Case: Lakhanlal Etc Vs. State of Orissa and Ors. (with connected appeals)

1. These appeals by certificate or special leave are directed against judgments of the Orissa High Court dated May 15, 1970, February 3, 1971, April 16, 1971, May 7, 1971, September 6, 1971 and March 28, 1974. They arise out of several writ petitions. The facts which gave rise to the petitions changed from time to time largely because of amendments in the law, and that was the reason for the filing of separate writ petitions resulting in the impugned judgments of the High Court, but we have heard them together at the instance of the learned counsel for the parties and will dispose them of by a common judgment. The nature of the controversy in these cases is such that it will be enough to state the basic facts for the purpose of appreciating the arguments of counsel for the parties.2. The Collector of Mayurbhanj issued a notice on February 3, 1 970 by which he invited tenders for the grant of licences for establishing 70 outstill shops for 1970-71. Ajodhya Prasad Shah gave the highest bid for a group of seven shops, in one lot, for Rs. 34, 000/-per month. H is bid was accepted and his name was entered in the prescribed register, and the entry was signed by the successful bidder and the Collector. Ajodhya Prasad accordingly deposited Rs. 68, 000/- on account of two months "fees", in advance, as required by rule 103 of the Boards Excise Rules, 1965. Raghunandan Saha, who was the unsuccessful bidder, felt aggrieved and filed an appeal, but it was dismissed by t he Excise Commissioner on March 16, 1970. The Board of Revenue also refused to interfere. Ajodhya Prasad claimed that in the mean time he made arrangements for establishing his shops and incurred an expenditure of about Rs. 1, 50, 000/-. He therefore approached the authorities concerned for the issue of the licenses for running the shops from April 1, 1970. He approached , the Superintendent of Excise for depositing Rs. 34, 000/- for the month of April, but the Superintendent did not pass the deposit challan. Ajodhya Prasad thereupon filed a writ petition (O.I.C. No. 329 of 1970) in the High Court with the allegation that the Collector was not acting according to the law as the State Government had issued instructions to him not to. issue the licenses. Ajodhya Prasad prayed in his petition for the issue of directions for the issue of licenses and quashing the State Governments instructions to the contrary. Raghunandan Saha also filed a petition (O.J.C. No. 357 of 1970) on April 13, 1970. The Collector issued a notice for reauction on May 1, 1970 an d Ajodhya Prasad amended his petition for quashing the notice also.The State Government and the other respondents traversed the claim in Ajodhya Prasads writ petition and pleaded, inter alia, that the bids at the auction were not satisfactory and, in the interest of the State revenue, the State Government had passed the orders for not accepting Ajodhya Prasads bids. The High Court examined the questions whether Ajodhya Prasad was entitled to the issue of the licenses for the seven shops and whether the State Government had the authority to direct the withholding and reauctioning of the licenses, and held, inter alia, that the State Government had no power to interfere with the auction held by the Collector after it had "become final in appeal and revision", and could not direct a reauction. The High Court examined the nature of the realisation at the auction and held that it was a tax which was not contemplated by section 38 of the Bihar and Orissa Excise Act, 1915, herein- after referred to as the Act, and that rule 103(1) of the Boards Excise Rules in regard to the fees for the licenses was not authorised by the Act and was in excess of the rule-making power of the Board. The High Court also held that the "auction price for a license is not excise duty within the meaning of Entry 51 of List II of the Seventh Schedule to the Constitution" and it was not open to the Collector "to follow the process of auctioning for determining the license fee" which was really a tax in the garb of a fee. It held that the aforesaid rule 103 was incompetent and ultra vires the Act. On the question of grant of the "exclusive privilege" under section 22 of the Act, the High Court held that what was purported to be given under the sale notice was not the grant of .an exclusive privilege. In taking that view the High Court stated that notice had not been issued under section 22 (1) of the Act and the Collector had no authority to issue such a notice In that view of the matter, the High Court did not express any final opinion as to whether the licence was to be granted for an exclusive privilege to manufacture and sell liquor . The High Court accordingly quashed the direction of the State Government dated April 15, 1970 for reauctioning the license and declared that rule 103(1) of the Boards Excise Rules was