nine instalments upto the month of December and balance 10th and 11th instalments are ordinarily adjustable against the initial amount deposited by the Petitioner as per the terms and conditions of the auction subject to the forfeiture clause. The Respondents have seriously disputed the "claim of the Petitioner to" be awarded inte''rest on the principle of common law or equity as also on the basis of provisions of the interest Act, 1978 or the Negotiable Instruments Act, 1881. Replies filed on behalf of the Government of Punjab and the Union Territory of Chandigarh are also on similar lines. The Government of Punjab has pleaded that the amount required to be deposited by the Petitioners is strictly not a security but is a part of the licence fee and if the conditions of auction were not acceptable to the Petitioners, they were at liberty not to participate in the auction. According to the Respondents, after having accepted the terms and Conditions of auction and having given bids pursuant to those conditions, the Petitioners cannot now claim that they should be paid interest on the amount deposited by them.

All the learned Counsel are in agreement that the provisions of the Punjab Excise Act. 1914 and the Rules framed thereunder are applicable to the grant of licences in the States of Punjab and Haryana and the Union Territory, Chandigarh. The Haryana Legislature made some amendment and separate Rules have been framed by the Government of Haryana in regard to the various matters covered by the provisions of the Punjab Excise Act, 1914.. Section 34 of the Punjab Excise Act, 1914, falls in Chapter VI which relates to licences, permits and passes. This Section deals with fees for terms,'' conditions and form of and duration of licenses permits and passes. Sub-section (2) thereof refers to ''Security''. The same. read as under:

Fees for terms, conditions and form of, and duration of licenses, permits and passes:

(1) Every licence, permit or pass granted under this Act shall be granted:

(a) on payment of such fees, if any,

(b) subject to such restrictions and on such conditions.

(c) in such form and containing such particulars.

(d) for such period, as the Financial Commissioner may direct.

(2) Security: Any authority granting a licence under this Act may require the licensee to give such security for the observance of the terms of his licence or to make such deposit in view of security, as such authority may think fit.

Liquor Licences are granted in the State of Punjab under the Punjab Liquor Licence Rules, 1956, whereas in the State of Haryana, the same are governed by the Haryana Liquor Licence Rules, 1970. These rules are also almost pari materia and as the majority of the cases relate to the State of Haryana, we shall make reference to the provisions contained in the Haryana Liquor Licence Rules, 1970, vwhich shall hereinafter be referred to as the 1970 Rules. Rule 2 of these Rules specifies the classes of licenses and authorities empowered to grant and renew them. L-J2 licence is for wholesale and retain vend of foreign liquor to the public only. It has to be granted by auction or private contract. Collector is the competent authority and it is not renewable. L-14 licence pertains to retail vend or country spirit for consumption "on and off" the premises. It is also to be granted by auction or private "contract. Collector is the competent authority in case of auction. Private contract can be granted by the Financial Commissioner. This licence is also not renewable Rule 35 empowers the grant of these two licences on fee fixed by auction. Rule 36 contains the procedure, for grant of licenses. For the purpose of these cases, it would be profitable to quote Rules 35 and 36.(1), (4), (5), (25), (26) and (27) of the 1970 Rules:

35 Auction:

The following licenses are granted on fee fixed by auction. The Financial Commissioner, however, reserves the right to grant licenses by private contract.

L.2, L.14, L.14-A and L.14-B.

Procedure for grant of licenses by auction:

(1) Subject to such changes as the Excise Commissioner may make in the number and location of excise vends each year before the annual auction, the minimum license fee for each group or vend, which shall be fixed by the Collector with the approval of the Excise Commissioner having regard to the estimated sales and other incidental factors pertaining to each vend. The minimum license fee so fixed for each group/vend shall be announced at the time of auction. If the Collector

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of auction or before 31st of March whichever is earlier. The entire amount of security of its ninety per cent as may be deemed proper by the Financial Commissioner shall be adjusted against the last instalments of license fee payable by him unless the same or any part thereof is forfeited or adjusted against any amount of fee or penalty due from him in respect of his licence. In addition, the successful bidder for a license of country liquor will have to deposit at the fall of the hammer an additional security equal to 2.5 per cent of the entire bid money in case the increase in bid money is more than 15 per cent but less than or equal to 20 per cent and other 2.5 per cent of the entire bid money, in case the increase in bid money is between 20 per cent and 25 per cent over the reserve price fixed for the vend/group of vends. The reserve price shall be fixed on the basis'' of) the license fee for the preceding year in respect of all the vends that fall in the area of the group of vends to be auctioned.

