N THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 10.12.2009 CORAM THE HONOURABLE MR. JUSTICE F.M.IBRAHIM KALIFULLAH AND THE HONOURABLE MR. JUSTICE T.S.SIVAGNANAM W.A.Nos.1322,1323, 1324, 1325, 1326 & 1327/2000 & W.P.Nos. 9337, 9338 & 9339/2000 &C.M.P.Nos.11698 to 11670/2000 W.P.M.P.No.13682 to 13684/2000 1. T.A.Anandan (Died) 2. Mrs.V.V.Chandri 3. T.Remabhai 4. T.P.Ramesh 5. T.Jayan 6. T.Reena 7. T.Sheeba 8. T.Rajesh ... Appellants in W.A.Nos.1322 & 1323/2000 Appellants 2 to 8 substituted as Lrs. of the deceased sole appellant vide order of Court dated 21.07.2008 made in W.A.M.P.Nos.88,89/2000 1. T.Ramadoss (Deceased) 2. Subashini Ramadoss 3. Sindhudoss 4. Nidhindoss ... Appellants in W.A.Nos.1324 & 1325/2000 Appellants 2 to 4 substituted as Lrs of deceased sole appellant vide order of Court dated 13.10.2009 made in W.A.M.P.Nos.111 &112/08 Kootendavida Nanu ... Appellant in W.A.Nos.1326 & 1327/2000 S/o Koran, "Ushalayam" Post. Pandakkal Mahe, Pondicherry State, rep. by his Power Agent, P.A.Thambi,S/o Appu. Panthayil House, Kandanasserry, Trichur District,Kerala State. https://hcservices.ecourts.gov.in/hcservices/ Koottendavida Nanu ... Petitioner in W.P.No.9337/2000 1.T.Ramadas(Deceased) 2.Mrs.Subashini Ramadoss 3.Ms.Sindhudoss 4.Mr.Nidhindoss ... Petitioner in W.P.No.9338/2000 (Petitioners 2 to 4 substituted as L.Rs. of deceased sole petitioner vide order of Court dated 10.12.2009 made in W.P.M.P.No.1143/08 in W.P.No.9338) 1.T.A.Anandan(died) 2.Mrs.V.V.Chandri 3.Mrs.T.Remabhai 4.T.P.Ramesh 5.T.Jayam 6.Mrs.T.Reena 7.Mrs.T.Sheeba 8.T.Rajesh ... Petitioners in W.P.No.9339/2000 Petitioner 2 to 8 impleaded as L.R's of the deceased petitioner T.A.Anandan as per Court order dated 21.07.2008 in W.P.M.P.No.1111/2008 in W.P.No.9339/2000 Vs. 1.Union Territory of Pondicherry, rep. by Secretary to Government, Revenue Dept. Govt. of Pondicherry, Pondicherry. 2.The Deputy Commissioner (Excise) Govt. of Pondicherry, Mahe, Pondicherry U.T. 3.The Excise Commissioner, Govt. of Pondicherry, Pondicherry. ... Respondents for all W.As & W.Ps. COMMON PRAYER IN ALL WRIT APPEALS: Writ appeals filed under clause 15 of the letter patent against the order dated 04.12.1998 made in W.P.Nos.8104, 8103, 8105, 8105, 6804 & 6804/1998. https://hcservices.ecourts.gov.in/hcservices/ Prayer in W.A.No.1323/2000:- Writ Appeal filed under clause 15 of the letter patent against the order dated 4.12.98 made in W.P.No.8103/98 filed under Article 226 of the Constitution of India to issue a writ of certiorarified mandamus calling for the records relating to the order of confirmation dated 4.10.97 on the file of the third respondent relating to Arrack shop No.1 at Chalakkara, Mahe, Pondicherry (U.T) for the year 97-98 and the consequent order dated 21.4.98 on the file of the third respondent demanding a sum of Rs.17,56,903/- on the file of the third respondent herein to refund a sum of Rs.77,605/- deposited by the petitioner as E.M.D. for Arrack shop No.1, Chalakkara, Mahe, Pondicherry (U.T) for the year 1997-98. W.A.Nos.1324/2000:- Writ Appeal filed under clause 15 of the letter patent against the order dated 4.12.98 made in W.P.No.8105/98 filed under Article 226 of the Constitution of India to issue a writ of certiorarified mandamus calling for the records relating to the order of confirmation dated 4.10.97 on the file of the third respondent relating to Arrack shop No.2 at Pandakkal (via) Mahe, Pondicherry (U.T) for the year 97-98 and the consequent order dated 21.04.1998 on the file of the 3rd respondent demanding a sum of Rs.29,09,623/- on the file of the third respondent and to quash the same and to direct the respondents herein to refund a sum of Rs.93,170/- deposited by the petitioner as E.M.D. for Arrack Shop No.2 Pandakkal (via) Mahe, Pondicherry (U.T) for the year 1997-98. W.A.Nos.1326/2000:- Writ Appeal filed under clause 15 of the letter patent against the order dated 4.12.98 made in W.P.No.7082/98 filed under Article 226 of the Constitution of India to issue a certiorarified mandamus calling for the records relating to the order of confirmation dated 4.10.97 on the file of the third respondent relating to Arrack shop No.3 at Palloor Village, Mahe, Pondicherry (U.T) for the year 97-98 and the consequent order dated 21.04.1998 on the file of the 3rd respondent demanding a sum of Rs.26,16,559/- on the file of the third respondent and to quash the same and to direct the respondents herein to refund a sum of Rs.96,000/- deposited by the petitioner as E.M.D. for Arrack Shop No.3 at Palloor Village, Mahe, Pondicherry (U.T )for the year 1997- 98. Prayer in W.P.No.9337/2000: The Writ Petition filed under Article 226 of the Constitution of India for issue of Writ of Certiorarified Mandamus to call for the records relating to the order dated 05.10.1999 bearing No.2378/A2/99-2000, Mahe on the file of the Second respondent and to quash the same and to direct the respondent herein to refund a sum of Rs.96,000/- deposited by the