G.M. AKBAR ALI,J., The writ appeal arises out of the order passed by the learned single Judge in W.P.No.4834 of 1995 dated 14.8.2001. The appellant was the highest bidder for the running of an Arrack Shop No:4 at Bahour Commune Panchayat, (Arachikuppam), Pondicherry for the period from 15.9.94 to 30.6.95. He was given the right of retail vending of arrack for a monthly kist of Rs.1,20,100/-for the lease year of 1994-95 and the guaranteed quota was 364 litres of arrack per day. The confirmation order was issued on 15.9.94. He had deposited a sum of Rs.3,60,300/-. Against the guaranteed arrack, he had lifted only 3400 litres of arrack from the Pondicherry Distilleries Ltd. He did not pay the kist for the month of September, October and November 1994. Moreover, he has not executed an agreement of lease as contemplated under the Pondicherry Excise Rules. Therefore, a show cause notice was issued on 11.11.94 calling upon him to pay the lease amount and execute the lease agreement.
2. On 6.2.1995, the Deputy Commissioner (Excise), Government of Pondicherry issued a notice under sub-rule(2) of Rule 201 of the Pondicherry Excise Rules, 1970 to show cause as to why the licence granted to the appellant should not be cancelled and the deposit be forfeited and the shop to be re-auctioned.
3. The appellant sent a reply dated 18.2.1995 stating that he was not issued with a licence and he has also not executed a lease agreement and therefore, there is no question of cancelling the lease agreement. He has also contended that he was not allowed to run the arrack shop by the public and therefore, he requested for the refund of security deposit. He sent a reminder on 11.3.1995. However, on 21.3.1995, the Deputy Commissioner (Excise) -cum-Under Secretary (Excise), Pondicherry passed an order cancelling the right of lease and also forfeited the security deposit of Rs.3,60,300/-. Aggrieved by which, the appellant approached this Court by way of Writ of Certiorarified Mandamus to quash the order passed by the respondent and also for a direction to refund the security deposit.
4. The Government of Pondicherry filed a counter stating that the appellant is the highest bidder whose bid was confirmed and pursuant to which he had also deposited a sum of Rs.3,60,300/- and had also lifted 3400 litres as on 10.2.1995 and another 3400 litres of arrack as on 21.3.95 against the guaranteed quota of 54,257 litres and 68,808 litres respectively.
5. It was further contended that on enquiry, it was found that the appellant himself has instigated the villagers to raise objection to divert the issue and without lifting the Government quota he has been selling illicit arrack.
6. The learned single Judge by his Order dated 14.8.2001 found that the appellant had participated in the auction and his bid was confirmed on 15.9.94. It is further held that he had admitted that he will lift the guaranteed quota and pay the kist to run the shop and till 16.2.1995 the appellant had run the shop without any complaint. The learned single Judge had also referred to Rule 201 of Pondicherry Excise Rules and upheld the order passed by the Deputy Commissioner (Excise). Against which, the present appeal has been filed.
7. Mr.S.K. Rakhunathan, learned counsel for the appellant would submit that the appellant took part in an earlier auction dated 3.8.1994 and offered a highest bid of Rs.95,000/- but the Government of Pondicherry rejected the offer as the bid amount was not reasonable. The learned counsel further contended that in the subsequent auction, the appellant offered the bid of monthly kist of Rs.1,20,100/- which ought to have been confirmed and the necessary G.O ought to have been published by the Under Secretary (Excise), Government of Pondicherry. According to the learned counsel, the confirmation order given by the Deputy Commissioner (Excise) dated 15.9.1994 is not a licence for the appellant to run the arrack shop. The learned counsel pointed out that the appellant had also not executed the agreement of lease and moreover, he was also not allowed by the local people to run the arrack shop in the specified place and therefore, he is not a licensee under the respondent and he has not run the shop.