The entire amount of additional security, including l/3rd of the bid money deposited will be adjustable towards the last instalments of license fee.

In the event of the amount of security or any part thereof having been forfeited or adjusted the deficiency shall be made good by the licensee within seven days of the happening of such an event, failing which the license shall be liable to cancellation by the competent authority.

In case of adjustment of ninety percent amount of security, the remaining ten percent of security shall be refundable to the licensee after deducting therefrom any kind of arrears due to the Government from him after the close of the financial year.

(26) A person to whom the liquor vend has been sold shall pay by the 15th of the month in which the begins business under his license and by the 15th of every subsequent month, an instalment equal to one eleventh of the total annual license fee till the entire license fee has been realised. Deputy Excise and Taxation Commissioner of the district may authorise the licensee to deposit the amount of instalment or part thereof up to the last day of the month; for which the instalment is due on the condition that the licensee pays interest'' at the rate of eighteen per cent per annum for the period from the twentieth day of the month to the date of payment of the instalment or any part thereof deposited after the due date. The date of payment shall be included in the period for which interest to be discharged- In case the instalment or any part thereof along with interest is not paid up to the end of the month, apart from closure of the vend, interest shall be charged for the whole month.

In the event of failure to pay the instalment or instalment along with the interest, as the case may be, by the due date, the vend shall cease to be in operation on the first day of the '' following month and shall ordinarily be sealed by the Deputy Excise and Taxation Commissioner or the District. Excise and Taxation Officer Incharge of the district or any other official authorised by him and his licence may be cancelled.,

(27) If any person whose bid has been accepted by the Presiding Officer at the auction fails to deposit the amount of security equivalent to 16 2/3 per. cent of the total licence* fee or refuses to accept the licence, the Collector or any officer not below: the rank of Excise and Taxation Officer authorised by licence by the Financial Commissioner in this behalf, may resell it by public auction and any deficiency in licence fee shall be recoverable from the defaulting bidder as arrears of land revenue or land holding tax.

We may also quote Para 6 of Annexure.P-1 which deals with the requirement of deposit of 16 2/3 per cent of annual licence fee by way of security. The same reads as under:

6(i) The successful bidder shall deposit by way of security an amount equivalent to 16? per cent of the annual licence fee both for country liquor and Indian Made Foreign Liquor vends.

He shall have to pay a sum equal to five per cent (5 per cent) of the total amount of Ms annual license fee in cash at the fall of the hammer and the remaining amount of 11� per cent within a period of ten days of the date of auction on or before 31st March, 1995, whichever is earlier. The entire amount of security or its ninety per cent, as may be deemed proper by the Excise and Taxation Commissioner, shall be adjusted against the last instalments of license fee payable by him unless the same or any part thereof is forfeited or adjusted against any amount of fee or penalty due from him in respect of Ms licence.

In addition, the successful bidder for a license of country liquor will have to deposit at the fall of the hammer an additional security equal to 2.5 per cent of the entire bid money in case the increase in bid money is more than 15 per cent but less than 20 per cent and Anr. 2.5 per cent of the entire bid money in case the increase in bid money is more than 20 per cent but less than 25 per cent over the reserve price fixed for the group of vends. The reserve price shall be fixed on the basis of the licnese fee for the year 1994-95 in respect of all the vends that fall in the area of group of vends to be auctioned for the year 1995-96. However, beyond 25 per cent increase, in order to check speculative bidding, the Presiding Officer may demand l/3rd of the total bid money in cash or Bank Draft at the time of auction. The entire amount of additional security including l/3rd amount will be adjustable towards the last instalments of the license fee. In the event of the amount of security or any part thereof having been forfeited or adjusted the deficiency shall be made good within seven days of the happening of such an event failing which the license shall be liable to cancellation by the competent authority.

In the case of adjustment of ninety per cent amount of security, the remaining ten per cent of the security shall be refundable to the licensee after deducting therefrom any kind of arrears if any due to the Government from him after the close of the financial year.