ultra vires the Act. Appeal s Nos. 1892 and 1893 of 1971 are directed against that judgment of the High Court dated May 15, 1970, on certificates.The State Government issued the Bihar and Orissa Excise (Orissa Amendment) Ordinance of 1970 and the State Government issued a fresh order dated August 19, 1970 under the provisions of the amended section 29(2) of the Act for fresh settlement of the shops, and wrote to the Collector of Mayurbhanj to c all for tenders in accordance with that order. The Collector called for tenders within a week.Ajodhya Prasad thereupon filed another writ petition (O.J.C. No. 850 of 1970) for quashing the Collector s tender notices and for a direction to the authorities concerned to grant a license to him on the basis of the earlier auction.The Bihar and Orissa Excise (Orissa Amendment) Act, 1970 was passed on October 5, 1970 and the ordinance was repealed. That was followed by the Orissa Excise (Exclusive Privilege) Rules, 1970, which were made under section 89 of the Act.The respondents in Ajodhya Prasads writ petition No. 850 of 1970 pleaded that the amendments to the Act were valid and that the State Government had the right to grant an exclusive privilege for the purposes mentioned in section 22 of the Act. The money so realised was consideration for the exclusive privilege under section 22 and was neither an excise duty nor a tax nor a fee. It was also pleaded that the tender was in accordance with the rules as the authority to accept the tender was the State Government.3. The High Court examined Ajodhya Prasads writ petition (No. 850 of 1970 in its Judgment dated February 3, 1971. It held that the order of the State Government dated August 19, 1970 for inviting tenders was invalid as the authorities for fixing the procedure under the amended section 29(2)(b) had not been specified, the Government had "appropriated for itself absolute and naked and arbitrary power to accept any tender or reject any tender for any reason whatsoever or without any rhyme or reason" and the order left it to the uncontrolled discretion of the authority concerned to determine the adequacy of the amount offered in the tender. As regards the claim for the issue of a license under section 6, the High Court held that as the petitioner was the highest bidder on February 20, 1970 and his name was entered in the bid register and the entry was signed, the petitioner was entitled to the grant of the exclusive privilege under section 22 by virtue of section 6(a) of the Amending Ordinance irrespective of the validity of rule 103 (1) of the Boards Excise Rules. The High Court accordingly held that section 6(a) of the Amending Ordinance was valid and the grant of seven shops to the petitioner, for the manufacture and retail sale of country liquor was therefore validated "as the grant of an exclusive privilege under section 22 of the Act" and he was entitled to license under sub-section (2) of that section.. The Order of the State Government dated August 19 , 1970 and the Collectors tender notice were quashed and the Collector was directed to issue the license for the seven shops to him.Siba Prasad Saha who filed the writ petition (No. 786 of 1970) in August 1970, after the first judgment of the High Court dated May 15, 1970 for refund of the license fee and for non-payment of any fee in the future, as he was a licensee for several liquor shops, amended it in the light of the subsequent developments. The High Court took the view in its judgment dated April 16, 1971 that sections 2 to 5 of the Amending Ordinance, or the Amending Act (17 of 1970) were not made retrospective. It took note of this Courts decision in Krishna Kumar Narula etc. v. The State of Jammu and Kashmir and others([1967] 3 S.C.R. 50.) that a citizen had the fundamental right to carry on business in liquor and all that the State could do. was to impose reasonable restriction thereon. It also held that in so far as section 29(2) of the Act provided that the sum payable under sub-section (1) thereof shall be determined "otherwise" than by calling tenders or by auction, it was unconstitutional That portion , of sub-section (2)(a) was therefore struck off. The High Court held further that what was realised by the State was not a fee or tax, as the primary purpose of the Act was to. restrict the manufacture and sale of country liquor. It accordingly held as follows, ---"We are, therefore, satisfied that the provision in Section 22 of the Act for grant to any person of the exclusive privilege of manufacture and sale of country liquor for a sum, the method of determination of which is provided in Section 29, are provisions which are calculated to restrict and control trade in liquor although incidentally revenue is earned for the State thereby and that Entry in List II of t he Seventh Schedule confers power on the State Legislature to enact such a regulatory measure and consequently the State Legislature