Case: P. Bhooma Reddy Vs. State Of Mysore &amp; Ors

is a dispute on the question whether the circular was sent to the districts of Gulberga and Raichur.In so far as the circular attempted to modify Rule 19 it was ineffective. The Excise Commissioner, had no power to abrogate or modify a rule framed under Section 71.On behalf of the appellant it was argued that as the Chief Controlling Authority the Excise Commissioner could frame regulations under Section 3 read with Rule 24 and could issue general instructions on the subject of taking security in cases not cover by R. 19. We express no opinion on this question, as the Government has already withdrawn the circular. But we must observe that relying on this circular the appellant deposited two months rent as required by the circular in addition to the two months rent as required by Rule 19 sub-rule (2) and that such deposits were duly made within 15 days from the date of the sale. However, it is not necessary for the appellant to rely on the terms of the circular. He has complied with the provisions of Rule 19 and the sale in his favour cannot be cancelled.15. On behalf of respondent No. 4 it is argued that the appellant bought the right of retail vend as benamidar for some other person, that his benami bid was opposed to R.12 and could not be accepted and that as the sale of liquor by the real buyer without a licence in his favour was illegal in view of Sections 15 and 26, the appellant was not entitled to any relief in view of the decision in Venkata Subbayya v. Attar Sheikh Mastan, AIR 1949 Mad 252 . The onus is upon the respondent to prove that the appellant made a benami purchase. It appears that the appellant is a retired inspector drawing a pension of about Rs. 75/- per month. He is not an income-tax or a wealth tax assessee. He does not own any property in Mysore State. The appellant says that he owns immovable properties in Andhra pradesh but he did not file the title deeds in respect of them. However, the appellant was in possession of a large amount of ready cash. Before June 25, he deposited about Rs. 40 lakhs and thereafter deposited about Rs. 50 lakhs. There can be no doubt that the appellant has the backing of powerful financiers. There is no specific charge that some named person is the real purchaser. From the materials on the record it is not possible to record a finding that the appellant is a benamidar and that some other person is the real purchaser. The purchase is not illegal merely because the appellant obtained the necessary funds from some financiers. The government never alleged that the appellants bid was a benami bid and opposed to Rule 12. His bid was accepted and such acceptance was subsequently confirmed. Under Rule 17 (1) the confirmation is effective until revised by the appropriate authority. It is neither alleged nor proved that some person other than the appellant had been managing the shops and selling liquor in contravention of Section 15. Respondent No. 4 has failed to establish contravention of either Rule 12 or Section 15. The High Court was in error in holding that the appellants bid was opposed to Rule 12.16. Having regard to the fact that the appellant had already deposited about Rs. 40 lakhs the Divisional Commissioner, Gulbarga, acted rather precipitately and harshly in cancelling the sale. For the reasons already given, the order of cancellation (Ex. J) is invalid. The order must be set aside and a writ of mandamus must issue for the grant of licences to the appellant.17. Some complication arises out of the fact that the licences have been granted to respondent No. 4 after the disposal of the writ petitions by the High Court. Licences cannot be given to both the appellant and respondent No. 4 for retail vend of liquors in respect of the same groups of shops. In order to give effect to our order or the issue of licences in favour of the appellant it is necessary to give the further direction that the licences issued to respondent No. 4 should be cancelled. We can give this direction as respondent No. 4 is a party to this appeal.18. While holding that Rule 17 sub-rule (4) did not compel the officer conducting the sale to accept the next highest offer of respondent No. 4 the High Court observed that the authorities concerned should consider the advisability of accepting his bid. This observation is not in accordance with law and has given rise to unnecessary complications.Rule 17 (4) provides thatif the officer conducting the sale rejects the highest bid or offer, he may either accept the next highest bid or offer or re-sell the shop."The sub-rule cannot be invoked if the officer conducting the sale has accepted the highest offer. In the present case, the officer accepted the appellants highest offer and later confirmed it. The confirmation is still effective under Rule 17 (1). If for some reason the confirmation is subsequently revised or set aside, the officer cannot act under Rule 17 (4). In such a case there must be a fresh disposal of the right of retail vend of liquor in accordance with the Rules.It follows that the bid of respondent No. 4 could not be accepted under Rule 17 (4) after the disposal of the writ petitions on September 19.19. It is rather surprising that the government acted so hastily and issued licences to respondent No. 4 on or about September 18. It is not quite clear how licences in respect of l168 shops could be issued on a single day. The effect of this precipitate action on the part of the government was that the appellant could not on the next day obtain a stay of the operation of the High Courts order. There is ground for suspecting that the government was favouring respondent No. 4.