(ii) If any person whose bid has been accepted at the auction fails to make deposit of the amount of security in time or refuses to accept the licence, the licence may foe resold by public, auction or private contract by the competent authority and any deficiency in license fee and all expenses of such resale or attempted resale shall be recoverable from the said person in the same manner as laid down in Section 60 of the Punjab Excise Act, 1914.

(iii) The successful bidder granted a license shall pay by the,15th of the month in which he begins his buisness under his license and by the 15th of every subsequent month rani instalment equal to 1/llth of the total, annual license fee till the entire license fee has been realised.

In the event of his failure to pay the instalment or any past thereof by the due date, the Deputy Excises and Taxation Commissioner of the district concerned may authorise the licensee to deposit the amount of instalment of part thereof. up to the last day of the month for which the instalment. is due on the condition that licensee pay the interest at the rate of 1.5 per cent per month for the period of delay from the 15th of the month up to the end of the months. The date of payment shall be included in the period for which interest is to be charged. In case the instalment or any part thereof along with interest is not paid up to the end of the month, apart from closure of the vend, as given in-next para, interest shall be recoverable for the whole month.

If the licensee fails to deposit the instalment along with interest, as the case may be up to the last day of the month the vend would cease to be in operation on the first day of the following month. The Deputy Excise and Taxation Commissioner of the district concerned or any other official authorized by him would ordinarily seal the vend(s) is/are not sealed and is/are allowed to operate then interest shall be charged on the arrears of license fee up to the date of the payment of the license fee for the total period starting from the 1st day of the month in which the fee was payable. This shall be in addition to the penalty provisions that may be brought into operation against the licensee under the Punjab Excise Act. 1914 and rules framed thereunder.

(iv) In the event of cancellation of a licence for the wholesale and retail vend of foreign liquor to public and retail vend of country spirit including Rum and Gin of 50 degree proof, the Collector may resell it by public auction in accordance with the procedure laid down in Rule 36(28) of the Haryana Liquor License Rules, 1970 and in addition he may prescribe the manner under which the license fee and the amount of security is to be realised.

From the above quoted provisions of the 1914 Act, 1970 Rules arid the conditions incorporated in the notice issued by the Government for auction of the licences, it is clear that the Government decided to invite bids for grant of licences by way of auction. While doing so, the Government made it clear that it would be necessary for the successful bidder to deposit in advance a sum equivalent to 16 1/2 per cent of the annual license fee meant for country liquor as well as the Indian Made Foreign Liquor vends--The mode of payment has also been indicated in para 6 of Annexure P-l. The Petitioners knew it very well that if they were to give bid and it was found to be highest, they will be required to deposit a specified amount as a part of annual license fee before licence would be issued in their favour. The offer in the form of highest bid given by the Petitioners was acceptable to the Government on fulfilment of the conditions specified in Annexure P-l. The Petitioners volunteered to fulfil those conditions and thereafter the Government granted licence to them. The Petitioners cannot, therefore, challenged the terms and conditions incorporated in Annexure P-l. and the conditions of the licence by arguing that they are arbitrary or unreasonable.

The amount equivalent to 16$ per cent of the annual license fee though described as security in the Act as well as the Rules and Annexure P-l, in substance it is a price payable by the person who seeks licence to sell liquor--both country liquor and foreign liquor. The Government is possessed with the exclusive privilege to deal in the liquor and. therefore, the one, who wants to get a licence to sell liquor has to pay a price for purchase of the privilege and it is not open to such person to subsequently plead that the conditions of the contract are arbitrary or unreasonable.

In Nashirwar and Others Vs. State of Madhya Pradesh and Others, , their Lordships made reference to an earlier decision in Krishna Kumar Narula etc. Vs. The State of Jammu and Kashmir and Others, , and held that the State had the exclusive right or privilege of manufacturing and selling liquor, that it had the power to hold a public auction for granting the right or privilege to sell liquor, that traditionally intoxicating liquors were the subject matter of State monopoly and that there was no fundamental right in a citizen to carry on trade or business" in liquor.

