Case: Sham Lal and Others Vs. State of Punjab (Civil Appeal Nos. 2504-2508 of 1969)

This judgment will govern the disposal of these seven appeals filed on the strength of certificates of fitness granted by the High Court of Punjab and Haryana.2. The appellants have been carrying on business as liquor contractors. At the annual excise auctions held for the yearthey were the highest bidders for the country liquor vends at various places in the State of Punjab, and the auctions were knocked down in their favour.3. Since the questions involved and basic factswith immaterial variationsare common, it will be sufficient to refer to the facts of the case giving rise to Civil Appeal No. 1641 of 1971, in which only arguments have been specifically addressed to us by Shri T. S. Munjral, for the appellant. Thein this case gave the highest bids of Rs. 2, 64, 000 and Rs. 1, 03, 000 respectively and got licences in Formfor retail country liquor vends at Jandiala and Bundala in Jullundur district. The material conditions of the licences announced at the auction and accepted by the appellants, were that annual quotas of liquor (in proof litres) for the vends at Jandiala and Bundala were 11, 000 and 4, 600 proofs respectively. Of the annual licence fees representing the highest bids, 1/24th was to be deposited within seven days of the auction or by the last day of the month in which the auction took place. The appellants had duly deposited these amounts before April 1, 1968.4. Condition 15(ii) of the contract waslicensee for retail vend of country spirit had to pay the whole amount of licence fee in 24 equal instalments, each instalment being payable by the 10th and 25th day of each month, beginning from the month of April, 1968.5. Condition 18 reads as follows :(i) A licensee shall not be entitled to any compensation or claim for damages if the supplies of country liquor to him falls short of the quota fixed in respect of his vend or vends. He will, however, be entitled to the refund of the proportionate license fee in such a contingency provided he established to the satisfaction of the Excise Commissioner that such a shortfall of supplies did not occur because of any fault on the part of the licensee himself. Such claims for refund shall be preferred and considered only after the close of the financial yearAccording to condition 26, subject to the directions issued by the Excise Commissioner from time to time regulating the supplies from different distilleries in Punjab for various districts/areas, the licensed vendors were free to obtain their supplies of country spirit, wholly or partly from any of the licensed distilleries or the licensed warehouses in Punjab.

Reasoning:
18. The impugned demands have been raised in this case respect of the balance of the licence fee which remains unpaid after adjustment of the amounts due against the security deposits.19. In Har Shankars case this Court disapproved the conduct of such liquor licensees who offer bids with full knowledge of the terms and conditions attaching to the auctions and thereafter try to wriggle out of the contractual obligations arising out of the acceptance of their bids by resorting to Article 226 of the Constitution. Speaking for the Court, Chandrachud, J. observed : [SCC pp.para 16]The announcement of conditions governing the auctions were in the nature of an invitation to an offer to those who 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 binding 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 contract along with its benefit. The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees though 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 for their enforceability upon whether a contracting party finds it prudents to abide by the terms of the contract.20. What has been extracted above applies aptly and with greater force to the cases before us; for, here the vends were operated by the licensees for the full period of the license year ending March 31, 1969. Having exploited the licences for the entire period without discharging the full burden of the fees payable for the same period, the appellants are seeking to avoid contractual obligations voluntarily incurred and to work the licences on terms as they find convenient.21. In these circumstances, the High Court rightly refused to exercise its extraordinary jurisdiction under Article 226 of the Constitution in their favour.