JUDGMENT M.C. Agarwal, J.
1. These two petitions arise out of a common matter. The parties are represented by common counsel. Therefore, they were heard together and are disposed of by this common judgment.
2. In Writ Petition No. 497 of 1985, the petitioner is Raj Kumar who was the highest bidder in the auction of a licence for bhang for the year 1984-85 in respect of the Shamli bhang shop in district Muzaffanagar. His bid was for a sum of Rs. 1.86.000 and according to the terms of auction.
he was required to pay l/6th of the bid money on the fall of the hammer which he did on the date of the auction, i.e., the 26th March. 1984. On the 4th April, 1984, he deposited another sum of Rs. 15,500 as security. In the same month, he deposited Rs. 15,500 towards licence fee. Another sum of Rs. 15.500 is claimed to have been deposited on 31st May. 1984 as licence fee for the month of May, 1984. According to the petitioner, the licence fee had to be deposited in advance by 20th of the month. For the month of June, 1984, the petitioner could not deposit the licence fee by the specified date, i.e., 20th June. 1984. Due to this default, the licence was cancelled on 30th June, 1984. The petitioner further claims that from 1st April, 1984 to 27th May, 1984, no bhang was supplied to the petitioner. The petitioner, therefore, made an application for remission of the licence fee which is still pending even though. licence had already been cancelled on 30th June, 1984. The Excise Commissioner accepted the petitioner's bid on the 4th June. 1985. The shop was settled on the basis of daily licence fee for the period 3rd July to 12th July. 1984. The shop was re-auctioned on 12th July, 1984 for a sum of Rs. 72,000 resulting in shortfall of Rs. 35.600. The Collector, Muzaffarnagar is said to have sent a letter to the Collector, Ghaziabad for the recovery of the said amount as arrears of land revenue without Issuing any notice to the petitioner. The Collector. Ghaziabad was alleged to be pressing for depositing the amount. The petitioner's contention is that the bhang was not available at the Government depot and, therefore, it could not be supplied to the petitioner during the aforesaid period and the petitioner is entitled to a remission of the licence fee. The petitioner also claims that he had paid licence fee for three months and the respondents could adjust the licence fee for a period of one month only and therefore, he is entitled for a refund of Rs. 31.000. The petitioner claims that since the bid was not accepted by the Excise Commissioner upto 30th June, 1984 when the licence was cancelled, there was no concluded contract between him and the respondents and, therefore, he is not liable for short-fall in the sale consideration for the licence. This petitioner, therefore, prayed for a direction in the nature of certtorart for quashing the order dated 30th May, 1985 issued by the Collector, Muzaffarnagar and a direction to him to refund the amount of Rs. 31,000 and a further mandamus directing the respondents not to proceed against the petitioner for recovery of the sum of Rs. 35,600.
3. A counter-affidavit has been filed. Their case is that in pursuance of the licence granted to the petitioner, he ran the shop for some time and the petitioner deposited the monthly sums but for the month of June. 1984, the same was not deposited which was made good from the security amount and the petitioner was asked to make up the resultant deficiency in the security amount. Since the petitioner failed to comply, his licence was cancelled on 30th June, 1984. Thereafter, there was a re-auction resulting in a shortfall which the petitioner is bound to make good as it was on account of the breach of contract by him that the State suffered the loss. It is claimed that the acceptance of the bid by the Commissioner was only a routine of a formal matter and did not affect the validity of the contract.
4. In Writ Petition No. 504 of 1985, the petitioner is Brijesh Kumar who had stood surety for Raj Kumar the petitioner. Since Raj Kumar did not pay the amount of Rs. 35,600 demanded from him a notice dated 25.7.1984 was issued to him. A copy of the said notice is Annexure-'14' to this writ petition in which Brijesh Kumar prays for the quashing of the letter dated 30th May. 1985 sent by the Collector, Muzaffarnagar to the Collector. Ghaziabad for the recovery of Rs. 35,600 from Raj Kumar. He also seeks quashing of the notice dated 25.7.1984 issued to him and for a mandamus directing the respondents to dispose of the applications for refund of licence fee for the month of April and May. 1984 and directing the respondents not to proceed against him for the recovery of the sum of Rs. 35,600 till it is found that the said amount is not recoverable from respondent No. 4. The case of this petitioner is similar to the case of Raj Kumar, in addition he claims that the amount cannot be recovered from him unless the same cannot be recovered from Raj Kumar. The defence of the respondents is similar and it is their contention that the petitioner having stood surety for Raj Kumar is liable to pay the amounts due from the later.
5. We have heard Sri Pankaj Mittal, learned counsel for the petitioner and Sri S. D. Singh, learned standing counsel for the respondents.
6. The main thrust of the learned counsel for the petitioner was that any amount resulting from the breach of contract cannot be recovered as arrears of land revenue and the respondents should have filed a suit. Section 39 of the U. P. Excise Act provides for recovery of excise revenue. It reads as under :
"39. Recovery of excise revenue.--All excise revenue including all amounts due the Government by any person on account of any contract relating to the excise revenue, may be recovered from the person primarily liable to pay the same, or from his surety if any, as arrears of land revenue or in the manner provided for the recovery of such demands by any law for the time being in force, in case of default made by a holder of a licence the Collector may take the grant, for which the licence has been given under management at the risk of the defaulter, or may declare the grant forfeited and resell it at the risk and loss of the defaulter. When a grant is under management under this section, the Collector may recover as excise revenue any moneys due to the defaulter by any lessee or assignee.
Provided that no licence for an exclusive privilege granted under Section 24 shall be forfeited or re-
sold without the sanction of the authority granting the licence."