has legislative competence to enact Sections 22 and 29."4. The High Court accordingly held that section 22 and section 29 without the expression "or otherwise" in clause (a) of sub-section 2 were valid and constitutional. The High Court then examined the effect of section 6 of the Amending Act of 1970, and held that as retrospective effect was not given to sections 2 to 5 of that Act, the validity of the money realised by the State had to be judged with reference to the unamended provisions, and held as follows, --"It, therefore, follows that by reason of the fact that Sections 2 to 5 of the Amending Act were not made retrospective in operation, the effect of Section 6 is that thereby t he Legislature had directed the State to disregard the decision given by this Court in Ajodhya Prasads case (I.L.R. 1971 Curt. 51 ) that the amount realised by the auction is illegal. This virtually amounts to judicial exercise of power by the legislature a power which the Legislature does not possess. We, therefore hold that Sections 2 to 5 of the Amending Act having not been made retrospective, Section 6 is ultra vires the powers of the Legislature."5. The High Court however held that although the license fee collected by the State was illegal, the petitioner had already enjoyed the benefit under the license and had voluntarily participated in the auction, and was not entitled to an order for its refund. A similar view was taken in the judgment dated April 16, 1971 in O.J.C. No. 242 of 1967 and the judgment dated May 7, 1971 in O.J.C. NOS. 1185-1190, 1223, 1224 and 1226 of 1970. Those judgments have given rise to civil appeals Nos. 2071, 1855- 1863 and 351-359 Of 1972 (cross-appeals). O.J. Cs. Nos. 859 and 863 of 1970 were disposed of by separate judgments dated September 6, 1971 which followed the earlier judgment dated April 16, 1971 in Siba Prasad Sahas case and that has given rise to appeals Nos. 1235 and 1236 of 1972.The Bihar and Orissa Excise (Orissa Second Amendment) Act, 1971 (10 of 1971) was passed to set right the defects in the law. Stated briefly that Act made the amendments to sections 2, 7, 29, 37 and 90 retrospective and validated the earlier acts.6. A writ petition (O. J.C. No. 589 of 1972) was filed to challenge the vires of section 22 and 29 of the Act. The main judgment in the matter was delivered in O.J.C. No. 1036 of 1971, on January 3, 1974. In that judgment the High Court examined the challenge to the vires of sections 22 and 29 of the Act and the claim for refund of the money already paid with reference to the amendments to the Act. It followed the earlier decision in Siba Prasad Sahas case of April 16, 1971 (I. L.R.1971 Cuttack 777) and dismissed the writ petitions and that/ms led to the filing of civil appeals Nos. 1235 and 1236 of 1972.7. The last judgment was delivered on March 28, 1974 in O.J.C. No. 589 of 1972 , in Siba Prasad Sahas case. The petitioner there was the grantee of the exclusive privilege for sale of country liquor: during the year 1972-73 for some shops in Mayurbhanj district. The petitioner challenged the vires of sections 22 and 29(2) as amended, and prayed for the consequential reliefs. The High Court held that the case was completely covered by its decision dated January 3, 1974 in O.J.C. No. 1036 of 1971 and dismissed the petition.It will tires appear that these appeals are inter-connected and that is why we have thought it desirable to examine them in a common, judgment.8. As has been stated, Civil Appeals Nos. 1892 and 1893 of 1971 arise out of O.J.Cs. Nos. 392 and 357 of 1970 which have been decided by the judgment of the High Court dated May 15, 1970. It has been argued by Mr. Govind Das on behalf of the appellant s that the High Court erred in holding that the sale notice issued by the Collector was not for the grant of an exclusive privilege under subsection (1) of section 22 of the Act because the Collector had no authority to issue a notice under that sub-section, as the power of the State Government in that respect had been delegated to the Board of Revenue.Sub-section (1) of section 22 of the Act provides that the State Government m ay grant to any person, On such conditions and for such periods as it may think fit, the exclusive privilege, inter alia, of manufacturing or selling retail any country liquor. The proviso to the sub-section re quires that public notice shall be given of the intention to grant any exclusive privilege of that nature and that a. decision would be taken after considering the objections made in that respect. Once a decision is taken under , sub section (1) to grant the exclusive privilege within any specified area, sub-section (2) provides that no grantee of such a privilege shall exercise the same "unless or until he has received a license in that behalf from the Collector or the Excise Commissioner." It has been stated at the Bar by Mr. Govind Das, and has not been controverted