THAKUR PRASAD SAO ETC. v. THE MEMBER. BOARD OF REVENUE & ORS.
Citation: [1976] 3 S.C.R. 34; 1975 INSC 327
Court: Supreme Court of India
Bench: A.N. RAY , M. HAMEEDULLAH BEG, R.S. SARKARIA, P.N. SHINGAL
Judgment date:
Case summary
1975 INSC 327. Supreme Court of India judgment dated 1975-12-18. THAKUR PRASAD SAO ETC. v. THE MEMBER. BOARD OF REVENUE & ORS. Read the judgment and case...
Judgment text
36 SUPREME COURT REPORTS [1976] 3 S. C. R. THAKUR PRASAD SAO ETC. v. THE MEMBER. BOARD OF REVENUE & ORS. December 18. 1975 I [A. N. RAY, C. J. , M. H. BEG, R. S. SARKARIA AND P. N. SlllNGHAL, JJ. ] II Biliur & ()ris! :irl FKcisl' Act 1915-Ss. 22 and 30-Liceuce pn111ted 111;dcr s. 22 an exclusive pril'ihge-lnahility to open liquor shop-If l·ntitled to refund of fees-Incurring loss-If a gro1111d for reduction of fees-if refund . 1fiould be granted if quid pro quo is absent. Under the Bihar & Orissa Excise Act the holder of an outstill licence for country liquor pays a certain sum per mensem for manufacturing country spirit in his outstill nnd selling it by retail in his premises. No definite are:i. is fixed within which each outstill has the n1onopoly to supply country spirit but thci1 number is regulated according to rules and five miles is taken a~ the minimun1 distance betV1'een one outstill and another.
· The appellants in all the appeals were the holders of licences for the manu~ facturing and sale of country liquor. In the first batch of cases the appellant could not open the outsill even after more than si_X months of its gr~int despite his best efforts. The approval for op::ning the outstill \vas withdra\Vn and ht~ \Vas asked to pay the monthly licence fee according to the terms of licence. The appellant's clairn for refund of the money deposited by him. together with compensation for loss of anticipated profits and da1nages, \vas rejected. l)cspite this, the appellant continued to bid for licences during the subsequent three year" nnd claimed refund and damages, which claim was rejected by the wuthoritics. In the second batch of appeals the appellants claimed reduction of the licence fee for outstill liquor shops on the ground that they incurred losses because of the speculative bids at the auction should have been prevented by the 2uthorities.
Jn the third batch of cases th_e appellants claim·td refund of It has also been contended that the High Court erred in holding that the State Government had the power to require the appellants to pay the amounts under demand as they represented consideration for the contracts. It has been argued that this Court's decision in Nashirwar etc. v. State of Madhya Pradesh and others(1) and Har Shankar and others etc. v. The Deputy Excise and Taxation Commissioner and others etc. (') related to the Excise laws of other States and did not bear on the present controversy. The argument is however futile for we have given our reasons for holding that what was granted to the appellants was the exclusive privilege of manufacturing and se.
lling country liquor within the meaning of section 22(1 )(d) of the Act, and it has been expressly provided in section 29 that it would be permissible for the State Government to accept payment of a sum in "consirteration" of the exclusive privilege under section 22. The decisions of this Court in Nashirwar's case and Har Shankar's case have set any controversy in ----~~ (I) 11975] 2 S. C. R. 861. 'C) [1975] 3 S. C. R. 254. T. P. SAO v. BOARD OF REVENUE (Shinghal, !. ) 4 I this respect at rest, so that it is well settled that as the State has the exclusive right and privilege of manufacturing and selling liquor, it has the power to hold a public auction for the grant of such a right or privilege and to accept the payment of a sum therefor.
It was therefore permissible for the State to frame rules for the grant of licences on payment of fees fixed by auction, for that was only a mode or medium for ascertaining the best price for the grant of the exclusive privilege of manufacturing and selling liquor. As has been stated, Group 'B' appeals relate to the claim for I reduction of the licence fees for the liquor shops concerned. It has been argued by counsel for the appellants that as the Collector did not discharge his duty under the instructions contained in paragraph 130 read with paragraph 93 of the Regulations, the Board acted arbitrarily in refusing the order reduction of the amounts of the fees which were the subject-matter of the demands under challenge. It has been urged that the bids were highly speculative and should have been reduced.
