Case: Lakhanlal Etc Vs. State of Orissa and Ors. (with connected appeals)

held that as sections 2 to 5 of the Amending Act of 1970 were not made retrospective in operation, the effect of section 6 amounted to a direction by the Legislature to the State to disregard the decision in Ajodhya Prasads case that the amount realised by auction was illegal and that section 6 was therefore ultra vires the powers of the Legislature. It will be sufficient to say in this connection that the Bihar and Orissa Excise (Second Orissa Amendment) Act, 1971 (Act 10 of 1971) has made good the deficiency, if any, by stating that the amending provisions shall be deemed always to have been so added or inserted or substituted. In this respect also, the impugned judgment of the High Court must be rectified.16. Mr. S.C. Agarwal has argued that the amount realised by the State for grant of the exclusive privilege under sections 22 and 29 was nothing but a tax and no such tax was permissible under Entries 45 to 63 of List II of the Seventh Schedule to the Constitution and that it was not excise duty within the meaning of Entry 51 or a fee under Entry 66. It has also been argued that En try 8 embodying the Police powers of the State could not be invoked to sustain such an imposition. Mr. Bhagat has also argued that the collection was in the nature of a tax and section 29 was therefore ultra vires the Constitution. Mr. Bhagat has also urged that the State was not the owner of the exclusive privilege to manufacture or sell liquor and that the Act did not empower it to part with that right on payment. We have given our reasons already for taking a contrary view, with reference to the decisions in Nashirwars case and Har Shankars case. The State has the exclusive right or privilege to manufacture, store and sell liquor and to grant that right to its license holders on payment of consideration, with such conditions and restrictions for its regulation as may be necessary in the public interest. The argument to the contrary is futile and is rejected.It has been argued by Mr. Agarwal that although the Amending Act of 1970 (Act 17 of 1970) was enacted for the purpose of getting over the High Courts declaration in O.J.C.No. 357 of 1970 that rule 103 of the Boards Excise Rules, 1965, in so far as it directs that fees for license for the retail vend of excisable articles shall be fixed by auction, was ultra vires the Act, rule 103 continued to remain invalid even after the promulgation of that Act because. such a rule could not be made under section 90(7) of the Act. Counsel has argued that as the rule was in- valid, it was not permissible to hold the impugned public auction because that was not permissible under any other provision of the Act. This argument is also futile because section 5 of the Bihar and Orissa Excise (Second Orissa Amendment) Act , 1971 (Act 10 of 1971) has substituted a new sub-section (2) for the old sub-section as follows, providing for auction, and it has been stated that it shall be "deemed always to have been substituted".-"(2) The sum payable under sub-section (1) shall be determined as follows, -(a) by auction or by calling tenders or otherwise as the State Government may, in the interest of excise revenue by general or special order direct."17. Then follow other clauses with which we are not concerned. Moreover section 17 of that Act has validated all grants mad e by way of licenses for manufacture and retail sale of country liquor in respect of any place on or after the 7th day of August, 1965, on which date the Boards Excise Rules (including rule 103) admittedly came into force. In this view of the matter, it is not necessary for us to examine the other arguments of Mr. Agarwal Which have been adopted by Mr. Bhagat regarding the invalidity of rule 103. It is not necessary to deal s eparately with the judgment of the High Court dated April 16, 1971 in O.J.C. No. 242 of 1967, which has given rise to civil appeal No. 2071 of 1972, or with its decision dated May 7, 1971 in O.J.Cs. No. 1185-1190, 1223, . 1224 and 1226 of 1970 (which has given rise to civil appeals Nos. 1855-1863 of 1972 and cross-appeals Nos. 351-359 of 1972) because they are based on the aforesaid decision dated April 16, 1971 in O.J.C. No. 786 of 1970. So also, it is not necessary to deal separately with the decision dated September 6, 1971 in O.J.C.No. 859 of 1970 and 863 of 1970 which have given rise to civil appeals Nos. 1235 and 1236 of 1972, for the same reason .This takes us to the judgment of the High Court dated March 28, 1974 in O.J.C.No.589 of 1972 which has given rise to civil appeal No. 1802 of 1974. That decision is based on the decision dated January 3, 1974 in O. J.C.No. 1036 of 1971. The petitioner in that case was a licensee for the retail sale of country liquor in Mayurbhanj district. He challenged the vires of sections 22 and 29 of the Act and claimed that the monthly consideration for the license was not due from him and that he was entitled to a refund of the money already paid by him. The High Court followed that decision and dismissed the writ petition. In doing so it relied on its decision dated April 16, 1971 in Siba Prasad Saha v. State of Orissa and other (I.L.R. 1971 Cuttack 777) and the decision of this Court in Jaiswals case (supra) and dismissed the petition. We have al ready dealt with the points which arise for consideration in this case while examining the earlier cases and we see nothing wrong with the impugned judgment of the High Court by which the writ petition has been dismissed.18.