that, as. had been averted in the memorandum of appeal, the requirement of sub-section (1) of section 22 had already been complied with by the State Government, and that the Collector was not concerned and did not in fact issue any public notice for purposes of sub-section (1) of section 22. A reading of the Collectors notice, which admittedly was in Form G.L. 10, shows that it related to the auction of the right to open a shop at the site named in the notice and the payment of the license fee therefore. The High Court therefore went wrong in holding that the issue of the notice in Form G.L. 10 negatived the contention that what was proposed to be given was the exclusive privilege to manufacture and sell country liquor. By virtue of section 7(1), the administration of the Excise Department and the collection of excise revenue within the district vested in the Collector, and we are unable to think, that his notice in Form G.L. 10 was sufficient to show that the exclusive privilege for retail sale of country liquor, under the outstill system, was not proposed to be given to the successful bidders at the auction.The true nature of the proceeds of the auction held by the Collector in such a case has been examined by this Court in Nashirwar etc. etc. v. The Slate of Madhya Pradesh, ([1975] 2 S.C.R. 861.) Har Shankar and others v. The Dy. Excise and Taxation Commissioner and others([1975] 3 S.C.R. 254.) and Thakur Prasad Sao and others v. The Member, Board of Revenue and others etc.([1976] 2 S.C.C. 850.). In Nashirwars case (supra) this Court examined the constitutional validity of the provisions in the Central Provinces Excise Act for granting leases in respect of liquor by public auction, and of the Abkari Act of the Kerala State placing restrictions on the manufacture and sale etc. of liquor. After considering all the decided cases including Narulas case (supra) in which it was held that a citizen had a fundamental right to. do business and deal in liquor, this Court referred to its decision in State of Orissa and others v. Harinarayan Jaiswal and others ([1972]3 S.C.R. 784.) in which Narulas case was explained, and held as follows, -"For these reasons we hold that the State has the exclusive right or privilege of manufacturing and selling liquor. The State grants such right or privilege in the shape of a licence or a lease. The State has the power to hold a public auction for grant of such right or privilege and accept payment of a sum in consideration of grant of lease."While taking this view this Court held that the State Legislature was authorised to make a provision for public auction by reason of the power contained in Entry 8 List II of the Seventh Schedule to the Constitution and that there w as "no fundamental right of citizens to carry on trade or to do business in liquor."9. The matter again came up for consideration in Har Shankars case (supra) with reference to the provisions of sections 27 and 34 of the Punjab Excise Act, 1914, where the appellants gave bids at public auctions. It was held that the amount payable by them, as licensees, was neither a fee in the technical sense n or a tax, but was in the nature of "price of a privilege" and that auctions were only a mode or medium for ascertaining the best price obtainable therefore.Thakur Prasads (supra)was a case directly under the provisions of the Act. It also related to the outstill system. It was held that "the State has the exclusive right and privilege of manufacturing and selling liquor" and that it has the "power to hold a public auction for the grant of such a right or privilege and to accept payment of a sum therefore." It was accordingly held that the right granted to the appellants by public auction and the licenses issued to them was "clearly an exclusive privilege within the meaning of section 22(1) of the Act" and that it has expressly been provided in section 29 that it would be permissible for the State Government to accept payment of a sum in "consideration" of the exclusive privilege under section 22.There can be no doubt therefore that the High Court erred in taking a contrary view.10. The High Court has tried to support its view by referring to the condition stated in Form G.L. 10 for the opening of additional shops during the currency of the license, and has stated that an exclusive privilege under section 22 "cannot comprehend exercise o[ such power once it is granted for a specified period." This was clearly an erroneous view because it is not disputed before us that no such condition was inserted in the license at all. What the licensee therefore received under the license was an exclusive privilege of manufacturing and selling liquor under the outstill system within the meaning of section 22 of the Act.11. The High Court has held that after the acceptance of the bid all that remained was to issue a license and that the Collector committed an illegality in ordering a reauction