Excise revenue has been defined in Section 3 (1) of the U, P. Excise Act as under :
"(1) 'excise revenue' means revenue derived or derivable from any duty, fee tax, fine other than a fine imposed by a Court of law, or confiscation imposed or ordered under the provisions of this Act, or of any other law for the time being in force relating to liquor or intoxicating drugs."
7. Learned counsel for the petitioner placed reliance on State of U. P. v. Kishore Lal, AIR 1980 SC 680. That was also a case for the recovery of short-fall as a result of re-auction of the licence rights and the State Government had filed a suit for the recovery of damages resulting from the short-fall. The Hon'ble Supreme Court held that since the bid was not accepted by the Commissioner, there was no concluded contract and hence the bidder was not liable to pay any damages, in that case, the highest bidder had not even deposited l/6th of the bid money as required under the Excise Rules, in our view, this ruling helps to the petitioner only to the extent that it supports Its contention that a suit should have been filed for the recovery of the damages in the circumstances of the present case. As regards, the contention that there was no concluded contract, we are of the view that the facts of that case are distinguishable. Rule 373 of the U. P. Excise Rules governs auction and contains general conditions as to auction. The relevant part of the said Rule is as below :
"373. General conditions as to auction.--The following conditions shall apply to all sale under the auction system, and will be inserted at the foot of the sale proclamation if such proclamation is issued by the Excise Commissioner :
(1) The officer conducting the sale is not bound to accept the highest or any bid.
In any case when the highest or any bid is not proposed to be accepted, the next highest bid should also be reported to the Excise Commissioner.
(2) The final acceptance of any bid is subject to the sanction of the Excise Commissioner, which in its turn, is subject to decision by the Government in appeal or revision, if any.
(3) Every person bidding will be held to his bid, whether it be the highest or not.
(4) A sum of equal to one sixth of the annual fee in the case of country spirit shops and a sum equal to one fourth of the annual licence fees in the case of foreign liquor shops shall be payable immediately on the conclusion of the sales for the day, and the balance by such installments as are specified in the licence to be granted. If default be made in the payment of the advance installment, the shop or farm will be resold, and if the" price finally offered at the re-sale be less than that bid at the first sale the difference will be recovered from the defaulter's through a civil suit.
(5) in tracts in which the out still system is in force the liquor shall be colored red with sandal wood (lal chandan) the coloring being effected in the process of distillation by placing a bag of sandal wood shavings in the receiver. No liquor not so colored shall be manufactured or sold in tracts under this system."
8. A perusal of the above provisions in Rule 373 would show that the officer conducting the sale has a right to accept the highest bid which is final so far as the bidder is concerned and is only subject to the powers of the Commissioner. Therefore, unless the Commissioner declines to accept the bid, a binding contract arises between the parties as soon as the bid is accepted by the officer conducting the same. The petitioner's contention, therefore, that there was no concluded contract in this case as the licence was cancelled on 30th June, 1984 is not tenable, in case there was no concluded and binding contract between the parties, there was nothing to be cancelled, in any case, the petitioner having accepted the licence and according to his own admission having worked the same for some time is debarred from pleading that there was no concluded contract and he is not liable to pay damages, if any, resulting from the breach that necessitated a re-auction of the licence.
9. The next point that is canvassed in these petitions is that damages. If any, cannot be recovered as arrears of land revenue and the respondents should file a suit for the same. Reliance is placed on Dhunmun Ram v. State of U. P.. 1979 UPTC 1033, in that case, the highest bidders had withdrawn their bids necessitating a re-auction in which lower prices were offered and it was held that the short-fell was not realisable as arrears of land revenue under Section 39. The Division Bench of tills Court proceeded on the basis that short-fall arising from the re-auction was not excise revenue within the meaning of the Act and, therefore, was not recoverable under the procedure prescribed in Section 39. Though almost 20 years have passed since this judgment was rendered, the definition of excise revenue has not been amended to cover a case of the present nature. Further, sub-rule (6) of Rule 373 which has already been reproduced above, specifically mentions that the difference will be recovered from the defaulters through a civil court. Reliance was also placed on a judgment of this Court in Mahesh Chandra v. Zila Panchayat, (1996) 3 UPLBEC 1586, in which it was held that no amount can be recovered as arrears of land revenue unless it is statutorily so provided, in the present case, Section 39 provides only for the recovery of excise revenue as arrears of land revenue and as already held by this Court, damages arising from breach of contract are not excise revenue within the meaning of the Act and, therefore, cannot be recovered as arrears of-
land revenue. Admittedly, the respondents have not filed any suit for the recovery of the damages from the principal debtor Raj Kumar or his surety and although there is no specific mention of the mode of recovery adopted by the respondents, it seems that the procedure for recovery by issue of a recovery certificate was being followed or was under contemplation which in our view is not permissible.
10. As is evident from the pleadings of either side, it is a case of breach of contract and either side is blaming the other for the breach. The petitioner seeks a refund of the excise licence fee paid. There was also a plea that no bhang was supplied which allegation is not controverted and the plea of the respondents is that the petitioner did not apply for the issue of bhang in accordance with the prescribed procedure. These are all matters of fact which cannot be decided in writ jurisdiction and. therefore, the relief prayed for by the petitioner claiming refunds cannot be granted to them in these proceedings and like the respondents, the remedy of the petitioner Raj Kumar too was to file a suit.
11. in view of the above discussions, these writ petitions are partly allowed and the respondents are refrained from recovering any amount from the petitioners in respect of licence of bhang shop at Shamli district Muzaffarnagar for the excise year 1984-85 except in accordance with law.
12. Parties shall bear their own costs.