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. In our opinion, the provision of Rule 19 sub-rule (1) requiring the successful bidder to furnish a statement of his properties to the Tahsildar and the provisions of Rule 19 sub-rules (3) and (4) do not apply where the shops in respect of which the right of retail vend is sold are situated in more than one tahsil. The opening part of Rule 19 sub-rule (1) requires the purchaser to furnish to "the tahsildar" the location of the shops and the boundaries of the shop sites.The expression "the Tahsildar" is not defined but it is reasonable to think that the details regarding the shops should be furnished to the Tahsildar within whose tahsil the shops are situated. If the shops are situated in more than one tahsil the details can be furnished to several Tahsildars. But it is not possible to give effect to the last part of sub-rule (1) and the provisions of sub-rules (3) and (4) in cases where the shops are situated in more than one tahsil.The statement of immovable properties under the last part of sub-rule (1) can be furnished to only one Tahsildar so that he can peruse the same and on such perusal or on independent inquiry ascertain under sub-rule (3) whether or not the purchaser is of doubtful solvency and satisfy himself under sub-rule (4) whether or not the value of the immovable properties tendered as security is adequate. Sub-rules (3) and (4) do not contemplate findings by more than one Tahsildar nor do they provide any machinery for resolving the conflict of opinion, if any, between two or more Tahsildars. In our opinion, the last part of sub-rule (1) and the provisions of sub-rules (3) and (4) do not apply where the shops are situated in two or more tahsils.The right of retail vend sold to the appellant is in respect of shops situated in 19 tahsils in the districts of Raichur and Gulberga. Consequently, those provisions were not attracted to this sale and the appellant was not required to comply with those provisions.9. The Divisional Commissioner, Gulberga, could not record a finding under Rule 19 sub-rule (3) that the purchaser was of doubtful solvency. Even a Tahsildar could not record such a finding without making an independent inquiry where no statement regarding immovable properties was furnished under sub-rule (1). No independent inquiry under sub-rule (3) was made by any Tahsildar. For this reason also the appellant cannot be regarded as a person of doubtful solvency and he was therefore not required to comply with the provisions of sub-rule (3). The appellant has so far deposited about Rs. 90,00,000/- and it is impossible to believe that he is a person of doubtful solvency.10. The remaining charge is that the appellant did not "at once" apply for licences.Rule 20 (2) provides for the forfeiture of the deposits on failure to comply with the provisions of Rule 19. Under the Mysore Excise Licences (General Conditions) Rules, 1967 a licensee is required to commence his business on July 1. The purpose of the Act and the Rules is achieved if the application for licence is made within sufficient time so as to enable the issue of licences before July 1. Having regard to the object of the Act and the Rules the expression "at once" in Rule 19 sub-rule (1) means within a reasonable time before July 1.It could not have been intended that the deposits would be forfeited where the purchaser applies for licence within a reasonable time. The appellant sufficiently complied with Rule 19 sub-rule (1) by applying under Ex. B, to the Excise Commissioner for permission to obtain licences and by applying to the Divisional Commissioner on June 18 for the issue of licences.In view of this conclusion it is not necessary to consider whether Rule 19 sub-rule (3) offends Articles 14 and 19 of the Constitution and we express no opinion on the question. We cannot agree with the proposition that the appellant is estopped from challenging the constitutionality and vires of the sub-rule. It is true that Rule 24 provides that the purchaser shall be bound by all the rules. But if Rule 19 sub-rule (3) offends Articles 14 and 19 it is non est and there can be no question of the appellant being bound by a rule which does not exist. Though we express no opinion on the vires of the sub-rule, we must observe that Rule 19 is clumsily drafted, its import is not clear, its tight time schedule works hardship and its procedure is cumbersome. The Government should immediately consider the question of redrafting Rule 19. It may be noted that Mr. Narasaraju conceded that Rule 19 is not beyond the rule-making powers of the State Government.Having regard to the fact that the appellant had already deposited about Rs. 40 lakhs the Divisional Commissioner, Gulbarga, acted rather precipitately and harshly in cancelling the sale. For the reasons already given, the order of cancellation (Ex. J) is invalid. The order must be set aside and a writ of mandamus must issue for the grant of licences to the appellant.17. Some complication arises out of the fact that the licences have been granted to respondent No. 4 after the disposal of the writ petitions by the High Court. Licences cannot be given to both the appellant and respondent No. 4 for retail vend of liquors in respect of the same groups of shops. In order to give effect to our order or the issue of licences in favour of the appellant it is necessary to give the further direction that the licences issued to respondent No. 4 should be cancelled. We can give this direction as respondent No. 4 is a party to this appeal.18. While holding that Rule 17 sub-rule (4) did not compel the officer conducting the sale to accept the next highest offer of respondent No. 4 the High Court observed that the authorities concerned should consider the advisability of accepting his bid. This observation is not in accordance with law and has given rise to unnecessary complications.Rule 17 (4) provides thatif the officer conducting the sale rejects the highest bid or offer, he may either accept the next highest bid or offer or re-sell the shop."The sub-rule cannot be invoked if the officer conducting the sale has accepted the highest offer. In the present case, the officer accepted the appellants highest offer and later confirmed it. The confirmation is still effective under Rule 17 (1). If for some reason the confirmation is subsequently revised or set aside, the officer cannot act under Rule 17 (4). In such a case there must be a fresh disposal of the right of retail vend of liquor in accordance with the Rules.It follows that the bid of respondent No. 4 could not be accepted under Rule 17 (4) after the disposal of the writ petitions on September 19.19. It is rather surprising that the government acted so hastily and issued licences to respondent No. 4 on or about September 18. It is not quite clear how licences in respect of l168 shops could be issued on a single day. The effect of this precipitate action on the part of the government was that the appellant could not on the next day obtain a stay of the operation of the High Courts order. There is ground for suspecting that the government was favouring respondent No. 4.