petitioner as https://hcservices.ecourts.gov.in/hcservices/ E.M.D. for Arrack shop No.3, Pallor Village, Mahe, Pondicherry (U.T) for the year 1997-1998. Prayer in W.P.No.9338/2000: The Writ Petition filed under Article 226 of the Constitution of India for issue of Writ of Certiorarified Mandamus to call for the records relating to the order dated 05.10.1999 bearing No.2378/A2/99-2000, Mahe on the file of the Second respondent and to direct the respondents and to quash the same and to direct the respondent herein to refund a sum of Rs.93,170/- deposited by the petitioner as E.M.D. for Arrack shop No.2, Pandakkal, Mahe, for the year 1997-1998. Prayer in W.P.No.9339/2000: The Writ Petition filed under Article 226 of the Constitution of India for issue of Writ of Certiorarified Mandamus to call for the records relating to the order dated 05.10.1999 bearing No.2378/A2/99-2000, Mahe on the file of the Second respondent and to direct the respondents and to quash the same and to direct the respondent herein to refund a sum of Rs.77,605/- deposited by the petitioner as E.M.D. for Arrack shop No.1, Challakara, Mahe, for the year 1997-1998. For Appellants/Petitioners:Mr.G.Masilamani, Senior Advocate For Respondents :Mr.T.Murugesan Govt. Pleader cum Public Prosecutor (Pondicherry Govt.) COMMON ORDER T.S.SIVAGNANAM,J. Since the issue involved in this batch of cases are identical, they are taken up together for disposal. For the purpose of disposal of these matters, the facts in W.A.No.1326/2000 and W.P.No.9339/2000 are taken up for consideration. Writ Appeal Nos. 1323, 1324 & 1326/2000 have been filed against W.P.Nos.8103/1998, 8105/98 & 7082/98. The prayer in the said writ petitions were for issue of a writ of certiorarified mandamus to quash the order passed by the third respondent herein, dated 04.10.1997 and the consequential demand dated 21.04.1998. 2. Writ Appeal Nos.1322, 1325 & 1327/2000 have been filed against the orders in W.P.Nos.8104, 8106 and 6804/1998. The prayer in the said Writ Petitions were for issuance of a writ of declaration to declare the condition “A bid once offered shall not be withdrawn” incorporated in Section 152 (5) of the Pondicherry Excise Act 1970 as unconstitutional. 3. All the Writ Petitions came to be disposed by a common order dated 04.12.1998 as against which the present Writ Appeals have been filed. https://hcservices.ecourts.gov.in/hcservices/ 4. W.P.Nos. 9337, 9338 &9339/2000 have been filed challenging the order of recovery of kist amount from the petitioners, being the alleged loss of revenue in respect of the tender for right to vend arrack. These Writ Petitions have also been tagged along with the above Writ Appeals and are heard together. 5. The matter arises under the provisions of the Pondicherry Excise Act 1970 and the Rules framed thereunder (hereinafter referred to as 'the Act' and the Rules). Essentially the dispute relates as to whether the order of confirmation of auction for grant of privilege to vend arrack, stated to have been passed in favour of the petitioners was done within a reasonable time, as contemplated under the Rules, as to whether the appellants would be entitled to withdraw their bids on the ground that there was no valid order of confirmation in their favour and such confirmation was not done within a reasonable time and as to whether the appellants could be denied the relief on the ground that there is no fundamental right to carry on trade or business in liquor as the same is "res extra commercium" (outside commerce) and the principles of "res commercium" and the Mercantile Law has no application. 6. The facts giving rise to the present litigation is as follows:- The third respondent issued a notification dated 19.07.1997 under the Pondicherry Excise Rule, 1970, bringing to the notice of the Public the exclusive privilege of selling toddy and arrack for the period from 01.08.1997 to 30.06.1998 in the shops specified in schedule I and II of the notification. The present issue relates to arrack shops in Mahe Region and three of the bidders are the appellants and the petitioners in the above matters. In terms of the notification, the bid is to be offered on monthly rental basis for the duration of the license period and the licensee is liable to pay the rental for the entire license period of the 11 months. The notified date of auction was on 29.07.1997 at 8.00A.M to be conducted by the Deputy Commissioner and the sale was subject to the provisions of the Act and Rules and the conditions of sale set down in the notification. It is seen that the auction was not conducted on the notified date, but was conducted after a period of six days on 04.08.1997. The appellants participated in the auction sale conducted on 04.08.1997 in respect of three shops namely Shop- I, II and III of Mahe Region. The conditions of sale which are relevant for the purpose of these appellants are that, person who desires to participate in the auction shall produce