IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 11.03.2008 CORAM : THE HON’BLE MR. JUSTICE S.TAMILVANAN A.S.No.9 of 1997 1. Union of India Rep. By Chief Secretary Government of Pondicherry 2. The Commissioner of Excise Pondicherry. 3. The Deputy Commissioner (Excise) Deputy Collector, Karaikal. .... Appellants/Defendants. vs. N.R.M.Subramanian ..... Respondent/Plaintiff. Appeal filed against the Judgment and Decree, dated 30.04.1996 made in O.S.No.2 of 1996 on the file of the Principal District Judge, Pondicherry. For Appellants : Mr.T.Murugesan, Senior Counsel Spl. G.P. (Pondicherry) For Respondent : Mr.R.Thirugnanam JUDGMENT This appeal has been directed against the Judgment and Decree, dated 3004.1996 made in O.S.No.2 of 1996 on the file of the Principal District Judge, Pondicherry. 2. The appellants herein were the defendants in the suit before the trial court. The suit was filed by the respondent herein seeking a decree, declaring that the order of confirmation, dated 30.06.1995 in No.5153/95-96/C2 for shop No.3 (Arrack Shop) Karaikal Municipality in favour of the plaintiff is void abinitio and as such a nonest document incapable of being acted upon and in the alternate to grant mandatory injunction directing the defendants to ensure the location of shops 2 and 4, as per notification, dated 12.06.1995 in No.1531/T1/95. https://hcservices.ecourts.gov.in/hcservices/ 3. It is an admitted fact that the appellants had issued notification to auction for right of retail vend of Toddy and Arrack in the regions of Pondicherry, Karaikal and Mahe of the Union Territory of Pondicherry for the lease period between 01.07.1995 and 30.06.1996. The respondent herein was a successful bidder of shop No.2, Vizhidiyur-Neravy Commune and run the said shop and also participated in the auction for the Shop No.3 of Karaikal. 4. According to the respondent/ plaintiff, he had participated in the auction for Shop No.3 for Karaikal, after scrutinizing the prospects of the sale of the Shop No.3, he found that two shops numbering 2 and 4 at Vettaikaran Theru and Melaveli, which were originally notified to be located in two adjoining areas of Shop No.3 for the previous years were found to be located far away from Shop No.3 at Keezhaveli. As per the notification, Shop No.2 should be set up in TS No.6/7 Ward B, Block 2 of Thalatheru Revenue Village and that Shop No.4 at Melavali had to be set up in T.S.10 of Kovilpathu Revenue Village in Ward-D, Block 3. The said locations of Shop Nos.2 and 4 were of significance for the period 1995-96. Since as per the notifications for the previous years, the said two Shop Nos.2 and 4 were notified to be located in adjoining areas of Shop No.3, there was a keen competition for Shop No.3, Keezhaveli for the year 1996- 97. The respondent / plaintiff was the highest bidder for a sum of Rs.2,53,000/- per month and also paid advance kists of three months, amounting to Rs.7,59,000/- for getting confirmation order. It is not in dispute that the bid amount for Shop No.3 for the previous year was Rs.1,04,200/-. According to the respondent, he had made arrangements to locate Shop No.3 in T.S.No.1/2 pt. Ward-G, Block-7 of Keezhaveli Revenue Village and confirmation order was served on him in the first week of July 1995. However, Shop No.4, continued in the old notified area for the previous year giving an effective competition in the sales. So far as Shop No.2 is concerned, there was frequent auctions and the successful bidder run the Shop in the same previous location giving stiff competition, hence, the respondent sent a representation on 12.07.1995 to the third appellant herein, informing that the participants in the auction for 1995-96 believed that the Shop Nos. 2 and 4 would be located far away from Shop No.3, otherwise, he would not have gone for higher bid of offer. The respondent requested the defendants to ensure that Shop Nos. 2 and 4 were housed as per the notification of the auction for 1995-96 in the newly notified areas. According to the respondent, there was no reply from the appellants and Shop Nos. 2 and 4 continued in the old places without any change of location as mentioned in the notification for the year 1995-96, which caused great loss to Shop No.3 for the respondent. According to the respondent, the order of confirmation conveyed to him was nonest, incapable of being acted upon. With the above averments, he filed the suit seeking declaration and mandatory injunction. https://hcservices.ecourts.gov.in/hcservices/ 5. In the written statement, the appellants have admitted that the respondent was the successful bidder for Rs.2,53,000/- monthly kist in respect of Shop No.3, Keezhaveli for the period 1995-96 and that the confirmation order was communicated to the respondent on 30.06.1995. The security deposit of three months kist amounted for Rs.7,59,000/- was also paid by the respondent. According to the appellants, the respondent had lifted 417 litres of arrack per day, as per the Gazette Notification. There was no bidder for Shop No.2, hence, the same was not run by any one right from 01.07.1995 