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

Explanation:
1[ds]We do not think that what the High Court held to be an "acceptance of the bid" at the "auction", even after the announcement of an express condition attached to it that the knocking down of the bid would not really be an acceptance of it by the Government, could be an acceptance of the bid at all. In the peculiar facts and circumstances of the auction, the bids were, apparently, nothing more than offers in response to invitation to make tenders, and such auctions were the mode of ascertaining the highest offers. The basic conditions for the emergence of rights through offers or conditions made and accepted, and acted upon, by paying any specified or agree d price as consideration, were thus wanting in this case. In fact the express and advertised terms of the auction made it clear that the money tendered was to be deemed to be deposited tentatively, pending the acceptance of the bid. So what we have before us are neither offers nor acceptance by the Government. There were only offers by the bidders to purchase the rights, subject expressly to their acceptance or rejectio n by the State Government. The essentials of any agreement and the mutuality of obligations were thus absent altogether.Moreover it was not an ordinary auction where binding agreement could be deemed to be concluded at the fall of the hammer, creating mutually enforceable obligations. Those were only so called auctions, adopted as means for ascertaining the highest offers for the exclusive privileges which the Govern ment alone could grant for carrying on a trade or business. considered noxious, under the law and which, because of its special character, could be regulated in any way, or even prohibited altogether, by the Govern- ment. This special character of the trade or business would appear from the power of the State Government to grant the exclusive privilege to. carry on trade in the manufacture and sale offollow other clauses with which we are not concerned. Moreover section 17 of that Act has validated all grants mad e by way of licenses for manufacture and retail sale of country liquor in respect of any place on or after the 7th day of August, 1965, on which date the Boards Excise Rules (including rule 103) admittedly came into force. In this view of the matter, it is not necessary for us to examine the other arguments of Mr. Agarwal Which have been adopted by Mr. Bhagat regarding the invalidity of rule 103. It is not necessary to deal s eparately with the judgment of the High Court dated April 16, 1971 in O.J.C. No. 242 of 1967, which has given rise to civil appeal No. 2071 of 1972, or with its decision dated May 7, 1971 in O.J.Cs. No. 1185-1190, 1223, . 1224 and 1226 of 1970 (which has given rise to civil appeals Nos. 1855-1863 of 1972 and cross-appeals Nos. 351-359 of 1972) because they are based on the aforesaid decision dated April 16, 1971 in O.J.C. No. 786 of 1970. So also, it is not necessary to deal separately with the decision dated September 6, 1971 in O.J.C.No. 859 of 1970 and 863 of 1970 which have given rise to civil appeals Nos. 1235 and 1236 of 1972, for the same reason .This takes us to the judgment of the High Court dated March 28, 1974 in O.J.C.No.589 of 1972 which has given rise to civil appeal No. 1802 of 1974. That decision is based on the decision dated January 3, 1974 in O. J.C.No. 1036 of 1971. The petitioner in that case was a licensee for the retail sale of country liquor in Mayurbhanj district. He challenged the vires of sections 22 and 29 of the Act and claimed that the monthly consideration for the license was not due from him and that he was entitled to a refund of the money already paid by him. The High Court followed that decision and dismissed the writ petition. In doing so it relied on its decision dated April 16, 1971 in Siba Prasad Saha v. State of Orissa and other (I.L.R. 1971 Cuttack 777) and the decision of this Court in Jaiswals case (supra) and dismissed the petition. We have al ready dealt with the points which arise for consideration in this case while examining the earlier cases and we see nothing wrong with the impugned judgment of the High Court by which the writ petition has been dismissed.