In liar Har Shankar and Others Vs. The Dy. Excise and Taxation Commr. and Others, , a Constitution Bench reviewed the case law and then held:

In. our opinion, the true position governing dealings in intoxicants is as stated and reflected in the Constitution Bench decisions of this Court in The State of Bombay and Another Vs. F.N. Balsara, , Cooverjee B. Bharucha Vs. The Excise Commissioner and the Chief Commissioner, Ajmer and Others, ; The State of Assam Vs. A.N. Kidwai, Commissioner of Hills Division and Appeals, Shillong, ; Nagendra Nath Bora and Another Vs. The Commissioner of Hills Division and Appeals, Assam and Others, ; Amar Chandra Chakraborty Vs. The Collector of Excise, Government of Tripura and Others, . and the The State of Bombay Vs. R.M.D. Chamarbaugwala, As interpreted in State of Orissa and Others Vs. Harinarayan Jaiswal and Others, and Nashirwar and Others Vs. State of Madhya Pradesh and Others, . There is no fundamental right to do trade or business in intoxicants. The State, under its regulatory powers, has the right to prohibit absolutely every form of activity in relation to intoxicants--its manufacture, storage, export, import, sale and. possession. In all their manifestations, these rights are vested in the State and indeed without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants.

In the same very case, the Supreme Court reiterated that power of the Government to charge a price for parting with its right constitute the essence of the matter. While making reference to Sections 27, 34 and 59 of the 1914 Act, the Supreme Court observed:

Section 27 of the Act recognises the right of the Government to grant a lease of its right to manufacture, supply or sell intoxicants. Section 34 of the Act read with Section 50 (d) empowers. The financial Commissioner to direct that a licence, permit or pass be granted under the Act on payment of such fees and subject to such restrictions and on such conditions as he may prescribe. In such a scheme; it is not of the assence whether the amount charged to the licen sees is pre-determined as in the appeals of Northern India Caterers and of Green Hotel or whether it is left to be determined by bids offered in auctions held for granting those rights to licensees. The power of the Government to charge a price for parting with its rights and not the mode of fixing that price is what constitutes the essenee of the matter: Nor indeed does the label affixed to the price determine either the true nature of the charge levied by the Government or its right to levy the same.

The Supreme Court also rejected the theory that the license fee is a tax or fees as understood in common parlance of commercial transactions and held:

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(c) Potable liquor as a beverage is an intoxicating and depressant drink which is dangerous arid injurious to health and is, therefore, an article which is res extra commercium being inherently harmful. A citizen has, therefore, no furdamental right to do trade or business in liquor. Hence, the trade or business in liquor can be completely prohibited.

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(e) For the same reason, the State can create a monopoly either in itself or in the agency created by it for the manufacture, possession, sale and distribution of the liquor as a beverage, and also sell the licences to the citizens for the said purpose by charging fees. This can be done under Article 19(6) or even otherwise.

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(h) The State can adept any mode of selling the licences- for trade or business with a view to maximise its revenue so long as the method adopted is not discriminatory.

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(j) The mere fact that the State livies taxes or fees on the production, sale and income derived from potable liquor whether the production, sale or income is legitimate or illegitittiate, does not make the State a party to the said activities. The power of the State to raise revenue by levying taxes and fees should not be confused'' with the power of the State to prohibited or regulate the trade or business in question. The State exercises its two different powers on such occasions. Hence the mere fact that the State levies taxes and fees, on trade or business in liquor or income derived from it, does not make the right to carry on trade or business in liquor a fundamental right, or even a legal right when such trade or business is completely prohibited.

It must, therefore, now be treated as ceneladed that the State has the exclusive privilege in the matters pertaining to the business of liquor and it is the State which can permit a citizen to carry on trade of liquor subject to specified'' limitation. It is also open to the State to adopt any mode of selling" the licences for trade or business with the object of earning the maximum revenue

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contend that they are entitled to the amount of interest at the rate of 18 per cent per annum merely because the Government is entitled to charge interest at that rate as and when they commit default in payment of the instalments. In fact, incorporation of a provision requiring the Petitioners to pay interest in case of default in the payment of the instalments and absence of such a provision for payment of interest to the Petitioners show that the Government had made it clear to the Petitioners, even before they gave their bids that no interest would be payable to them on the amount of the advance license fee although they will be required to pay interest in case of failure to deposit the instalments.