and therefore, according to the appellants, the loss sustained by him on account of Shop No.2 is not true. So far as Shop No.4 is concerned, the lessee thereof was running arrack business for sometime in an unauthorised place. When the same was brought to the notice of the third appellant through some other sources other than the respondent, he took immediate steps to see that Shop No.4 Melaveli was shifted to the notified place, as per the Official Gazette Notification No.48, dated 12.06.1995. According to the appellants, Shop No.4 was shifted to the notified place with effect from 29.09.1995 and also denied the averments of the respondent that he had given representation on 12.07.1995. According to the appellants, there was progressive increase in the bid amounts every year and the allegation that the respondent had sustained loss on account of Shop Nos. 2 and 4 functioning in the same old places was also denied by the appellants. With the above said pleadings, the appellants, as defendants had sought for the dismissal of the suit. 6. On the side of the respondent / plaintiff, his power of attorney was examined as P.W.1 and Exs.A.1 to A.8 were also marked. On the side of the appellants, the then Deputy Collector (Excise), Karaikal was examined as D.W.1, apart from marking Exs.B.1 to B.4. The trial court, considering the oral and documentary evidence decreed the suit with costs, directing the respondent to pay proportionate kist of Rs.1,04,200/- per month from 01.07.1995 to 30.06.1996 in full quit to the Government of Pondicherry and also granted mandatory injunction that proportionate stock of arrack to be supplied to the respondent. Aggrieved by the said Judgment and Decree, the appeal has been preferred. 7. Mr.T.Murugesan, learned Senior Counsel and also the Government Pleader (Pondicherry) appearing for the appellants submitted that the respondent being a statutory licensee to vend arrack is bound by the statutory conditions and rules and the court below cannot remake a new contract and alter the terms already agreed upon between the parties. The learned Special Government Pleader further contended that the Court below had exercised its power by reducing monthly kist amount from Rs.2,53,000/- to Rs.1,04,200/- without jurisdiction. In support of his contention, he relied on the following decisions: https://hcservices.ecourts.gov.in/hcservices/ 1. HAR Shankar vs. Dy. Excise and Taxation Commr., 1975 (1) SCC 737. 2. Asst. Excise Commissioner vs. Issac Peter, 1994 (4) SCC 104. 3. Khoday Distilleries Ltd., vs. State of Karnataka, 1995 (1) SCC 574. 8. In the decision, HAR Shankar vs. Dy. Excise and Taxation Commr., reported in 1975 (1) SCC 737, the Constitutional Bench of the Hon'ble Apex Court has held the contention that the citizen had either a natural or a fundamental right to carry on trade or business in liquor has been repeatedly rejected by the Supreme Court. In that appeal before the Hon'ble Supreme Court, the preliminary objection was taken and it was held that such of the appellants who offered their bids in the auction did so with a full knowledge of the terms and conditions attaching to the auctions and they cannot by their own writ petitions, be permitted to wriggle out the contractual obligations arising out of the acceptance of their bids. 9. In the decision, Khoday Distilleries Ltd., vs. State of Karnataka, reported in 1995 (1) SCC 574, the Constitutional Bench of the Hon'ble Supreme Court has held that a citizen has no fundamental right to trade or business in liquor as beverage and that the activities which are res extra commercium cannot be carried on by any citizen and that the state can prohibit completely trade or business in potable liquor, since trade or business in liquor as a beverage is res extra commercium. In the said decision, the Law and Subject relating to right to carry on trade or business in potable liquor has been summarized as follows : "(a) The rights protected by Article 19(1) are not absolute but qualified. The qualifications are stated in clauses (2) to (6) of Article 19. The fundamental rights guaranteed in Article 19 (1)(a) to (g) are, therefore, to be read along with the said qualifications. Even the rights guaranteed under the Constitutions of the other civilized countries are not absolute but are read subject to the implied limitations on them. Those implied limitations are made explicit by clauses (2) to (6) of Article 19 of our Constitution. (b) The right to practise any profession or to carry on any occupation, trade or business does not extend to practising a profession or carrying on an occupation, trade or business which is inherently vicious and pernicious, and is condemned by all civilised societies. It does not entitle citizens to carry on trade or business in activities which are immoral and criminal and in articles or goods which are obnoxious and injurious to health, safety and welfare of the https://hcservices.ecourts.gov.in/hcservices/ general public, i.e., res extra commercium (outside commerce). There cannot be business in crime. (c) Potable liquor as a beverage is an intoxicating and depressant drink which is dangerous and injurious to health and is, therefore, an article which is res extra commercium being inherently harmful. A citizen has, therefore, no fundamental right to do trade or business in liquor. Hence, trade or business in liquor can be completely prohibited." 