Case: Rishi Pal and Company Vs. State of Himachal Pradesh and Others

2. M/s. Rishi PalCo., the Contractor, made a bid for the auction of a liquor vend; being ther unit, for the year. The auction was held on. The Contractors was the highest bid. He deposited 5 per cent thereof immediately and another 8.5 per cent within the stipulated 10 days. On4 his bid was rejected3. At the same auction held on4 no bid was received for theI andI units. The Deputy Commissioner wrote on4 to the Excise and Taxation Commissioner that, after the auction of ther unit, the bidders had got together and had not made any bid for the auction of theI andI units, even though these units had been clubbed together. What transpired on 16th March is also evident from the report of the auctions held on that date. The report speaks of the aforesaid pooling and states that no bids were offered; it recommended that"it is extremely essential to pass appropriate orders so that revenue could be kept secured .... In this context holding negotiations appears to be a suitable alternative"The suggestion was accepted and invitations were sent to those who had participated in the aforesaid auction to participate in negotiations for the allotment of theI andI units. These negotiations took place on. It appears from the affidavit that was filed by the State before the High Court that an offer was made by one of the negotiating parties in the sum of Rs. 8.50 crores for theI andI units provided ther unit was also tagged on. This was found attractive and the negotiations were adjourned to 3.30 p.m. At that time the parties were told that the Financial Commissioner had decided that the negotiations should be held for the combinedI andI andr units and that the parties should make offers accordingly. Three of these parties, including the Contractor, requested for half an hours time to formulate their response. After this lapse of time these parties, including the Contractor; participated in the negotiations and made offers. The offer of Rs. 8.55 crores given by the one of the parties (Respondent 6) was found to be the highest and was recommended for acceptance, which the Financial Commissioner thereafter gave. Accordingly, the Contractor was informed on4 that his bid for ther unit had not been approved and that a refund of the amount deposited by him would be made5. The Contractor filed the writ petition in the High Court challenging the validity of the rejection of his bid and for consequential reliefs. The High Court came to the conclusion that the Financial Commissioner had no power to regroup the vends and also that the proposed negotiations for ther unit had not received due publicity. Since, by efflux of time, the High Court could grant no effective relief, it awarded "just and fair compensation" to the Contractor in the sum of Rs. 1 lakh

Reasoning:
We have already indicated what had transpired from4 onwards. All those who had participated in the auction on that date had been given notice of the negotiations that were proposed for. It is true that those negotiations were originally proposed forI andI units but it became clear during the proceedings that the revenue of the State would be greater if ther unit was combined with theI andI units. Therefore, the participants in the negotiations were told to return in the afternoon. When informed about the decision in this behalf they asked for some time, which was given, and it was thereafter that the highest amount offered by the other party (Respondent 6) was accepted. There is irrefutable evidence in the form of a photostat copy of the record of the persons present at the negotiations that the Contractor was represented throughout. The Contractor was the highest bidder at the auction for ther unit and his bid had not been accepted. He was given notice. In the circumstances, the authorities cannot be faulted at its instance for lack of adequate publicity, considering also the fact that the new financial year when the period of the licences would commence was fast approaching