Jammu & Kashmir High Court
Kewal Krishan Gupta vs Union Of India on 5 June, 2024
Author: Wasim Sadiq Nargal
Bench: Wasim Sadiq Nargal
Sr. No. 118
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT JAMMU
WP(C) No. 317/2024
CM No. 738/2024
a/w
WP(C) No. 276/2024
CM No. 664/2024
WP(C) No. 279/2024
CM No. 667/2024
WP(C) No. 281/2024
CM No. 671/2024
WP(C) No. 319/2024
CM No. 671/2024
WP(C) No. 325/2024
CM No. 749/2024
WP(C) No. 403/2024
CM No. 970/2024
WP(C) No. 416/2024
CM No. 1010/2024
WP(C) No. 432/2024
CM No. 1052/2024
WP(C) No. 433/2024
CM No. 1053/2024
WP(C) No. 434/2024
CM No. 1054/2024
WP(C) No. 454/2024
CM No. 1089/2024
WP(C) No. 464/2024
CM No. 1111/2024
Reserved on:14.05.2024
Pronounced on:05.06.2024
WP(C) No.317/2024
Kewal Krishan Gupta, Age 75 years ...Petitioner(s)
S/O Late Hans Raj
R/O H. No. 135 A/D Gandhi Nagar,
Jammu.
Through: Mr. Gagan Basotra, Sr. Advocate
with Mr. Sumit Moza, Adv.
Mr. Abhimanyu Singh, Adv.
Mr. Hamzah Hussaini, Adv.
2 WP(C) No. 317/2024
& connected petitions.
1. UT of Jammu and Kashmir
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex, Rail Head,
Jammu
...Respondent(s)
Through: Mr. D. C. Raina, Advocate General
with Mr. KDS Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.276/2024
Kuldeep Singh, Aged 34 years ...Petitioner(s)
Son of Sh. Des Raj,
R/O ParshallaTipri Banoon
District Doda.
Through: Mr. Sunil Sethi, Senior Advocate
with Mr. Parimoksh Seth, Adv &
Mr. T. S. Chib, Advocate.
Mr. Ravi Dogra, Advocate.
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex, Rail Head,
Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. K.D.S. Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.279/2024
Ashish Babbar Aged 34 years ...Petitioner(s)
Son of Monohar Lal Babbar,
R/O H. No.103 Sector 5, Upper
Roop Nagar, Jammu.
Through: Mr. Sunil Sethi, Senior Advocate
with Mr. Parimoksh Seth, Adv.&
Mr. T. S. Chib, Advocate.
Mr. Ravi Dogra, Advocate.
3 WP(C) No. 317/2024
& connected petitions.
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex, Rail Head,
Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. K.D.S. Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.281/2024
Sunita Choudhary Aged 42 years ...Petitioner(s)
Wife of Late Sh. Jagdish
Choudhary,
R/O Raipur, Satwari,
Tehsil Jammu South, District
Jammu.
Through: Mr. Sunil Sethi, Senior Advocate
with Mr. Parimoksh Seth, Adv.&
Mr. T. S. Chib, Advocate.
Mr. Ravi Dogra, Advocate.
...Respondent(s)
1. UT of Jammu and Kashmir
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex,
Rail Head, Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. K.D.S. Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.319/2024
Nitin Gupta, Age 43 years ...Petitioner(s)
S/O Sh. Kewal Krishan Gupta,
R/O H. No. 135 A/D Gandhi Nagar,
Jammu
Through: Mr. Sumit Moza, Adv
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
4 WP(C) No. 317/2024
& connected petitions.
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex, Rail Head,
Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. K.D.S. Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.325/2024
Shriya Rajput, Age 23 years, ...Petitioner(s)
D/O Sh. Pritam Singh,
Permanent R/O Village Chorli,
Tehsil Bishnah, Distt. Jammu,
A/p Ward No.55, Marble Market,
Jammu.
Through: Mr. Rakesh Sharma, Advocate.
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex, Rail Head,
Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. K.D.S. Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.403/2024
Subash Chander, Age 26 years ...Petitioner(s)
S/O Sh. Titru Ram,
R/O Blandh, Tehsil Ramanagar,
District Udhampur
Through: Mr. Nitin Bhasin, Advocate.