10. As contended by the learned Government Pleader for Pondicherry State, auction of the right for retail rent of taddy and arrack by the state is res extra commercium, as it is outside the purview of any commercial transactions. 11. It is an admitted fact that for Shop No.3, the respondent herein was declared as successful bidder, as his offer was the highest bid amount of Rs.2,53,000/- per month. As per the evidence of D.W.1, Deputy Collector (Excise), Karaikal, there was no license given to run Shop No.2 at Karaikal Municipal area to rent arrack. Shop No.4 and as per Gazette Notification, it should be located at T.S.No.10 of Kovilpathu village. As per the auction condition, the shop had to be located in the notified area, namely, T.S.No.10 of Kovilpathu Village and during 1995, it was brought to the notice of the authorities that the arrack shop was running in the premises where it was located during the previous year and not in the notified area for the relevant period. After knowing the same, according to D.W.1, a notice was issued to the licensee to shift the premises to the notified place, accordingly, the arrack shop was shifted to the notified premises with effect from 27.09.1995. The letter intimating that the shop had been shifted to the original place has been marked as Ex.B.3 and Ex.B.4 is the seizure mahazar showing the articles belonging to Shop No.4 of Elizabeth Rani and subsequently, the same had been returned to the owner of Shop No.4 on 29.09.1995. According to D.W.1, there was no complaint by the plaintiff on 12.07.1995. 12. As per Ex.A.6, lease agreement (license agreement), the lease period was from 01.07.1995 to 30.06.1996, subject to the notification published in the Gazette No.48, dated 12.06.1995. The guaranteed quantity of the Arrack for the shop shall be 417 litres per day and subject to the provisions of Rule 178(A) of Pondicherry Excise Rules. 13. In the cross-examination, P.W.1 has admitted that six persons have participated in the auction for the Keezhaveli area, relating to arrack shop No.3. According to him, finally there was a competition in the bid between the respondent and the said Elizabeth Rani alone. According to him, he did not know whether Elizabeth Rani had made a bid for Rs.2,50,000/- per month, prior to the bid for Rs.2,53,000/- https://hcservices.ecourts.gov.in/hcservices/ made by the respondent. He has also admitted that he had lifted 12,927 litres of arrack from the Government Distilleries towards his quota for July 1995. According to P.W.1, the respondent had given a complaint to the third appellant on 12.07.1995 with regard to the functioning of arrack shop Nos.2 and 4 within Karaikal Municipal limit in the non-notified areas. 14. The alleged notice, dated 12.07.1995 has been denied by the appellants. For service of notice, no acknowledgment has been produced by the respondent. Further, P.W.1 has admitted in his evidence that he did not have any documentary evidence to show that the aforesaid complaint had been given to the authorities. 15. The main contention raised by Mr.T.Murugesan, learned Government Pleader is that the Court below cannot alter or modify the statutory contract made between the Union Territory of Pondicherry and the respondent. In support of his contention, he relied on the decision, Asst. Excise Commissioner vs. Issac Peter, reported in 1994 (4) SCC 104, wherein the Full Bench of the Hon'ble Apex Court has held as follows : "May be these are cases where the licensees took a calculated risk. May be they were not wise in offering their bids. But in law there is no basis upon which they can be relieved of the obligations undertaken by them under the contract, profit and loss being normal incidents of a business. There is no room for invoking the doctrine of unjust enrichment in such a situation. The said doctrine has never been invoked in such business transactions. The remedy provided by Article 226 or for that matter, suits, cannot be resorted to wriggle out of the contractual obligations entered into by the licensees." As per this decision, it has been made clear that the licensees who have taken calculated risk, subsequently, cannot resorted to wriggle out of the contractual obligations entered into by way of the statutory contract. Here in this case, admittedly the respondent had entered into the lease agreement (license agreement) to pay Rs.2,53,000/- per month as successful bidder of arrack shop No.3, Karaikal Municipal Limit (Keezhaveli), the trial Court by the impugned Judgment and Decree ordered that the plaintiff shall pay proportionate kist of Rs.1,04,200/- from 01.07.1995 to 30.06.1996 in full quit to the appellants herein (Government of Pondicherry) and the appellants herein do supply the proportionate stock of arrack to the respondent herein and also to pay costs of the suit. 16. As per the statutory contract, the respondent had to pay Rs.2,53,000/- per month for the period mentioned in the agreement, Ex.A.6. It is seen that the court below has altered the amount in to Rs.1,04,200/- per month. In the light of the decision of the Hon'ble https://hcservices.ecourts.gov.in/hcservices/ Apex Court cited above, alterations made by the court below is beyond the competency of the trial court. As contended by the learned Government Pleader appearing for the appellant, the court can only interpret the law, but cannot enact the same, so as to make material alterations in the contract. 