8. According to the learned counsel, when the licence was not issued, there is no question of running the arrack shop, lifting the guaranteed quota of arrack and there is no question of non payment of kist for the months of September to December 1994. The learned counsel also relied on the communication by the under Secretary dated 13.8.1994, confirmation letter Dated 15.9.94, the various representations of local people objecting for running arrack shops and the appellant's reply dated 18.2.1995 for the show cause notice.
9. Ms.N.Mala, the Special Government Pleader, (Pondicherry), submitted that the appellant's bid was confirmed by the Government of Pondicherry on 15.9.1994 and thereafter, the appellant had also lifted certain quantity of arrack against the guaranteed quota and was running the arrack shop. As he failed to execute the lease agreement, a show cause notice was issued as early as 11.11.1994 and the appellant never made a representation that he was not allowed to run the arrack shop by the public. The learned Special Government Pleader (Pondicherry) pointed out that under the provisions of Pondicherry Excise Act 1970, the appellant, whose bid was confirmed, should have executed a lease and mortgage deed with the Government and in the failure of compliance, the Government has the authority to forfeit the deposit. The learned Special Government Pleader also relied on a decision reported in 2010 Writ Law Reporter 631 (Luke Stephen vs The Secretary to Government, Prohibition and Excise Department and others), wherein single Judge of this Court has held as follows:
"26...... once the bid amount is accepted and the sale is confirmed by the competent authority, the completed contract comes into existence and the bidder who made an offer for grant of privilege with full knowledge of the terms and conditions attached to the auction cannot be permitted to wriggle out the contractual obligations arising out of the acceptance of the bid and confirmation of the sale in his favour"
10. Heard both sides and perused the materials available on record.
11. The appellant was the highest bidder of a retail vending of arrack in respect of shop No.4, Bahour Commune Panchayat, (Arachikuppam), Pondicherry, for the lease year 1994-95 for a monthly kist of Rs.1,20,100/- and the guaranteed quota of arrack is 364 litres per day. The bid was confirmed on 15.9.1994 by the Deputy Commissioner (Excise). The appellant had also deposited a sum of Rs.3,60,300/-towards three months kist . He was called upon to execute an agreement of sale and a mortgage deed. On 11.11.1994, a show cause notice was issued stating that the appellant has not executed the lease deed, mortgage deed and has lifted only 3400 litres against the guaranteed quota and therefore, the appellant was called upon to show cause why the right of retail vending should not be cancelled and the deposit be forfeited. The appellant sent a reply on 18.2.1995 for the first time stating that he is not a lessee as he has not executed the lease agreement and he is also not a licensee as the Government has not passed the necessary order. He has also contended that he was not allowed to run the arrack shop by the general public who has made some representations to the Government.
12. The following are some of the provisions of the Pondicherry Excise Rules 1970.
"155. Confirmation (1) Whenever the Deputy Commissioner has accepted provisionally a tender, offer or bid, he shall forthwith submit to the Government through the Excise Commissioner the records of the proceedings conducted by him for confirmation, (2) The Government shall, on a consideration of the records under sub-rule (1) pass an order confirming the disposal of the right to retail vend of liquor or refusing to confirm it. . The order shall forthwith be communicated to the person concerned
156. Lease and mortgage to be executed The persons whose tender, offer or bid is confirmed under rule 155 shall, within seven days from the date of communication of the order.
2(a) remit into the State Bank of India or the Government Treasury, or open a term deposit or fixed deposit in the name of the Deputy Commissioner (in any Scheduled Bank) in the Union Territory of Pondicherry, a security deposit equal to one-fourth of the knocking down price deduction being made of the earnest money deposited earlier (Provided that the Excise Commissioner /Deputy Commissioner (Excise) shall have powers to accept or reject such securities of the non-nationalised scheduled banks for the reasons to be recorded in writing
(b) execute and register(at his expense) an agreement of lease (in Form L.A) with the Government incorporating the terms and conditions under which the right of retail vend of liquors is leased in his favour;
158. Failure to execute lease agreement, etc., (1) Where the person in whose favour the disposal is confirmed fails to comply with the provisions of rules 156 and 157, the disposal of the right of retail vend of liquors shall be cancelled by the Government. The deposits made by such person shall be liable to be forfeited to the Government and the right of retail vend of liquors' shall be disposed of afresh in such manner as the Government may direct.