Chapter VI of the Negotiable Instruments Act, 1881 relates to payment and interest. Section 78 says that payment is to be made to the holder of the instrument. Section 79 deals with payment of interest when rate is specified. Section 80 relates to payment of interest when no rate is specified. These three Sections are reproduced for ready reference:

To whom, payment should be made: Subject to the provisions of Section 82, Clause (c), payment of the amount due on a promissory note, bill of exchange of cheque must, in order to discharge the maker or acceptor, be made to the holder of the instrument.

Interest when rate specified: When interest at a specified rate is expressly made payable on a promissory note or bill of exchange, interest shall be calculated at; the rate specified on the amount of the principal money due thereon, from the date of the instrument, unit tender or realization of such amount, or until such date after the institution of a suit to recover such amount as the Court directs.

Interest when no rate specified:When no rate of interest is specified in the instrument, interest on the amount due thereon shall, notwithstanding any agreement relating to interest between any parties to the instruments, be calculated at the rate of eighteen per centum per annum, from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as the Court directs.

Explanation:When the party/charged is the indorser of an instrument dishonoured by non-payment, he is liable to pay interest only from the time that he receives notice of the dishonour.

A close look at the above-quoted provisions shows that all of them relate to instruments, promissory note and bill of exchange, and interest is payable on the specified rate or at 18 per cent per annum on the amount specified in the promissory note, bill of exchange or cheque. None of these provisions relates to payment of interest in a case where a person has been granted license and he is made to pay advance money as a part of contract for grant of licence. We, therefore, hold that on the basis of the provisions of the Negotiable Instruments Act, 1881, the Petitioners are not entitled to claim interest.

Coming to the provisions of the Interest Act, 1978, we may. refer to Sections 2(c), 3 and 4 of that Act. These provisions are also reproduced below for ready reference:

(C). "debt" means any liability for an ascertained sum of money and includes a debt payable in kind, but does not include a judgment debt ;

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Power of Court to allow interest:(1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damaegs already paid is made, the Court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part, of the following period, that is to say:

(a) if the proceedings relate to a debt by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings ;

(b), if the proceedings do not relate to any such debt, then from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim, to the person liable that interest will be claimed, to the date of institution of the proceedings:

Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such repayment.

(2) where, in any such proceedings as are mentioned in Sub-section (1):

(a) judgment, order or award is given for a sum which, apart from interest on damages, exceeds four thousand rupees, and

(b) the sum represents or includes damages in respect of personal injuries to the Plaintiff or any other person or in respect of a person''s death, then the power conferred by that subjection shall be exercised so as to include in that sum interest on those damages or on such part of them as the court considers appropriate for the whole or part of the period from the date mentioned in the notice to the date of institution of the proceedings, unless the Court is satisfied that there are special reasons why no interest should be given in respect of those damages.

(3) Nothing in this section,--

(a) shall apply in relation to--

(i) any debt or damages upon which interest is payable as of right, by virtue of any agreement ; or

(ii) any debt or damages upon Which payment of interest is barred, by virtue of an express agreement ;

(b) shall affect--

(i) the compensation recoverable for the dishonour of a bill of exchange, promissory note or cheque, as defined in Negotiable Instruments Act, 1881; or

(ii) the provisions of Rule 2 of Order II of the First Schedule to the Code of Civil Procedure, 1908 ;

(c) shall empower the court to award interest upon interest.

Interest payable under certain enactments: (1) Not-withstanding anything contained in Section 3, interest shall be payable in all cases in which it is payable by virtue of

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the year. Therefore, neither u/s 3 nor u/s 4 of the 1978 Act, the Petitioners can claim interest from the Government.

In this connection, it will be useful to refer to the decision of the Supreme Court in Ferro Alloys Corps. Ltd. v. A. P. State Electricity Board JT 1993 (3) S.C. 83. That was a case in which various consumers of. electricity had put up claim for award of interest on the cash security required to be deposited by them as per the condition of supply. While holding that the object of the security was to ensure proper payment of bills, their Lordships negatived the argument that as per the provisions of the 1978 Act, the Petitioners were entitled to be paid interest. After making reference to Section 4 of the Interest Act, 1978, their Lordships held:

This section has no application to a case where on account of a contractual term or a statutory provision payment of interest is not permitted.