a challan for remitting the earnest money to an amount equivalent to 10% of the eleven months upset price for the shop and the other records to be produced are a Solvency Certificate, Nil Arrears Certificate from the Deputy Tashildar, a certificate from an M.L.A or M.P stating that the bidder has not been sentenced by a Court of Law for a offence involving moral turpitude, Income Tax Clearance Certificate https://hcservices.ecourts.gov.in/hcservices/ and Birth Certificate. These certificates are required in terms of stipulation under Rule-4 and condition 4 of the sale conditions. After having complied with the requirements, the list of intending bidders was prepared and in terms of condition 6(2) of the conditions of sale, they were required to give an undertaking in Form U-1 confirming that they were aware of the condition of the sale and other formalities and in case, he is declared as successful bidder he should comply with the other requirements. The intending bidder was required to remit a sum of Rs.5,000/- as participation fee in terms of condition 6(3). Clause 10 to 14 of the condition of sale are very relevant for the purpose of this case. In terms of clause 10(1), the person whose bid has been accepted provisionally, shall immediately produce the original title deeds of the property offered by him as security, upon failure to produce, it is open to the Excise Official to select the next highest bidder. In terms of clause 10(2), the person whose bid is provisionally accepted shall execute an undertaking that he will not withdraw from the offer made by him and the offer will be binding on him. The agreement to be executed is as per the statutory format in Annexure IV to the notification. In terms of clause 13, the acceptance of the bid shall be subject to the confirmation of the Government and the order of confirmation or refusal to confirm shall be communicated to the person concerned within a reasonable time. 7. Clause 14 deals with the requirements to be complied with by person whose bid is confirmed by the Government. The person whose bid is confirmed is required to remit the security deposit equal to five months bid amount within five days from the date of communication of the confirmation order, to execute and register an agreement of lease in the prescribed format with the Government within ten days from the date of receipt of a confirmation order, execute a mortgage at his expense in the statutory form DM-1 in respect of the property offered as security, which shall also be done within ten days from the date of receipt of a confirmation order. In terms of clause 14(2), if security deposit is not remitted within five days, the confirmation order issued under clause -13 shall stand automatically cancelled without notice to the bidder. In terms of clause 14(3), if the mortgage deed is not executed within 10 days, order of confirmation shall stand automatically cancelled without notice to the bidder and deposit made shall be forfeited and right to vend would be granted to next highest bidder. Thus, it could be seen that a definite time schedule has been prescribed under the Rules for the bidder to comply with formalities after the order of confirmation. However, the order of confirmation is required to be made by the Government and shall be communicated to the person concerned within a reasonable time. It is true that no https://hcservices.ecourts.gov.in/hcservices/ time limit has been prescribed under clause 13 and the expression used is within a reasonable time and the whole controversy in the present case revolves around the interpretation of the expression "reasonable time". 8. As noted above, though the auction was notified to be held on 29.07.1997, the same was not held on the said date, but held on 04.08.1997. The bids of all the three appellants were provisionally accepted in terms of clause 10(1) of the conditions of sale. According to the appellant, the order of confirmation was not passed within a reasonable time and therefore, the appellants submitted a representation on 23.09.1997 stating that substantial money has been paid by them and there is no response from the Government for nearly two months and the Government cannot retain such money without issuing license for such a long period of time and therefore requested for return of caution deposit and the original title deeds immediately. This has been followed by another representation dated 17.10.1997 wherein, it was stated that the appellants expected the order of confirmation or refusal to be communicated within one week and having not done so, the appellants cannot proceed further, since the Onam festival season is over and the pilgrim season has commenced, there would be a substantial drop in the consumption of liquor during the said period. It was further stated that the time taken was not a reasonable one and therefore, they were justified in withdrawing the offer. The earlier representation dated 23.09.1997 