THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE VILAS V.AFZULPURKAR WRIT APPEAL No.522 of 2010 July 16, 2010 Between: B.Vijay Bhaskar Reddy, S/o.Budda Reddy … Appellant AND The Commissioner for Prohibition and Excise, Government of Andhra Pradesh, at Hyderabad And others THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE VILAS V.AFZULPURKAR WRIT APPEAL No.522 of 2010 JUDGMENT: The Andhra Pradesh Excise (Lease of Right of Right of Selling by shop and Conditions of Licence) Rules, 2005 (hereafter, the Rules) apply for the grant of privilege by shop, conditions governing thereof and transport of Indian Liquor and Foreign Liquor by the leaseholders. In exercise of powers under the Rules 5 and 11 of the Rules, the District Collector, Kurnool, second respondent herein, (hereafter, the Collector/Auctioning Authority), issued notification dated 27.5.2010 inviting tenders for grant of lease (licence in Form A4) for a period of two years i.e., from 01.7.2010 to 30.6.2012. Shop, gazette Sl.No.114 at Gadivemula Village, was also notified with an upset price of Rs.87,70,000/-. Appellant, fourth respondent and four others submitted tenders. The fourth respondent offered Rs.2,07,99,999.99 ps and the appellant offered Rs.1,90,00,008/-. Fourth respondent was absent when the tenders were opened on 07.6.2010. Appellant was next highest bidder. Appellant alleged that he alone is entitled to grant of licence under the Rules. But the Deputy Commissioner of Prohibition and Excise sent a report on the same day to first respondent seeking clarification. By impugned order dated 10.6.2010, first respondent clarified purportedly under Rule 60 of the Rules requesting the Collector to allot A4 shop to fourth respondent. In the challenge to the said order, by impugned order dated 01.7.2010, after perusing the record, learned Single Judge held that, (i) the auction register does not contain endorsement that the appellant herein is highest bidder; (ii) the auction register does not indicate that the bid has been knocked down in favour of petitioner; (iii) the Collector ignored the tender offered by fourth respondent and proceeded to accept the tender of petitioner, who stood in second place; and (iv) the very procedure adopted by the Collector is contrary to Rule 14 of the Rules. The Counsel for appellant submits that the Commissioner has no power to set aside the decision taken by the Collector and that when the fourth respondent was not present at the time of auction, bid was knocked down in favour of appellant, as he is next highest bidder. He would urge that when once a decision is taken in purported exercise of power under Rule 60 of the Rules, the decision cannot be clarified nor reversed by the Commissioner of Prohibition and Excise. Relying on Rule 14 (7) and 16, the Counsel submits that when once the highest bidder is absent at the time of auction, the bid should be decided in favour of next highest bidder, who has signed against the relevant entry in the Register maintained for that purpose. Per contra, the Assistant Government Pleader for Excise relies on Sub rules (6), (7) and (9) of Rule 14 of the Rules and contend that the absence of a tenderer who offered highest bid shall not affect his tender and the acceptance of the same is binding on all the tenderers. As reliance is placed on Rule 14 (6), (7) and (9) of the Rules, we may quote the same as under. “14 Submission and finalisation of tenders:- (6) The tenderer shall be present at the place of auction at the time of opening of the tenders, but his absence shall not affect his tender or the auction proceedings. (7) The auctioning authority shall open sealed tenders for each shop notified for auction. The highest tender may be accepted if the lease amount offered is higher than the upset price notified by way of announcement by the auctioning authority at the place of public auction, o the name of the highest tenderer and the lease amount offered and the rest of the tenders shall be rejected. Notwithstanding the absence of the tenderer, the acceptance of the highest tender by the auctioning authority shall be binding on the tender. Provided that when on the opening of the sealed tenders it is found that two or more tenderers have quoted the same highest amount, the successful auction purchaser among such tenderers shall be selected by drawal of lots: Provided further that if the highest tender is less than the upset price notified, the auctioning authority may provide an opportunity to the highest tenderer to increase his offer to an amount higher than the upset price and accept the offer. If the highest tenderer is not willing to increase his offer to an amount higher than the upset price, the second highest tenderer may be given a similar opportunity. If both the tenderers are not willing to increase the offer to an amount higher than the upset price, all the tenders in respect of that shop shall be rejected and it shall be put to re-auction. Provided also that if the auctioning authority considers that the auction should be postponed for a future time and date for