Case: Guruvamma Vs. State of Karnataka & Others

1. Leave granted.2. The appellants husband late Annegowda had participated in an auction held on 5th /6th May, 1999 for lease of retail vend of arrack for the Excise Year 1999-2000 in respect of Mandya Taluk and Pandavanapura Taluk. He was the successful bidder. His bid was provisionally accepted and he deposited one months rent as earnest money i.e. amounting to Rs.94,00,100/-. The offer made by the husband of the appellant was confirmed by the Deputy Commissioner of Excise by his order dated 12th May, 1999 and the said confirmation order was communicated to the appellants husband on 1st June, 1999 and he was asked to execute the lease agreement. Though there is some controversy here, for the purposes of the present case still we will proceed on the basis that the said confirmation order dated 12th May, 1999 was communicated to the appellants husband on 1st June, 1999 and received by him on the same day. The appellants husband was required to execute a lease agreement within 15 days therefrom, as prescribed by Rule 16 of the Karnataka Excise (Lease of Rights of Retail Vend of Liquor) Rules, 1969 (hereinafter referred to as "1969 Rules"). However, on 16th June, 1999 the appellants husband passed away. The death, therefore, took place within 15 days of the date of receipt of the confirmation order i.e. 1st June, 1999. An offer was made to the appellant to run the business and execute the lease agreement. She declined the said offer on grounds of old age and inexperience in the field. At this stage, the bid offered by the appellants husband was canceled and the earnest money deposited by him was forfeited. The respondents proceeded to re-auction the lease and made the appellant liable for the loss that was occasioned to the State on account of such re-auction. The said amount was quantified at Rs.3,15,18,991.00. Aggrieved, the appellant moved the High Court.3. A learned single judge of the High court dismissed the writ petition against which a Writ Appeal was filed. The Division Bench of the High Court took the view that the amount of loss on account of re-auction should not be fastened on the appellant However, so far as the forfeiture of the earnest money is concerned, the Division Bench upheld the finding of the learned single judge and the decision of the authority that the said amount is liable to be forfeited. The Bench worked out the liability of the appellant at Rs.2,21,18,991/- by subtracting the amount of earnest money from the earlier computed figure of loss suffered due to the re-auction proceedings (Rs.3,15,18,991.00 – Rs.94,00,100.00). Aggrieved, this appeal has been filed.4. We have heard the learned counsels for the parties.5. The matter lies within a short compass. In view of the partial relief granted to the appellant by the Division Bench of the High Court, the issue with regard to forfeiture of the earnest money alone would require consideration. Under Rule 16 of the 1969 Rules, the person whose tender, offer or bid is confirmed under Rule 15 is required to execute the lease agreement with the State Government within 15 days from the date of communication of the confirmation order which in the present case is stated to be communicated on 1st June, 1999. The appellants husband passed away on 16th June, 1999. Therefore, it is on the 15th day from the date of communication and receipt of the confirmation order that the appellants husband had passed away. In other words, the period of 15 days contemplated by Rule 16 had not expired at the time of the death of the appellants husband so as to attract the liability sought to be imposed on the appellant by way of forfeiture of the earnest money. Irrespective of the above the fact of the death of appellants husband ought to have evoked compassion on the part of the State to relax the rigor of the Rules even assuming that the requirement of the Rules were not met. The argument that the leasehold right is a heritable right making the appellant, as the legal heir of her husband, liable cannot be accepted as no lease itself had been executed between the deceased husband of the appellant and the State Government. What really is contemplated by Rule 16 is the cancellation of the right to retail vend of liquor on failure to execute the lease deed. Such right must be deemed to have come to an end on the death of the appellants husband on 16th June, 1999.

Decision reasoning: 1[ds]5. The matter lies within a short compass. In view of the partial relief granted to the appellant by the Division Bench of the High Court, the issue with regard to forfeiture of the earnest money alone would require consideration. Under Rule 16 of the 1969 Rules, the person whose tender, offer or bid is confirmed under Rule 15 is required to execute the lease agreement with the State Government within 15 days from the date of communication of the confirmation order which in the present case is stated to be communicated on 1st June, 1999. The appellants husband passed away on 16th June, 1999. Therefore, it is on the 15th day from the date of communication and receipt of the confirmation order that the appellants husband had passed away. In other words, the period of 15 days contemplated by Rule 16 had not expired at the time of the death of the appellants husband so as to attract the liability sought to be imposed on the appellant by way of forfeiture of the earnest money. Irrespective of the above the fact of the death of appellants husband ought to have evoked compassion on the part of the State to relax the rigor of the Rules even assuming that the requirement of the Rules were not met. The argument that the leasehold right is a heritable right making the appellant, as the legal heir of her husband, liable cannot be accepted as no lease itself had been executed between the deceased husband of the appellant and the State Government. What really is contemplated by Rule 16 is the cancellation of the right to retail vend of liquor on failure to execute the lease deed. Such right must be deemed to have come to an end on the death of the appellants husband on 16th June, 1999.