GURUVAMMA Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) These writ appeals are directed against the order dated 5-1-2007 made in W.P.No.43013/1999 passed by the learned Single Judge whereby the learned Single Judge allowed the writ petition in part while restricting the demand notice to an extent of Rs.2,21,18,991/- and upheld the order of forfeiture of earnest money deposit.

(2.) The appellant herein had filed a writ petition seeking writ of mandamus directing the respondents to refund the earnest money deposited by her husband in accordance with Rule 13 of the Karnataka Excise (Lease of rights of retail vend of Liquor) Rules 1969 (hereinafter referred to as the Lease Rules for short) in respect of Mandya Taluk and Pandavapura Taluk with interest as the offer to take the right of retail vend of liquor given by the husband of the appellant was frustrated due to his death. Further the appellant also sought for setting aside the endorsement dated 30-10-1999 and demand notice dated 13-01-2000 issued by the Deputy Commissioner of Excise, demanding a sum of Rs.3,15,18,991/- towards the loss caused to the Government in view of re-auction. In the writ petition, the appellant has contended that her husband one Late Annegowda was a registered Excise Contractor and doing business of retail vend of liquor. In pursuance of the notification dated 12-04-1999 issued by the Commissioner of Excise in Karnataka for auctioning the right to vend arrack for the Excise year 1999-2000 for Mandya District, the husband of the appellant participated in the auction conducted on 5-5-1999 and he was the highest bidder in respect of Mandya and Pandavapura Taluks. He had offered a sum of Rs.68,00,100/- insofar as Mandya Taluk and Rs.26,00,000/- in respect of Pandavapura Taluk for the period from 1-7-1999 to 30-6-2000. Immediately on auction, on provisional confirmation, the husband of the appellant deposited one month s rent as per Rule 13(1) of the said Rules for the confirmation of the bid. The Deputy Commissioner of Excise by his order dated 12-05-1999, confirmed the bid of the said Annegowda as required under Rule 15 of the Lease Rules. Immediately on confirmation, the successful bidder has to fulfill the provisions of Rules 16 and 17 by entering into an agreement of lease with the State Government incorporating the terms and conditions under which the rate of retail vend of liquor in respect of the said two taluks. Further, within 15 days from the date of communication of the order of confirmation, the successful bidder has to furnish security for an amount equal to 3 and 1/10th of monthly rent in the form of Cash deposit in the form of Irrevocable Bank Guarantee. It is the case of the appellant that even before communication of the confirmation order, the said Annegowda died on 16-06-1999. Hence, he could not fulfill the requirements under Rules 16 and 17 of the Rules. On 26-06-1999, the Deputy Commissioner of Excise by his intimation letter informed the appellant that the bid offered by the said Annegowda was confirmed, whether the appellant is willing to continue the said business and if she is not willing, the EMD amount furnished by her husband-Annegowda will be forfeited and re-auction will be held in respect of two taluks. The appellant by her letter dated 28-06-1999 informed the Excise Commissioner that she has no experience with regard to the retail vend of arrack; she is aged about 60 years and without any male help she cannot carry on the said business and sought for refund of the EMD amount deposited by her husband. Since the respondents have not refunded the said EMD amount, she filed writ petition seeking refund of the EMD amount. In the meanwhile, she received an endorsement dated 30-10-1999 informing the appellant that the auction sale of right to vend arrack has already been confirmed by the Commissioner in respect of Mandya and Pandavapura Taluks, hence the EMD amount deposited by her husband cannot be refunded. Further she also received a demand notice dated 13-01-2000 demanding a sum of Rs.3,15,18,991/- towards the difference of bid amount between first auction and the second auction. She also sought for quashing of the said demand notice and endorsement.

(3.) The State Government entered appearance and filed the statement of objections contending that the husband of the petitioner late Annegowda participated in the public auction conducted for retail vend of liquor in respect of Mandya and Pandavapura Taluks and he was the highest bidder and his bid was provisionally approved by the Commissioner. Accordingly, Annegowda deposited one month s kishth amount as EMD. Subsequently, the auction was confirmed by the Commissioner on 12-05-1999 and the confirmation order was also communicated to the said Annegowda on 01-06-1999. However, he has failed to comply with Rules 16 and 17 within 15 days of confirmation of the auction and he died on 16-6-1999 after the confirmation of bid. Hence, he is not entitled for refund of EMD amount. Further, in the re-auction, the retail vend of arrack was auctioned for lesser amount in the said two taluks and the Government has suffered loss, hence issued demand notice for the difference amount of the two auctions. Further, the confirmation order has been served on Annegowda on 1-6-1999 and within 15 days from the date of communication of the confirmation order, he has to furnish the security or Bank Guarantee to the amount equal to 3 and 1/10th month of rent and also enter into an agreement of lease with the State Government. Though he was alive till 16-6-1999, he has failed to deposit the said amount and got into an agreement with the State Government. Further, though an offer was made to the appellant to continue the business, she has expressed her unwillingness to carry on the business. Hence, the State Government had no option other than to hold re-auction in the said two taluks. In the re-auction, the retail vend of arrack in respect of Mandya taluk was auctioned at Rs.47,20,999/- and in respect of Pandavapura Taluk, it was auctioned for Rs.20,53,500/- and the Government has suffered loss of more than Rs.3,15,18,991/-. Therefore, a demand notice was issued while cancelling the confirmation order issued in favour of Annegowda. Accordingly sought for dismissal of the writ petition.