was also referred in the representation dated 17.10.1997. The representation was sent by registered post and received by the Deputy Commissioner (Excise), Mahe on 17.10.1997. Another representation has been sent on 08.12.1997 to His Excellency Lt. Governor, Union Territory of Ponicherry and in the said letter, it has been mentioned that the appellants were orally informed by the clerk attached to the office of the Deputy Commissioner (Excise), Mahe that their offer was accepted by the Government on 04.10.1997 and that the appellant has withdrawn his offer by letter dated 23.09.1997. In view of the stand taken by the appellant, a re- auction notification was issued on 16.10.1997 and re-auction was conducted on 23.10.1997, thereafter, by an order dated 21.04.1998, the appellants were slapped with a demand towards loss of revenue to the Government and they were required to pay the kist amount for the days between 04.10.1997 and 10.11.1997 (date of confirmation of the lessee in the re-auction) and the difference of kist amount. The said demands were impugned in W.P.Nos.8103, 8105 and 7082/1998. As stated, the other three W.Ps. namely W.P.Nos.8104, 8106 & 6804/1998 had been filed by the appellants challenging the statutory provisions, which states that the bid once offered shall not be withdrawn. https://hcservices.ecourts.gov.in/hcservices/ 9. Mr. G.Masilamani, learned senior counsel appearing for the petitioner would assail the correctness of the impugned order on various ground. Firstly, that the conditions of sale states that the bid, which has been offered is subject to confirmation by the Government and confirmation or refusal to confirm shall be communicated to the person concerned within a reasonable time. What would be reasonable time should be considered taking into consideration the facts and the circumstances of the case and the time schedule stipulated under Act, Rules and conditions of sale. It is contended that by taking note of the time schedule fixed for compliance of various requirements by the bidder after confirmation, the reasonable time for Government to pass an order under clause 13 should be in one week. 10. Learned Senior counsel would further submit that the auction was notified on 29.07.1997 and the period of license was for eleven months. The auction was not conducted as per the schedule and was conducted only on 04.08.1997 and there is a delay of six days. Since no order of confirmation was passed for nearly two months, the appellant had withdrawn the offer on 23.09.1997 and sought for return of caution deposit and original documents of title. This request was reiterated in the subsequent representations dated 17.10.1997 and 08.12.1997, that the appellants were orally informed on 06.10.1997 that the Government has confirmed the bid in favour of the appellants on 04.10.1997. Though, this oral information was given by a clerk in the Excise Department, no written communication was received in this regard and even while filing the writ petition, the petitioners sought for dispensing the production of the order of confirmation dated 04.10.1997 and the same was permitted by this Court. The condition under Rule 151(5) stating that the bid once offered shall not be withdrawn is unguided, unjust and is an unfettered power and the same is violative of Article 14 and 19(1)g of the Constitution of India. It is further submitted by the learned Senior counsel appearing for the petitioners to do or not to do business in alcohol is not a fundamental right, but if the State decides to business in alcohol, it shall treat the citizen fairly and justly and the same shall satisfy the touch stone of Article 14 of the Constitution and there cannot be any arbitrariness merely because it is a business in alcohol. While interpreting what is reasonable time, the tenure of the lease period is a very relevant fact and a basic element and in the instant case no decision was taken within a reasonable time, the tenure of lease was unilaterally and drastically reduced to eight months by the belated order of confirmation said to have been passed on 04.10.1997 after more than 60 days from the date of auction, which was not also communicated to the petitioners, that inspite of three representations sent by the appellant withdrawing their bids, they were not favoured with any reply, that the so called confirmation is stated to have been made on 04.10.1997 which happened to be a Sunday and an officially https://hcservices.ecourts.gov.in/hcservices/ declared holiday by the Government, that all the circumstances would establish that the respondents have not acted fairly or reasonably, that the conduct of the respondents was unusual, which goes to establish that there was no legally valid order of confirmation, that it was not a case of concluded contract that it was well open to the appellant to withdraw their bids much earlier to the alleged order of confirmation, and the undertaking obtained from the