Case: Thakur Prasad Sao Etc Vs. Member, Board of Revenue and Others

relating to excisable articles other than opium." It has been stated in t he preface to Volume III that it consists of the Boards "instructions with regard to excisable articles other than opium" and that references have been made to the Government Rules and the Boards Rules having the force of law. There is however no such reference to any rule in regard to instructions Nos. 130 and 93. But quite apart from the question whether these instructions were legally enforceable, we have examined the question whether they could justify the argument that the appellants were entitled to reduction of the amounts of the fees payable by them.12. Instruction No. 93 mentions the circumstances when it would be advisable to accept bids other than the highest. It states that it is not an absolute rule that the highest bids must, on every occasion, be accepted. It states further that the presiding officer at an auction "may also refuse bids which he considers to be purely speculative or which are the outcome of private enmity", and that what is desired is not the highest fee obtainable, but a fee that can fairly be paid out of the profits of a shop without recourse to malpractices. There is there-fore nothing in the rule which could be said to give rise to a right in favour of the appellants for reduction of the amounts demanded from them. Instruction No. 130 merely states that reduction of licence fees, during the currency o f a licence, can be made by the Board under section 39 of the Act. It does not therefore advance the case of the appellants for, under that section, the Board has been given that power, "if it thinks fit", to order a reduction of the amount of fees payable in respect of a licence, "during the unexpired portion of the grant" which is not the case of the appellants. In fact all that has been argued on behalf of the appellants is that as the instructions contained in the note appended to paragraph 130 of the Regulations have not been complied with, their legal right to claim the benefit of the note has wrongly been denied to them. The note reads as follows, -"Note-ordinarily it is not the policy of Government to allow reduction in excise settlements. The licensees to a large extent, have only themselves to thank if they exceed in their bidding the figure which should return them a reasonable profit under normal conditions, and they are not therefore entitled to any reduction of fees as of right. The observance of this principle is the more important because it must be remembered that each remission is likely to aggravate the evil and encourage speculative bidding in the hope that should the speculation turn out a failure, Government will not insist on full payment. A remission should not be granted merely because working at a dead loss has -. been actually proved. Each case should be dealt with on its own merits. Where, for example, it is proved that the Collector has not fulfilled his duty in refusing to allow manifestly speculative bids and has failed to stop the bidding when a figure has been reached which, under normal conditions, might be expected to return a reasonable rate of profit to the vendor, the question would be whether the action of the Collector was so flagrantly opposed to the principles enunciated from time to time by Government as to necessitate remedial action. Such action should not take the form of any promise of resettlement with the existing licensees. It can only take the form of a reduction in the amount of the existing licensees.13. It should not be very difficult for an officer in a contract supply area to realise the stage at which bidding becomes purely speculative. He knows the issues of spirit during the previous year and the cost to the vendor including duty, carriage, establishment charges and the like, and should thus be able to estimate the figure beyond which a prudent man would not bid. If after warning the bidder, that this point has been reached, the latter still wishes to take the risk no case for remission can arise. The case is, however, different where exceptional reasons which would not at the time be. foreseen, operate adversely to the interest of the licensee but at the same time it is not the duty of Government to safe guard licensees from the effects of their own imprudence or ignorance."It would appear that there is nothing in the note to justify the argument that it gave rise to a right in favour of the appellants to obtain a reduction of the fees. As has been pointed out, that was clearly a matter within the discretion of the Board of Revenue under section 39, and the wordings of the note appended to paragraph 130 could not overreach that provision of the law. Moreover, the question whether the circumstances mentioned in the note were at all in existence in the case of the appeals under consideration, was a question of fact which could not be tried in these proceedings. The decision in Rohtas Industries Ltd. v. S. D. Agarwal and another ([1968] 3 S.C.R. 108.) to which our attention has been invited on behalf of the appellants, can be of no avail to them.14. As has been stated, the writ petition which has given rise to Civil Appeal No. 1105 of 1975 raised the question whether the refund of fees claimed by the appellant was permissible on the ground that there was no quid pro quo for the same. The High Court has rightly rejected that contention for the reason that the amounts in question were payable for the licences which had been granted for the exclusive privilege in question and, as has been shown, that argument is no longer available to the appellant in view of this Courts decisions in Nashirwars case (supra) and Har Shankars case (supra).