201) Payment of rent:(1) The lease period shall commence from the date on which the licensee is permitted to run the shop and the rent is payable in 12 equal monthly instalments, each such instalment to be paid on or before the 10th day of the month succeeding. If the 10th day happens to be a public holiday, the kist amount shall be paid on the next working day. In the event of failure to pay the kist amount within the above time limit, the lessee shall, in addition to the kist amount also pay interest calculated at the rate of 6 < % per annum.
(2) The non-payment of a monthly kist on or before 25th of the succeeding month shall entail forfeiture of the licence after giving due opportunity to the lessee and the shop shall be re-auctioned. The defaulting lessee shall jointly and severally with his sureties, in addition to the interest, as provided in sub-rule (1) and the arrears or kist, be also liable for the loss that may occur to the Government as a result of the re-auction for the remaining period. The secretary to Government, Revenue Department shall, however, have discretion to cancel the re-auction in case the defaulting licensee pays all the arrears in full together with interest before 4.00 p.m on the preceding day of the re-auction.
3) The Deputy Commissioner may stop the issue liquor or trees for realisation of kist amount, tree tax and tree rent.
13. According to Rule 155, when the offer of bid is accepted, the Government shall pass an order of confirmation. The confirmation order dated 15.9.1994 issued by the Deputy Commissioner (Excise), is under Form CO I and is in accordance with Rule 155 (2). Therefore, we are not persuaded by the argument that the Government of Pondicherry has not confirmed the right to retail vending of arrack for the appellant.
14. Once it is confirmed by the Government the appellant ought to have executed the lease and mortgage deed under Rule 156 of the Rules. Under Rule 158, in case of failure to comply with Rule 156, the Government is entitled to forfeit the deposit.
15. Under Rule 201, if the kist or rent are not paid, the Government is entitled to forfeit the licence and re-auction the retail vending.
16. It is pertinent to note that in pursuant to the confirmation order dated 15.9,1994, the appellant had deposited three months kist of Rs.3,60,300/- and he had also lifted 3400 litres against the guaranteed quota. The representations by the public were sent on 8.1.1995 and 26.1.1995. However, the show cause notice was issued as early as 11.11.1994 and therefore, we are also not persuaded by the submission that the appellant was not allowed to run the arrack shop. He has lifted 3400 litres as on 10.2.1995 and 3400 litres as on 21.3.1995. The appellant had entered into an agreement with the State to run the arrack shop for a specified period on a monthly kist of Rs.1,20,100/-.
In the cases of this nature, offer and acceptance are entered into pursuant to public auction and there is no compulsion on any one to offer their bid. There is no guarantee for profit and there is no warranty against any losses. Whether the person whose bid was confirmed run the shop and make a profit or incur loss is no concern of the State but the State is entitled to its revenue under the Contract. Once the bid is accepted and confirmed by the State, it is a concluded contract and the bidder cannot be permitted to wriggle out of the contractual obligations.
17. The appellant was the highest bidder and his bid was accepted under Rule 155 (1) of the Excise Rules Act. The Government has passed an order of confirmation in accordance with sub clause (2) of Rule 155. The failure to execute the lease agreement and the failure to pay the kist shall entail the State to forfeit the deposit amount. Therefore, the learned single Judge had upheld the order of the Deputy Commissioner (Excise) dated 21.3.1995 and rightly dismissed the writ petition. Therefore, we find no reason to interfere with the order of the learned single Judge.
18. In the result, the writ appeal stands dismissed. No costs.
sr To Government of Pondicherry rep by its Deputy Commissioner (Excise)-cum-Under Secretary (Excise), Excise Department Pondicherry