appellants prior to confirmation cannot operate as an estoppel, since no action was taken to pass orders of confirmation within a reasonable time. 11. Learned Senior counsel would submit that reliance placed by the respondents before the Learned Single Judge on Judgments to support the stand that there is no fundamental right to trade in liquor and the said product is "res extra commercium" would not apply to the facts and circumstances of this case, since the question involved in the present litigation is as to whether the action of the State is reasonable and fair and as to whether its satisfies the touch stone of Article 14 of the Constitution. According to the learned senior counsel, since the Government decided to do business in alcohol, it is only thereafter the bids are invited and therefore, it falls outside the realm of the theory of "res extra commercium" and this Court has sufficient jurisdiction to examine the legality and validity of the state action. 12. Leaned Senior Counsel appearing for the petitioners relied on the following Judgments for the proposition that there is no exclusion of Article 14 in contractual matters. i)Shrilekha Vidhyarth Vs. State of U.P. [1991(1)SCC 212] ii)ABL International Limited Vs. ECGCI [2004(3) SCC 553] iii)FCI and others Vs. SEJL Limited and others [2008(3) SCC 440] Learned Senior Counsel relied on the following decision in support of the contention that, what would be the reasonable time when no time limit is prescribed. i)Government of India Vs. Citadel Fine Pharmaceuticals and Others [1989(3) SCC 483] ii)H.I Trust Vs.Aaridas Mundhra[AIR 1972 SC 1826] iii) State of Kerala Vs. Narayana Pillai [2001(1) KLT 166 (SC)] 13. Mr.T.Murugesan, learned Senior Counsel appearing for the respondents would contend that the right to trade in alcohol is https://hcservices.ecourts.gov.in/hcservices/ vested with the State and the said right has not been parted away by the State and the theory of "res commercium" has no application and in view of the decision of the Constitution Bench of the Hon'ble Supreme Court in Khoday Distilleries Limited and Others Vs. State of Karnataka and others [1995 (1) SCC 574], the writ petitions itself were liable to be dismissed. It is further submitted that there is no invitation to the trade and the appellants had volunteered themselves and since the licence is in respect of right to vend liquor, the concept of Mercantile Law has no application. 14. Learned Senior Counsel would further submit that the order of confirmation was passed and the same was attempted to be served on the petitioners, but was refused to be received and the order has been passed within a reasonable time and even assuming without admitting, the non-service of order of confirmation is of no consequence, since the petitioner has given a statutory undertaking in Form No.U-2 and the order of confirmation is only a consequential action. It is further submitted that there were valid reasons as to why the order was not passed immediately and it has to be held that the time taken to pass the order was reasonable. By placing reliance on Rule 151 (5), it is submitted that the petitioner cannot withdraw from the offer and the stand taken by the appellants is only with an intention to wriggle out of the contract and the contention raised by the Appellants were rightly rejected. It is further submitted that in view of the law laid down by the Hon'ble Supreme Court in Assistant Excise Commissioner Vs. Issac Peter and Others [1994 (4) SCC 104] the prayer sought for in the writ petitions were not maintainable as the petitioners have no fundamental right to trade in liquor and such power had always vested with the state. 15. The learned senior counsel appearing for the respondents would rely upon the following Constitutional Bench Judgment of the Hon'ble Supreme Court (1) 1975 1 SCC 737 Har Shankar and others Vs. The Dy. Excise & Taxatiom Commissioner and others (2) 1995 1 SCC 574 Khoday Distilleries Ltd. And others Vs. https://hcservices.ecourts.gov.in/hcservices/ State of Karnataka and others and the decision of the Hon'ble Supreme Court in 2004 11 SCC 26 State of Punjab and others Vs. Devan Modern Brewaries Ltd. And others 16. On the above grounds the learned Senior counsel would submit that the order passed in the writ petition calls for no interference. 17. We heard at length the respective senior counsel appearing for the appellants and respondents and perused the materials available on record. Before proceeding to discuss the fact in issue, it would be appropriate to first consider the submissions made by the learned senior counsel appearing for the respondents, contending that the right to trade in alcohol is vested with state and the said right has not been parted away and the theory of "res commercium" has no application as the trade or business in potable liquor is a trade or business falls within the concept of "res extra commercium". The learned senior counsel