under the directions of the State Government. Such a view presupposes that a binding, obligation ha d come into existence in favour of the bidder by accepting a deposit from him even though this was done on the express condition that it was tentative and was not an acceptance of his bid. We do not think that what the High Court held to be an "acceptance of the bid" at the "auction", even after the announcement of an express condition attached to it that the knocking down of the bid would not really be an acceptance of it by the Government, could be an acceptance of the bid at all. In the peculiar facts and circumstances of the auction, the bids were, apparently, nothing more than offers in response to invitation to make tenders, and such auctions were the mode of ascertaining the highest offers. The basic conditions for the emergence of rights through offers or conditions made and accepted, and acted upon, by paying any specified or agree d price as consideration, were thus wanting in this case. In fact the express and advertised terms of the auction made it clear that the money tendered was to be deemed to be deposited tentatively, pending the acceptance of the bid. So what we have before us are neither offers nor acceptance by the Government. There were only offers by the bidders to purchase the rights, subject expressly to their acceptance or rejectio n by the State Government. The essentials of any agreement and the mutuality of obligations were thus absent altogether.Moreover it was not an ordinary auction where binding agreement could be deemed to be concluded at the fall of the hammer, creating mutually enforceable obligations. Those were only so called auctions, adopted as means for ascertaining the highest offers for the exclusive privileges which the Govern ment alone could grant for carrying on a trade or business. considered noxious, under the law and which, because of its special character, could be regulated in any way, or even prohibited altogether, by the Govern- ment. This special character of the trade or business would appear from the power of the State Government to grant the exclusive privilege to. carry on trade in the manufacture and sale of liquor. It will be recalled that section 22(1) provides that the State Government "may grant to any person, on such conditions and for such periods as it may think fit, the exclusive privilege" in question: Sub-section (2) of section 22 enacts that a grantee of such a privilege shah not exercise it "unless or until he has received a license in that behalf from the Collector or the Excise Commissioner."12. The powers of the Government to reject a bid were thus reserved both under the provisions of law and by the express declarations made before the auction. At any rate we do not find any basis for the creation of a right merely by making a bid. The extent of the powers of the government in such matters has been indicated by this Court in State of Orissa and others vs..Harinarayan Jaiswal and others (supra). So long as these powers are not used in an unreasonable or mala fide manner, their ex ercise cannot be questioned. In the cases before us, it could not be said that either the Gov- ernment or any of its officers abused the power by acting either unreasonably or in a mala fide manner, and we find no justification for the argument that it was not permissible for the State Government to issue.the directions for reauction even when it found that the bids at the auction were unsatisfactory.The High Court ha s taken the view that rule 103(1) of the Boards Excise Rules regarding the manner of fixation and realisation of the consideration for the grant of a license for the exclusive privilege of retail vend of country spirit was "incompetent and ultra vires the act." The High Court took that view under the mistaken impression that the State was not entitled to collect a tax "under the garb of a fee" and the "auction price for a license is not duty within the meaning of Entry 51 of List 11 of the Seventh Schedule to the Constitution." But, as has been shown, what was sought to be raised was consideration and not "fee". The use of the expression "fees" in the rule is therefore inaccurate, but that cannot detract from the real nature of the recovery. Mr. S.C.. Agarwal has challenged the validity of rule 103 on another ground, and we shall deal with it when we come to the judgment of the High Court dated April 16, 1971. The next judgment of the High Court is that dated February 3, 1971, in O.J.C. No. 850 of 1970, which has given rise to civil appeal No. 209/of 1972 by the State of Orissa. We have already stated the findings of the High Court in regard to it.13. It has been argued by Mr. Govind Das that even if the State Government failed to specify the authority which was to determine the mode of determining the sum payable under sub-section (1) of section 29, that could not be said to matter because it was