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

Explanation:
0[ds]7. We have described the essential features of the out still system, and there can be no doubt that the holder of a licence under the system acquires the right to manufacture country spirit in his outstill and sell it by retail "in his premises" without any restriction on the strength or pr ice at which the spirit is manufactured or sold. Moreover he has the monopoly of manufacturing and supplying country liquor within his area. The right is therefore clearly an exclusive privilege within the meaning of section 22(1) (d) of the Act and it is futile to contend that the licences in question were merely licences for the retail sale o f spirit for consumption on the vendors premises within the meaning of section 30 of the Act. The High Court was therefore quite correct in taking that view.It may be mentioned that the appellants have not produced their licences in support of the contention that exclusive privilege of the nature referred to above was not granted to them even though the licences w ere for establishing outstills in the area covered by them. It is however not disputed that the licences were granted in Form 30 (Volume II, Part I, Bihar and Orissa, Excise Manual) on the condition that the appellants would pay to the government, in advance. the monthly fee mentioned therein. It is nobodys case that the licences were cancelled or suspended under section 42 of the Act for any of the reasons mentioned in the section, or that the licences were withdrawn under section 43 so as to entitle the appellants to remission of the fee payable in respect of them or to payment of compensation in addition to such remission, or to refund of the fee paid in advance. It is also not the case of the appellants that t hey surrendered their licences within the meaning of(1) of section 44 so as to justify the remittance of the fee payable by them, or paid by them in advance. In fact it has clearly been provided in(2) of section 44 that t he provisions of subsection (1) shall not apply in the case of a licence for the sale of any country liquor in the exercise of an exclusive privilege granted under section 22. It is true that in its judgment under appeal (in Civil Appeals Nos.of 1975) the High Court has observed that the petitioner before it was at liberty to surrender the license, but it appears that in taking that view it did not notice(2) of section 44 even though it had held that what was granted was an exclusive privilege under section 22. The licences of the appellants therefore remained in force for the periods for which they were granted and, by virtue of the express provisions of section 45, they could have no claim to compensation.In such a situation, counsel for the appellants have placed considerable reliance on paragraph 121 of the Manual and have argued that the High Court erred in taking the view that the instructions contained in it had no statutory force and its benefit was not available to the appellants. Reliance in this connection has been placed on Sukhdev Singh and others v. Bhagatram Sardar Singh Raghuvanshi and another([1975] 3 S.C.R 619.), Laljee Dubey and others v. Union of India and others([1974] 2 S.C.R. 249.) Union of India v. K. P. Joseph and others([1973] 2 S.C.R. 75.).It would thus appear that thedeals with the "deposits" made immediately on account of advance fees, the consequences of the failures to make such payment and the return of those "deposits" to the person to whom the licence may subsequently be refused because (1) the Magistrate declines to grant him a certificate or because he is unable to obtain suitable premises in spite of his bona fide endeavors or (ii) for any other adequate reason. But it was not the case of the appellants that the licences were "subsequently refused" to them for any reason whatsoever. So even if it were assumed, for the sake of argument, that the instructions contained in paragraph 121 were binding on the authorities concerned, that would not matter for purposes of the present controversy as it does not relate to refund of the deposits referred to in paragraph 121. In this vie w of the matter, it is not necessary for us to examine here the larger question whether the instructions contained in the Manual were made under any provision of the law and created any rights in favour of persons whose bids were accepted at public auctions of the shops.It will be recalled that it was an incident of the outstill system that the holder of an outstill licence was allowed to manufacture country spirit within a "certain area" and he paid a certain sum of money per mensem for manufacturing country spirit in his outstill and "selling it by retail on his premises". It was therefore permissible for appellant Ayodhya Prasad to locate the shop at Bharbharia or at some other suitable place within his area, with the permission of the Collector. The notice which had been issued for the public auction is on the record and condition No. 5 thereof expressly states that the department would not be responsible for providing the place for the location of the outstill. Moreover it was expressly stated that the outstill at Bharbharia would be settled purely as a temporary measure on condition that an undisputed site was made available for it. There is therefore nothing wrong with the view taken by the High Court that the responsibility for finding a suitable site was of the appellant, and there is no justification for the argument that nothing was payable by him because he could not locate the shop in spite of his best efforts. It may be that the Deputy Commissioner recommended his case for remission, but that I would not matter when the appellant was liable to pay the money under the law governing hisargument is however futile for we have given our reasons for holding that what was granted to the appellants was the exclusive privilege of manufacturing and selling country liquor within the meaning of section 22(1) (d) of the Act, and it has been expressly provided in section 29 that it would be permissible for the State Government to accept payment of a sum in "consideration" of the exclusive privilege under section 22. The decisions of this Court in Nashirwars case and Har Shankars case have set any controversy in 41 this respect at rest, so that it is well settled that as the State has the exclusive right and privilege of manufacturing and selling liquor, it has the power to hold a public auction for the grant of such a right or privilege and to accept the payment of a sum therefore. It was therefore permissible for the State to frame rules for the grant of licences on payment of fees fixed by auction, for that was only a mode or medium for ascertaining the best price for the grant of the exclusive privilege of manufacturing and sellingis however no such reference to any rule in regard to instructions Nos. 130 and 93. But quite apart from the question whether these instructions were legally enforceable, we have examined the question whether they could justify the argument that the appellants were entitled to reduction of the amounts of the fees payable by them.It should not be very difficult for an officer in a contract supply area to realise the stage at which bidding becomes purely speculative. He knows the issues of spirit during the previous year and the cost to the vendor including duty, carriage, establishment charges and the like, and should thus be able to estimate the figure beyond which a prudent man would not bid. If after warning the bidder, that this point has been reached, the latter still wishes to take the risk no case for remission can arise. The case is, however, different where exceptional reasons which would not at the time be. foreseen, operate adversely to the interest of the licensee but at the same time it is not the duty of Government to safe guard licensees from the effects of their own imprudence or ignorance."It would appear that there is nothing in the note to justify the argument that it gave rise to a right in favour of the appellants to obtain a reduction of the fees. As has been pointed out, that was clearly a matter within the discretion of the Board of Revenue under section 39, and the wordings of the note appended to paragraph 130 could not overreach that provision of the law. Moreover, the question whether the circumstances mentioned in the note were at all in existence in the case of the appeals under consideration, was a question of fact which could not be tried in these proceedings. The decision in Rohtas Industries Ltd. v. S. D. Agarwal and another ([1968] 3 S.C.R. 108.) to which our attention has been invited on behalf of the appellants, can be of no avail to them.14. As has been stated, the writ petition which has given rise to Civil Appeal No. 1105 of 1975 raised the question whether the refund of fees claimed by the appellant was permissible on the ground that there was no quid pro quo for the same. The High Court has rightly rejected that contention for the reason that the amounts in question were payable for the licences which had been granted for the exclusive privilege in question and, as has been shown, that argument is no longer available to the appellant in view of this Courts decisions in Nashirwars case (supra) and Har Shankars case (supra).