STATE OF ANDHRA PRADESH Vs. NARENDER REDDY

JUDGEMENT

(1.) (Per ) The plaintiffs were the highest bidders in the auction conducted for sale of arrack for the groups of Miryalaguda, Kodad and Huzurnagar of Nalgonda District for the Excise year 1990-91. The Excise year starts from 1st October and ends by 30th of September each year. In terms of the agreement between the parties a minimum guaranteed quota was fixed and that had to be lifted by the contractors (plaintiffs). - Rentals had to be paid within stipulated period. For the sale of arrack in these three areas 300 shops had to be set up by the contractors. The plaintiffs had to deposit earnest money, container deposit, minimum guarantee quota deposit, one month's advance rentals in cash and one month's rentals by furnishing bank guarantee. The Minimum guarantee quota had to be lifted by depositing issue price within stipulated period. The plaintiffs on the other hand were entitled to conduct business of selling arrack in a fair and free manner. According to the plaintiffs, it was the responsibility of the defendants to provide an environment free of obstructions because State was overall incharge of the affairs of the State and also licensing authority and a party to the contract. The plaintiffs further contended that they were not expected to pay rentals without being able to conduct the business in accordance with the contract entered into and the licence granted. It was not enough for the State to grant licence and leave the plaintiffs to make their own arrangements for maintaining the law and order. Although the plaintiffs made their arrangements, even if they were not supposed to make under the contract, but they failed in conducting the business when the naxalites started interfering in the business of the plaintiffs. In the first week of October, 1990 the naxalites directed that arrack shall not be sold and even if it was sold it had to be sold at the rate at which it had been sold during the year 1989-90. The plaintiffs further contended that in 1989-90 arrack was sold at Rs. 60.00 per bulk litre which in turn works out to Rs. 6/- per 100ml sachet. There were no problems in selling arrack during the year 1989-90 but as compared to year 1989-90 there was an increase of 35% in the rentals for the Excise year 1990-91. In view of the increase in rentals higher selling price had to be fixed but the naxalites threatened that the sale price should not exceed Rs. 3.00 in villages and Rs. 4.00 at mandal headquarters. In some of the villages the naxalites did not even allow the plaintiffs to open the shops. The owners of the premises were threatened with dire consequences if they let out the premises to run arrack shops. Because of the threats from the naxalites and a price list having been fixed by the naxalites the plaintiffs could not run the business. The plaintiffs tried to resist, as a result they were not allowed to open certain shops and some shops were even burnt along with arrack and furniture. There was looting, arson and violence on large scale. The Excise officials advised the plaintiffs to concede to the demands of the naxalites as there was no other alternative. The Excise authorities were not able to give enough police force for protecting the business of the plaintiffs. The plaintiffs made several representations for protection but the defendants expressed their inability in the matter and could not curb the naxal problem. For arrack there was no fixed selling price. The plaintiffs were entitled to sell the arrack at a price fixed by the plaintiffs but restrictions were placed on their right to sell at the price of their choice by the naxalites. It would have been only profitable business had the plaintiffs been able to sell arrack at the rate of Rs. 70.00 per bulk litre. In any case the plaintiffs should not have sold the arrack for a rate less than Rs. 607- per bulk litre. The monthly rentals for Huzurnagar, Miryalaguda and Kodad groups were Rs. 27,77,777.77 ps., Rs. 31,27,999.99 ps., and Rs. 24,38,000.00 ps. respectively. In addition to this, the issue price per bulk litre works out to Rs. 12.09 ps. The plaintiffs contended that even though the contract was given to them to vend arrack in consonance with the conditions of the licence they were not permitted to sell arrack and there was impossibility of performance of their contract. The defendants were bound to see that there was no hindrance in the performance of the contract but they did not intervene and set right the things which resulted in impossibility of performance of the contract. The contract could not be performed but the defendants went on demanding payment of rentals even without considering these facts and ignoring representations. They further contended that for the whole of the year the business could not be conducted, only few shops could conduct business and arrack was sold at Rs. 2.75 ps. to Rs. 4/- per 100 ml. The average rate at which 100ml arrack could be sold worked out of Rs. 3.00 per sachet but the defendants insisted on payment of rentals for the month of October, 1990 and in consequence of non-payment there was suspension and cancellation of licence. The plaintiffs filed Writ Petition No. 15918 of 1990 in which time was granted to pay the rentals but that could not be done, licences were cancelled by the 6th defendant on 18-11-90, the same was assailed before the 4th defendant, he passed an order on 12-12-90 and imposed condition of paying exorbitant amounts with interest. The plaintiffs could not comply with the same in full. Pursuant to the said order they had paid substantial amounts but could not pay the instalments. From 1st January, 1991 all the arrack shops of Huzurnagar and Kodad were taken over by the State and were run departmentally. During the period for which the department carried the business departmentally the sale price had to be reduced by the department as well due to threat from naxalites. The State itself yielded to the dictates of the naxalites and sold arrack at the reduced rate. At times the selling price was even less than Rs. 30.00 per bulk litre. When the plaintiffs filed Writ Petition No. 17768/90 the defendants opposed the petition for granting stay of re- auction therefore the stay of re-auction was refused by the High Court. Consequently re- auction was held on 7th February, 1991. The High Court also held that the order of 4th defendant was not challenged therefore there could not be any stay of re-auction. The plaintiffs sought an amendment in the relief seeking to challenge the order of the 4th defendant. This application was allowed. After the amendment the plaintiffs moved another application before the High Court seeking direction that the shops be handed over back to the plaintiffs but the High Court imposed a condition of deposit of 50% of amount and furnishing of bank guarantee which could not be complied with by the plaintiffs. Thereafter when the Writ Petition came for final hearing on 4-4-91 the High Court found that the re-auction had been confirmed on 18-2-91. High Court also found that there were questions of disputed facts therefore it observed that a redressal may be sought from the civil court, The 7th defendant in the meantime passed an order on 14-3-91 seeking recovery of Rs. 1,88,06,826/-. The plaintiffs thereafter pleaded for three months time so as to enable them to issue notice u/s. 80 CPC and file the suit. The High Court by its order dated 4-4-91 gave 2 months time from 4-4-91 to enable the plaintiffs to issue a notice and file suit against the recovery. Even though the State filed Writ Appeal against the said order of the learned Single Judge no interim suspension was granted and the appeal was not admitted. The appeal, however, stands pending before the Court. Notice was issued to defendants on 6-4-91 under Section 80 C.P.C. reiterating all the facts. Another distraint order dated 6-5-91 was issued claiming Rs.2,27,68,000/-. These amounts pertain to Huzurnagar and Kodad arrack groups. The notices issued by the plaintiffs were served on defendants. On the basis of these facts the suit was filed. With regard to the relief and Court fee the following was added to the plaint:

(2.) On the basis of these pleadings the following issues were framed by the trial Court;

(3.) We have heard the learned counsel for the parties. The learned Single Judge framed three questions for consideration;