It has been strenuously argued on behalf of the respondent State of Bihar that the instructions contained in the Regulations were not issued under any provision of the law and could not give rise to any rigbt in favour of the appellants. Reference in this connection has been made to M/s Raman and Raman Ltd. v. The State of Madras and vthers(1) and R. Abdulla Rowther v. The State Transport Appellate Tribunal, Madras and others("). It has been pointed out that there are three volumes of the Bihar and Orissa Excise Manual, 1919. lt has been stated in the preface to Volume I that it is complete in itscl! and contains the whole of the law and the rules which have the force of law "relating to excise opium. " Volume II contains the "whole of t:1e law and the rules which have the force of law relating to excisable articles other than opium;" It has been stated in the preface .
to Volume III that it consists of the Board's "instructions with regard to excisable articles other than opium" and that references have been made to the Governmenti Rules and the Board's Rules having the force of law. There is however no such reference to any rule in regard • to instructions Nos. 130 and 93. But quite apart from the question whether these instructions were legally enforceable, we have examined the question whether they could justify the argument that the appellants were cntitled to reduction of the amounts of the fees payable bv ·them. Instruction No. 93 mentions the circumstances when it would be advisable to accept bids other than the highest. It states that it is not an absolute rule that the highest bids must, on every occasion, be accepted.
It states further that the presiding officer at an auction "may also refuse bids which he considers to be purely speculative or which arc the outcome of private enmity", and that what is desired i; not the highest fee obtaina,ble, but a fee that can fairly be paid out of the profits of a shop without recourse to malpractices. There is therefore nothing in the rule which could be said to give rise to a right in favour of the appellants for reduction of the amounts demanded frolll them. Instruction No. 130 merely states that reduction of licence (I) (1959] Supp. (2) S. C. R. 227. (2) A. LR. 1959 S. C. 896. fees, during the currency of a licence, can be made by the Board under section 39 of the Act.
It does not therefore advance the case · of the appellants for, under that section, the Board has been given that power, "if it thinks fit", to order a reduction of the amount of fees payable in respect of a licence, "during the unexpired portion of the grant" which is not the case of the appellants. In fact all that bas been argued on behalf of the appellants is that as the instructions contained in the note appended to paragraph 130 of the Regulations have not been complied with, their legal right to claim the benefit of the note has wrongly been denied to them. The note reads as follows,- "Notc-Ordinarily it is not the policy of Government to allow reduction in excise settlements. The licensees to a large extent, have only themselves to thank if they exceed in their bidding the figure which should return them a reasonable profit under normal conditions, and they arc not therefore entitled to any reduction of fees as of right.
The observance of this principle is the more im_portant because it must be remembered tbat each remission is likely to aggra-vate the evil and encourage speculative bidding in the hope that should the speculation turn out a failure, Government will not insist on full payment. A remission should not bt: granted merely because working at a dead loss has been actually proved. Each case should be dealt with on its own merits. \Vhcrc, for example, it is proved that the Collector has not lullilkd his duty in refusing to allow manifestly speculative bids and has failed to stop the bidding when a figure has been reached which, under normal conditions, might be expected to return a reasonable rate of profit to the vendor, the question would be whether the action of the Collector was so flagrantly opposed to the principles enun-ciated from time to time by Government as to necessitate remedial action.
Such action should not take the form of any promise of resettlement with the existing licensees. It • can only take the form of a reduction in the amount of the existing licensees. It should not be very difficult for an officer in a contract supply area to realise the stage at _which bidd. i~g b7comes purely speculative. He knows the issues of ~pmt ? urmg the previous year and the cost to the vendor mcludl! lg duty, carriage, establishment charges and the li~e, and should thus be able to estimate the figure beyond which a prudent man would not bid. If after warning the bidder, that this point has been reached the latter still wishes to take the risk no case for remissio~ can arise. The case is, however, different where exceptional reasons which would not at the time be foreseen, operate adversely to the interest of the licensee but at the same time it is not the duty of Government to. safe-guard licensees from the effects of their own imprudence or ignorance. " T. P. SAO V.
BOARD OF REVENUE (Shingha/, ]. ) 43 It would appear that there is nothing in the note to justify the argument that it gave rise to a right in favour of the appellants to obtain a reduction of the fees. As has been pointed out, that was clearly a matter within the discretion of the Board of Revenue under section 39, and the wordings of the note appended to paragraph 130 could not overreach that provision of the law. Moreover, the question whether the circumstances mentioned in the note were at all in exis-tence in the case of the appeals under consideration, was a question -0f fact which could not be tried in these proceedings. The decision in Rohtas Industries Ltd. v. S. D. Agarwal and another(') to which our attention has been invited on behalf of the appellants, can be of no avail to them. As has been stated, the writ petition which has given rise to Civil Appeal No.
1105 of 1975 raised the question whether the refund of fees claimed by the appellant was permissible on the ground that there was no quid pro quo for the same. The High Court has rightly ··"{ rejected that contention for the reason that the amounts in question were payable for the licences which had been granted for the exclusive privilege in question and, as has been shown, that argument is no longer available to the appellant in view of this Court's decisions in Nashirwar's case (supra) and Har Shankar's case (supra). There is thus no force in all these appeals and they are hereby dismissed with costs. It is however order!! d ihat, as has been agreed by the Advocate-General, the authorities concerned would recover the amounts in question in instalments spreading over a period of three years in case of those appellants who are able to furnish security for payment within that period. P. B. R . Appeals dismissed. • (I) [1968] 3 S. C. R. ! 08.
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