any reason he may do so without opening the tenders. Provided also that it shall be open to the auctioning authority to refuse to knock down the auction in favour of the highest tenderer if such authority is satisfied after a perusal of the affidavit that such tenderer cannot reasonably be expected to discharge his/her liabilities in terms of the lease. Provided also that where the highest tender is not accepted, the auctioning authority shall record the reasons thereof. (9) After rejecting, the highest tender the auctioning authority may either accept the next highest tender if it is higher than the upset price or dispose off the shop afresh at any subsequent notified auction as the case may be. A plain reading of Sub rules (6), (7) and (9) of Rule 14 of the Rules would reveal the following procedure to be adopted in the auction conducted by the Auctioning Authority: (i) the highest tender may be accepted, if the lease amount is offered by the highest price, and notified by way of announcement of name of the highest tenderer. In such event, the rest of the tenders shall be rejected; (ii) Sub rules (9) and (7) of Rule 14 of the Rules with non-abstante clause mandate that even if the highest tenderer is absent, the acceptance of his tender (when once the name is announced) is binding on the tenderer; (iii) if the highest tender is not accepted, the Auctioning Authority shall record reasons therefor; (iv) if there are two or more tenderers who have quoted the same highest amount, the successful auction purchaser shall be selected by drawal of lots; (v) if the highest tender is less than the upset price, the Auctioning Authority may negotiate with highest tender to increase the offer and if he is unwilling, negotiations shall be held with second highest tenderer. If both of them are not willing to increase the offer to an amount higher than the upset price, all the tenders shall be rejected and it shall be put to re-auction; (vi) the right is reserved to the Auctioning Authority to refuse to knock down the auction in favour of highest tenderer if he satisfied that the highest bidder cannot discharge his/her liabilities in terms of the lease; and (vii) it is only after rejecting the highest tender, the Auctioning Authority may either accept next highest tender or dispose of or notify the shop for fresh auction. Rule 16 of the Rules does not in any manner dilute or whittle down the effect of Rules 14 (6), (7) and (9) of the Rules. If the submission of appellant is accepted, it would be ignoring the non- abstante clause in Rule 14(7) of the Rules. Further, unscrupulous persons who are not serious about the business may file tenders quoting the fancy figures and may conveniently remain absent from the auction hall to create situation for conducting fresh auction or for other purposes. Therefore, the Rule requires to be read giving plain meaning. What is the effect of absence of fourth respondent when the auction was announced? There is no dispute that fourth respondent appeared before the Auctioning Authority on the same day. The Collector instead of accepting highest tender thought it fit to seek clarification from the Commissioner. Be it noted, the Rule 60 of the Rules empowers the Commissioner to clarify the position if there is any doubt or dispute regarding application or interpretation of the Rules. The Commissioner did precisely the same thing. Further Section 3(2) of the Andhra Pradesh Excise Act, 1968, confers plenary powers on the Commissioner (appointed under Section 3(1) read with 2(6) of the Excise Act) to exercise all power of the Collector and shall have the control of administration of Prohibition and Excise Department. Therefore the plea that the Commissioner lacks competency is to be rejected. From the record, we also find that the very contention of the appellant that his tender was accepted as the highest bidder is factually incorrect. The consideration of the tender of the appellant who is the second highest bidder would arise only if the fourth respondent’s highest tender was not accepted. As per the rules, even if the fourth respondent was absent at the auction, his tender was not affected by his absence and his tender was never rejected by the auctioning authority. On the contrary, the endorsement of the auctioning authority in the auction register is as follows, “seek clarification, meanwhile kept in abeyance” Thus when the tender of the fourth respondent was not rejected and a clarification was sought for from the Commissioner, there is no question of consideration of the appellant’s tender who is the second highest bidder. The writ petition filed by the appellant on a misconception that his tender was accepted, in preference to the fourth respondent’s tender, is factually unsustainable. In the result, for the above reasons, we hold that the impugned judgment of the learned Single Judge does not suffer from any error and no interference is called for. The writ appeal is therefore dismissed. ________________ (V.V.S.RAO, J) ______________________________ (VILAS V.AFZULPURKAR, J) July 16, 2010. YS