the Collector, who was incharge of the administration of the Excise Department and Collection of the excise-revenue under section 7 of the Act, who took the action to issue the auction notice for the grant of the license. for the retail sale of country liquor. Moreover, the State Government did not object to his authority to do so. and, on the other hand, directed him to make a reauction merely on the ground of the insufficiency of the bids. The Collector called for fresh. tenders. It was not in dispute before the High Court that the State Government issued a special order under section 29 by which it nominated itself to be the authority to determine the sufficiency of the sum payable under section 29(1) of the Act. There is nothing in sub-section (2)(b) to show that that was not permissible.The other question in this respect is whether the following direction in the State Governments order dated Aug ust 19, 1970 was valid, ---"It shall be at the discretion of the State Government to accept or reject any tender without assigning any reason therefore to order for calling of fresh tender or otherwise as the case may be."14. It will be recalled that the High Court has taken the view that the order dated August 19, 1970 and the tender notice issued in pursuance thereof were bad in law and were liable to be quashed. The High Court has taken the view that section 29(2)(a) did not authorise the exercise of "such absolute and naked power in determining the sum of money" as was sought to be done by the order dated August 19, 1970. It appears to us however that the power to accept or reject a tender without assigning any reason cannot be said to be arbitrary as section 29(2) (which has been amended with retrospective effect) itself provides. that (i) it shall be exercised in the interest of the Excise revenue", (ii) by the specified authority, and (iii) under such control as may be specified. As has been stated, the State Government retained the power of accepting or rejecting the tender, or for calling of a fresh tender, to itself, and such an order cannot be said to be an "absolute" or "naked" power of the nature apprehended by the High Court. Reference in this connection may be made to the decision in Jaiswals case (supra) mentioned above. Moreover it is not disputed before us that the power to accept or not to accept the highest or any bid was expressly reserved under the impugned sale notification. Sub-section (2) of section 79 of the Act was also amended by the Bihar and Orissa Excise (Second Orissa Amendment) Act 1971 (Act 10 of 1971) with full retrospective effect. Section 17 of the Act validated both the licenses granted and amounts paid or payable therefore, and its validity has not been challenged before us.It will be remembered that Siba Prasad Saha had filed O.J.C. No. 786 of 1970 after the first judgment of the High Court dated May 15, 1970, for refund of the license fee and for non-payment of the fee in future. The State of Orissa feels aggrieved against the decision of the High Court in that case dated April 16, 1971 that a citizen has a fundamental right to deal in liquor. In taking that view the High Court relied on this Courts decision in Narulas case (supra). The decision in Narulas case was considered and explained by this Court in Nashirwars care (supra) and it has been held as follows, --"It is not correct to read in the decision in Narulas case that there is a fundamental right to do business in liquor. The decision is that dealing in liquor is business and a citizen has a right to do business in that commodity and the State can impose reasonable restrictions on the right in public interest. If the State can prohibit business in liquor as is held in State of Bombay and Another v. F.N. Balsara (1951 S.C.R.682) this establishes that the State has exclusive rig ht of privilege of manufacture, possession, sales of intoxicating liquor and therefore the Slate grants such a right of privilege to persons in the shape of license or lease."In reaching this conclusion this Court took note of the decision in Bharuchas case(1) that there was no inherent right in a citizen to sell intoxicating liquors by retail, and that it is not a privilege of a citizen of the State, and observed that as Bharuchas case was a Constitution Bench decision like Narulas case, the latter could not be said to have overruled the former. As has been stated, the matter a gain came up for consideration in Har Shankars case (supra) with specific reference to Narulas case, and it was reiterated that "there is no fundamental right to do trade or business in intoxicants" and that "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." The contrary view of the High Court in impugned judgment is incorrect and must be set aside.The other grievance of the appellant State is that the High Court struck down the expression "or otherwise" from clause (a) of subsection (2) of 2 9 of the Act