The Supreme Court further held:

A careful reading of Section 4(2) of the Interest Act would disclose that it merely enlarges the category of cases mentioned in Section 4(1). Even otherwise, there is nothing to indicate that Section 4(2) could override the statutory provisions or a contract between the parties. No doubt, Section 4(2) contains a non-obstante clause. But such a clause is restricted to the provisions of Interest Act and cannot extend to other laws or a contract between the parties.

The Supreme Court further held:

The deposit made cannot be equated to a fixed deposit." The apex Court also considered the claim for award or interest in equity or common law. While rejecting the contention, the Supreme Court held:

Strictly speaking, the work "interest" would apply only to two cases where there is a relationship of debtor and creditor, A lender of money who allows the borrower to use certain funds deprives himself of the use of those funds. He does so because he charges, interest which may be described as a kind of rent for the use of the funds. For example, a bank or a lender lending out money on payment of interest. In this case, there is no relationship of debtor and creditor.

The Supreme Court also rejected the contention that because the Board charges interest on delayed payment, therefore, they are also entitled'' to award of interest. While doing so, the Supreme Court held:

It is the Board which should be entitled to receive interest on energy supplied to the consumers on credit as the consumers enjoy a credit facility as noted already. We are also unable to accept the argument advanced on behalf of consumers that because the Electricity Boards charge interest on belated payment, interest must be void on security deposits. Interest on belated payments is by way of penalty. That has no bearing.

The ratio of that judgment can appropriately be applied to these cases. The amount required to be deposited as advance money by the successful bidder for getting, a licence is for the purpose of ensurings the timely payment of instalments of license fee. By its experience, the Government has felt that the licensee commit breach of the condition of auction and licence and the public revenue Adversely suffers. Therefore, in order to ensure regular payment of the instalments and at the same time to secure the public revenue, the Government has made it obligatory for the successful bidder to deposit the advance money. The forfeiture clause contained in para 6 of Amnexure P-l is also necessary to protect the public revenue against unethical practices adopted by the. licensees of not paying the instalments within the stipulated time. In such a case, the advance money deposited by the licensee can be utilised by the Government for compensating the loss to the public revenue, precisely for this reason the licensee is required to make good, the amount of cash security within seven days and failure of the licensee to do so may invite cancellation "of the licence. It cannot, therefore, be said that the advance money is paid by the licensees for performance of any legal obligation or part of contract. Therefore, they '' cannot claim any interest. The right of the Government to Charge interest from the licensees in case of default of payment of instalments cannot be read as imposition of a corresponding obligation on the Government to pay interest on the money deposited by the licensees.

We may look at the matter from yet another angle. The money which the licensee deposits with the Government in the form of cash security is in fact a part of the public revenue. It is a part of the price which a licensee pays to the Government for getting a licence. Therefore, it would be highly anomalous if the Government is required to pay interest on the amount which is a part of the price of the privilege to sell liquor vesting in the Government and which the licensee purchases from the Government. The Government, in our considered opinion, cannot be made to pay interest on its own money merely because it is described as security under the provisions of the Act and the Rules framed thereunder or the conditions of the auction.

On the basis of the above discussion, it is held that:

(i) There is no legal or fundamental right vesting in the Petitioners to carry on trade or business in liquor and the Government is possessed with the exclusive privilege to sell liquor itself or through licensee ;

(ii) The Petitioners, who have accepted the conditions of auction and who have deposited the amount in the form; of cash security (advance money) fully knowing well the terms and conditions of auction, have no loots standi to challenge those very conditions:

(iii) The amount required to be deposited in the form of security is in reality a part of the price which the peti-tioners are required to pay for purchasing right to sell liquor from the Government ; and

(iv) No interest is payable on the amount deposited by the Petitioners either under the provisions of the Negotiable Instruments Act, 1881, the Interest Act, 1978, or in common law or equity.

For the reasons mentioned above, the writ petitions are. dismissed. Keeping in view the fact that the Petitioners in.. Civil Writ Petition Nos. 18432, 18863 and 18854 of 1995 did not pay half of the amount of last instalment on the basis of the stay orders passed by this Court, we direct them to pay costs of Rs. 5,000 (rupees five thousand) each to the Respondents.