Case: State Of Punjab & Ors Vs. Balbir Singh Etc. Etc

BEG, C.J. 1. This appeal by special leave comes up before us from the judgment and order of the Division Bench of the High Court of Punjab and Haryana dismissing the appeal of the State of Punjab against the judgment and order of the learned single Judge given on 27 March 1967 in Civil Writ Case No. 2021 of 1966. The learned single Judge had allowed the petition of the respondent M/s. Balbir Singh & Sons. who were the highest bidders at an auction for country liquor vends relating to certain villages in the district of Ferozepore for the year 1965-66. Under the terms of the licence issued to the respondent on conditions specified before the auction, the auction fee and the security had to be deposited before lifting the minimum quota of liquor fixed under the licence. For reasons not mentioned in the judgment of the High Court, which considered it unnecessary to go into them, the respondent-firm did not lift the minimum quota of liquor fixed under the licence. It also did not pay the full amount of licence fee as undertaken by it. The Excise authorities of the appellant State, therefore, demanded payment of the still-head duty on the entire minimum quantity of liquor which the respondent-firm was required to lift under the licence. The High Court allowed the petition following an earlier decision of that court merely on the ground that the respondent-firm had not been given an opportunity of being heard. 2. After the judgment under appeal before us, this Court has clarified the whole position in several decisions, and in particular, in Har Shankar v. Deputy Excise and Taxation Commr., 1975 (3) SCR 254 : (AIR 1975 SC 1121 ) followed in Sham Lal v. State of Punjab, (AIR 1976 SC 2045 ). In Har Shankars case (supra). Chandrachud J. speaking for the Constitution Bench of this Court said as under : Those interested in running the country liquor vends offered their bids voluntarily in the auction held for granting licences for the sale of country liquor. The terms and conditions of auctions were announced before the auctions were held and the bidders participated in the auctions without a demur and with full knowledge of the commitments which the bids involved. The announcement of conditions governing the auctions were in the nature of an invitation to an offer to those who were interested in the sale of country liquor. The bids given in the auctions were offers made by prospective vendors to the Government. The Governments acceptance of those bids was the acceptance of willing offers made to it. On such acceptance, the contract between the bidders and the Government became concluded and a blinding agreement came into existence between them. The successful bidders were then granted licences evidencing the terms of contract between them and the Government , under which they became entitled to sell liquor.The licensees exploited the respective licences for a portion of the period of their currency, presumably in expectation of a profit. Commercial considerations may have revealed an error of judgment in the initial assessment of profitability of the adventure but that is a normal incident of the trading transactions.Those who contract with open eyes must accept the burdens of the contact along with its benefits.The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who , had their venture succeeded, would have relied upon those very powers to found a legal claim. Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contact. By such a test no. contract could ever have a binding force. 3. In the aforementioned case of Har Shankar, all the relevant authorities on th subject were quite exhaustively considered by this Court.Subsequent decisions of this Court have followed the principle laid down in Har Shankars case. Learned counsel for the State also drew our attention to a recent judgment of this Court in State of Punjab v. Mulkh Raj & Co. in Civil Appeals Nos.1381-1382 and 1737 of 1974, delivered on 28 January 1977 = (reported in AIR 1977 SC 1550 )where this Court held, inter alia that considerations governing cancellation of licence under S. 36 of the Punjab Excise Act 1914 are not relevant in considering the question whether the demand was lawful under the terms which became binding on both sides as a result of mutual obligations carried out by following the conditions on which the liquor vends were auctioned. It is the enforcement of the liabilities arising out of mutually agreed conditions of auction, which were sought to be enforced by the demand notice. which was quashed by the High Court.

Decision reasoning: 1[ds]3. In the aforementioned case of Har Shankar, all the relevant authorities on th subject were quite exhaustively considered by this Court.Subsequent decisions of this Court have followed the principle laid down in Har Shankars case. Learned counsel for the State also drew our attention to a recent judgment of this Court in State of Punjab v. Mulkh Raj & Co. in Civil Appeals2 and 1737 of 1974, delivered on 28 January 1977 = (reported in AIR 1977 SC 1550 )where this Court held, inter alia that considerations governing cancellation of licence under S. 36 of the Punjab Excise Act 1914 are not relevant in considering the question whether the demand was lawful under the terms which became binding on both sides as a result of mutual obligations carried out by following the conditions on which the liquor vends were auctioned. It is the enforcement of the liabilities arising out of mutually agreed conditions of auction, which were sought to be enforced by the demand notice. which was quashed by the High Court.