as unconstitutional. We have given our reasons for the contrary view, and the High Court therefore went wrong in striking down the expression "or otherwise".15. The High Court has also held that as sections 2 to 5 of the Amending Act of 1970 were not made retrospective in operation, the effect of section 6 amounted to a direction by the Legislature to the State to disregard the decision in Ajodhya Prasads case that the amount realised by auction was illegal and that section 6 was therefore ultra vires the powers of the Legislature. It will be sufficient to say in this connection that the Bihar and Orissa Excise (Second Orissa Amendment) Act, 1971 (Act 10 of 1971) has made good the deficiency, if any, by stating that the amending provisions shall be deemed always to have been so added or inserted or substituted. In this respect also, the impugned judgment of the High Court must be rectified.16. Mr. S.C. Agarwal has argued that the amount realised by the State for grant of the exclusive privilege under sections 22 and 29 was nothing but a tax and no such tax was permissible under Entries 45 to 63 of List II of the Seventh Schedule to the Constitution and that it was not excise duty within the meaning of Entry 51 or a fee under Entry 66. It has also been argued that En try 8 embodying the Police powers of the State could not be invoked to sustain such an imposition. Mr. Bhagat has also argued that the collection was in the nature of a tax and section 29 was therefore ultra vires the Constitution. Mr. Bhagat has also urged that the State was not the owner of the exclusive privilege to manufacture or sell liquor and that the Act did not empower it to part with that right on payment. We have given our reasons already for taking a contrary view, with reference to the decisions in Nashirwars case and Har Shankars case. The State has the exclusive right or privilege to manufacture, store and sell liquor and to grant that right to its license holders on payment of consideration, with such conditions and restrictions for its regulation as may be necessary in the public interest. The argument to the contrary is futile and is rejected.It has been argued by Mr. Agarwal that although the Amending Act of 1970 (Act 17 of 1970) was enacted for the purpose of getting over the High Courts declaration in O.J.C.No. 357 of 1970 that rule 103 of the Boards Excise Rules, 1965, in so far as it directs that fees for license for the retail vend of excisable articles shall be fixed by auction, was ultra vires the Act, rule 103 continued to remain invalid even after the promulgation of that Act because. such a rule could not be made under section 90(7) of the Act. Counsel has argued that as the rule was in- valid, it was not permissible to hold the impugned public auction because that was not permissible under any other provision of the Act. This argument is also futile because section 5 of the Bihar and Orissa Excise (Second Orissa Amendment) Act , 1971 (Act 10 of 1971) has substituted a new sub-section (2) for the old sub-section as follows, providing for auction, and it has been stated that it shall be "deemed always to have been substituted".-"(2) The sum payable under sub-section (1) shall be determined as follows, -(a) by auction or by calling tenders or otherwise as the State Government may, in the interest of excise revenue by general or special order direct."17. Then follow other clauses with which we are not concerned. Moreover section 17 of that Act has validated all grants mad e by way of licenses for manufacture and retail sale of country liquor in respect of any place on or after the 7th day of August, 1965, on which date the Boards Excise Rules (including rule 103) admittedly came into force. In this view of the matter, it is not necessary for us to examine the other arguments of Mr. Agarwal Which have been adopted by Mr. Bhagat regarding the invalidity of rule 103. It is not necessary to deal s eparately with the judgment of the High Court dated April 16, 1971 in O.J.C. No. 242 of 1967, which has given rise to civil appeal No. 2071 of 1972, or with its decision dated May 7, 1971 in O.J.Cs. No. 1185-1190, 1223, . 1224 and 1226 of 1970 (which has given rise to civil appeals Nos. 1855-1863 of 1972 and cross-appeals Nos. 351-359 of 1972) because they are based on the aforesaid decision dated April 16, 1971 in O.J.C. No. 786 of 1970. So also, it is not necessary to deal separately with the decision dated September 6, 1971 in O.J.C.No. 859 of 1970 and 863 of 1970 which have given rise to civil appeals Nos. 1235 and 1236 of 1972, for the same reason .This takes us to the judgment of the High Court dated March 28, 1974 in O.J.C.No.589 of 1972 which has given rise to civil appeal No. 1802 of 1974. That decision is based on the decision dated January 3, 1974 in O. J.C.No. 1036 of 1971. The petitioner in that case was a licensee for the retail sale of country liquor in Mayurbhanj