17. Even in the suit, the relief sought for is to declare that the order of confirmation, dated 30.06.1995 in No.5153/95-96/C2 for shop No.3 (Arrack Shop) Karaikal Municipality in favour of the plaintiff is void abinitio and as such it is a nonest document, incapable of being acted upon and in the alternate to grant mandatory injunction directing the defendants to ensure the location of shops 2 and 4, as per notification, dated 12.06.1995 in No.1531/T1/95. Considering the prayer available in the plaint, it is clear that the court below has granted the relief exceeding its limit. 18. Mr.R.Thirugnanam, learned counsel appearing for the respondent submitted that even as per the interim order, the respondent was permitted to pay kist of Rs.1,04,200/- per month. Against the interim order, no revision was preferred by the appellants. 19. Based on the interim order, the court need not decide its final verdict. Merely because the respondent licensee was permitted to pay the amount based on the earlier bid amount, by the interim order, the respondent need not receive the amount, despite the final order passed in the Judgment. 20. During the cross-examination, P.W.1 was suggested that out of six bidders the next highest bidder to the respondent, Elizabeth Rani had placed her bid for Rs.2,50,000/- per month. In such circumstances, it would not be proper on the part of the court below entering into the domain of the Government and alter the statutory contract, by way of permitting the respondent to pay a lesser amount as that of the previous bid amount of Rs.1,04,200/- per month instead of Rs.2,53,000/- per month, since it is beyond the purview of the court below. 21. Mr.R.Thirugnanam, learned counsel appearing for the respondent contended that as per the notification, Shop No.4, Karaikal could have been run in the notified area, but the licensee of the said shop was running her arrack shop in the earlier notified area, which caused loss to the respondent and therefore, pleaded that on considering the equity, the appeal has to be disposed of. 22. This Court is of the view that merely because other licensee for Shop No.4 was running her shop outside her notified area, the respondent cannot be resorted to wriggle out of his contractual obligations. As when the contracts are entered into, pursuant to public auction, floating of tenders by a party cannot be accepted, as https://hcservices.ecourts.gov.in/hcservices/ there is no compulsion on anyone to enter into such contracts and hence, it is voluntary on both side. There can be no question of the State power being involved in such contracts and as such, which does not guarantee profit to the licensees in such contracts. There is no such warranty against incurring losses. As it is a business for licensees, they can make profit or incur loss is no concern of the State and as per law, it is entitled to its money under the contract. In the words of the Hon'ble Apex Court, in the aforesaid decision, it was made clear that it cannot be construed as if licensees are going to pay more to the State in case they make substantial profits. 23. Therefore, in the light of the decisions of the Hon'ble Apex Court referred to above, I am of the view that the appeal has to be allowed and the impugned Judgment and Decree rendered by the trial court is beyond its purview and the same has to be set aside. However, due to the running of the arrack shop by the other licensee of arrack Shop No.4 in a non-notified area, the respondent has said to have incurred loss, hence he is at liberty to approach the authorities to consider his grievance on equity. 24. In the result, the appeal is allowed and the impugned Judgment and Decree rendered by the court below are set aside. However, the respondent is at liberty to approach the Government of Pondicherry, to consider his grievance, within 15 days from the date of receipt of the copy of this Judgment and the same shall be disposed of by the said authority, within three months thereafter, according to law, considering the relevant factors on equity. However, there is no order as to costs. Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar. tsvn To The Principal District Judge Pondicherry. + 1 CC To Mr.R.Thirugnanam, Advocate SR NO.13593 + 1 CC to the Senior Government Pleader cum Senior Public Prosecutor, Pondicherry, SR NO 13504 A.S.No.9 of 1997 akr[co] gp/10.4. https://hcservices.ecourts.gov.in/hcservices/