P BHIMA REDDY Vs. STATE OF MYSORE

JUDGEMENT

(1.) This appeal raises the question of the legality 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 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 by the Divisional Commissioner, Gulbarga, on May 28 and inviting tenders by May 27. On May 27, the appellant made a tender offering Rs. 999999/- towards the monthly rent of the shops and deposited the requisite earnest money amounting to Rs, 1,85,168/- as required by Rule 7 (f).Respondent No. 4, K. V. Niranjan made a tender offering Rs. 969999/- towards the 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, Gulberga, under Rule 17 (1). The appellant deposited another sum of Rs. 814831/which together with the earnest money made up one month's rent as required by Rule 17 (5). On June 4, the Divisional Commissioner, Gulbarga, confirmed the sale under Rule 17 (1).

(2.) On June 6, the Deputy Commissioner, Gulbarga, issued a notice asking the appellant to make deposits according to Rule 19 immediately and to obtain licences from the concerned tahsil officers after completing other formalities. Under Rule 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 letter (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, Gulberga, for the issue of licences. On June 19, the Divisional Commissioner, issued a notice to the appellant stating that as he had not submitted a solvency certificate of his property or the property of his sureties 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 taken 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 view of the subsequent writ petition the State Government did not pass any orders on this petition. 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 Section 62 and that if necessary, the terms for compliance with the requirements of Rule 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 Government. 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 stating that he had complied with the terms of Rule 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 that (1) the appellant did not "at once" apply in writing for licences in accordance with Rule 19 (1); (2) though he deposited two months' rent as required by Rule 19 (2), he did not file a statement of his immovable properties in accordance with Rule 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 Rule 19 (3)(i) and to furnish securities for six months' rental or surety under Rule 19 (3) (ii) and (iii); (4) he failed to comply with Rule 19 in spite of notices dated June 6 and June 19; (5) the circular issued by the Excise Commissioner was opposed to Rule 19 and could 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 person of doubtful solvency; and (7) that the sale conducting officer has no power to extend the time or compliance with the formalities.

(3.) On June 28, the appellant filed Writ Petition No. 1889 of 1968 against the State of Mysore and others in the High Court of 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 Gulberga Districts and for other reliefs. The appellant submitted that (1) he had complied with the rules read with the circular; (2) he did not file any statement of his immovable properties under Rule 19 (i) as he had immovable properties in Andhra Pradesh; (3) as there was no inquiry nor finding by any tahsildar that he was of doubtful solvency Rule 19 (3) was not attracted; (4) the Divisional Commissioner, Gulberga, was not competent to ask for deposits and security under Rule 19 (3), nor was he competent to pass an order cancelling the sale and (5) Rule 19 (3) was violative of Articles 14 and 19 of the Constitution.