district. He challenged the vires of sections 22 and 29 of the Act and claimed that the monthly consideration for the license was not due from him and that he was entitled to a refund of the money already paid by him. The High Court followed that decision and dismissed the writ petition. In doing so it relied on its decision dated April 16, 1971 in Siba Prasad Saha v. State of Orissa and other (I.L.R. 1971 Cuttack 777) and the decision of this Court in Jaiswals case (supra) and dismissed the petition. We have al ready dealt with the points which arise for consideration in this case while examining the earlier cases and we see nothing wrong with the impugned judgment of the High Court by which the writ petition has been dismissed.18.

Decision:
1[ds]We do not think that what the High Court held to be an "acceptance of the bid" at the "auction", even after the announcement of an express condition attached to it that the knocking down of the bid would not really be an acceptance of it by the Government, could be an acceptance of the bid at all. In the peculiar facts and circumstances of the auction, the bids were, apparently, nothing more than offers in response to invitation to make tenders, and such auctions were the mode of ascertaining the highest offers. The basic conditions for the emergence of rights through offers or conditions made and accepted, and acted upon, by paying any specified or agree d price as consideration, were thus wanting in this case. In fact the express and advertised terms of the auction made it clear that the money tendered was to be deemed to be deposited tentatively, pending the acceptance of the bid. So what we have before us are neither offers nor acceptance by the Government. There were only offers by the bidders to purchase the rights, subject expressly to their acceptance or rejectio n by the State Government. The essentials of any agreement and the mutuality of obligations were thus absent altogether.Moreover it was not an ordinary auction where binding agreement could be deemed to be concluded at the fall of the hammer, creating mutually enforceable obligations. Those were only so called auctions, adopted as means for ascertaining the highest offers for the exclusive privileges which the Govern ment alone could grant for carrying on a trade or business. considered noxious, under the law and which, because of its special character, could be regulated in any way, or even prohibited altogether, by the Govern- ment. This special character of the trade or business would appear from the power of the State Government to grant the exclusive privilege to. carry on trade in the manufacture and sale offollow other clauses with which we are not concerned. Moreover section 17 of that Act has validated all grants mad e by way of licenses for manufacture and retail sale of country liquor in respect of any place on or after the 7th day of August, 1965, on which date the Boards Excise Rules (including rule 103) admittedly came into force. In this view of the matter, it is not necessary for us to examine the other arguments of Mr. Agarwal Which have been adopted by Mr. Bhagat regarding the invalidity of rule 103. It is not necessary to deal s eparately with the judgment of the High Court dated April 16, 1971 in O.J.C. No. 242 of 1967, which has given rise to civil appeal No. 2071 of 1972, or with its decision dated May 7, 1971 in O.J.Cs. No. 1185-1190, 1223, . 1224 and 1226 of 1970 (which has given rise to civil appeals Nos. 1855-1863 of 1972 and cross-appeals Nos. 351-359 of 1972) because they are based on the aforesaid decision dated April 16, 1971 in O.J.C. No. 786 of 1970. So also, it is not necessary to deal separately with the decision dated September 6, 1971 in O.J.C.No. 859 of 1970 and 863 of 1970 which have given rise to civil appeals Nos. 1235 and 1236 of 1972, for the same reason .This takes us to the judgment of the High Court dated March 28, 1974 in O.J.C.No.589 of 1972 which has given rise to civil appeal No. 1802 of 1974. That decision is based on the decision dated January 3, 1974 in O. J.C.No. 1036 of 1971. The petitioner in that case was a licensee for the retail sale of country liquor in Mayurbhanj district. He challenged the vires of sections 22 and 29 of the Act and claimed that the monthly consideration for the license was not due from him and that he was entitled to a refund of the money already paid by him. The High Court followed that decision and dismissed the writ petition. In doing so it relied on its decision dated April 16, 1971 in Siba Prasad Saha v. State of Orissa and other (I.L.R. 1971 Cuttack 777) and the decision of this Court in Jaiswals case (supra) and dismissed the petition. We have al ready dealt with the points which arise for consideration in this case while examining the earlier cases and we see nothing wrong with the impugned judgment of the High Court by which the writ petition has been dismissed.