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
5 WP(C) No. 317/2024
& connected petitions.
2. Excise Commissioner, Excise
and Taxation Complex, Rail Head,
Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. KDS Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.416/2024
Amit Kumar, Age 27 years ...Petitioner(s)
S/O Bodh Raj,
R/O Village Chhandityal,
Tehsil Hiranagar, District Kathua
Through: Mr. M. K. Bhardwaj, Senior
Advocate with Mr. Gagan Kohli,
Advocate.
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex, Rail Head,
Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. KDS Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.432/2024
Ashok Singh Jamwal, Age 65 years ...Petitioner(s)
S/O Sh. Sansar Singh Jamwal,
R/O 27/B Karan Nagar Ext.,
Rehari Mohalla Jammu.
Through: Mr. Nitin Bhasin, Advocate.
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex, Rail Head,
Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. K.D.S. Kotwal, Dy. AG &
6 WP(C) No. 317/2024
& connected petitions.
Mr. Sumeet Bhatia, GA.
WP(C) No.433/2024
Mohd. Sarvar Aged 33 years ...Petitioner(s)
S/O Khadim Hussain,
R/O, Ward No.5, village Mahra,
Tehsil Surankote, Poonch,
Through: Mr. Sunil Sethi, Senior Advocate
with Mr. Parimoksh Seth, Adv.&
Mr. T. S. Chib, Advocate.
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex,
Rail Head, Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. K.D.S. Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.434/2024
Sunil Kumar Age 62 years ...Petitioner(s)
S/o Sh. Jia Lal Sharma,
R/O House No.186, Ward No. 6
Near Shiv Mandir, Thodhi, Jawahar
Nagar, Rajouri-185132
Through: Mr. Anuj Sawhney, Advocate
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex, Rail Head,
Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. K.D.S. Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
7 WP(C) No. 317/2024
& connected petitions.
WP(C) No.454/2024
1. Preety Vohra W/O Ranjeev ...Petitioner(s)
Kumar Vohra R/O 221,
KachiChawni Palace Road,
Jammu Aged 42 years.
2. SanjeevGoswami S/O Ram
Kumar R/O Shop No.16
Parade Road, Jammu
Through: Mr. Virender Bhat, Advocate.
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex,
Rail Head, Jammu.
Through: Mr. D. C. Raina, Advocate General
with Mr. KDS Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
WP(C) No.464/2024
Raj Kumar, Age 30 years, ...Petitioner(s)
S/O Bodh Raj
R/O Chhandityal,Tehsil Hiranagar
District Kathua
Through: Mr. M K Bhardwaj, Sr. Advocate
with Mr. Gagan Kohli, Advocate.
1. UT of Jammu and Kashmir ...Respondent(s)
Through Commissioner/
Secretary, Finance Department,
Civil Secretariat, J&K, Jammu.
2. Excise Commissioner, Excise
and Taxation Complex,
Rail Head, Jammu.
3. Technical Programmer/Officer,
Excise Department, Jammu
Through: Mr. D. C. Raina, Advocate General
with Mr. K.D.S. Kotwal, Dy. AG &
Mr. Sumeet Bhatia, GA.
8 WP(C) No. 317/2024
& connected petitions.
Coram: HON'BLE MR. JUSTICE WASIM SADIQ NARGAL, JUDGE
JUDGMENT
INDEX
Serial Heading Page
No. Nos.
1. Facts 10-20
2. Arguments on behalf of Mr. Gagan Basotra, Senior 20-24
Advocate in WP(C) No. 317/2024.
3. Arguments on behalf of Mr. M K Bhardwaj, Senior 24-27
Advocate in WP(C) No.416/2024 & WP(C) No.
4. Arguments of Mr. Sunil Sethi, Senior Advocate in 27-30
WP(C) Nos.276, 279, 281 & 433/2024
5. Arguments of Mr. Sumit Moza, Advocate on behalf 30-31
petitioners in WP(C) No. 319/2024
6. Arguments of Mr. Virender Bhat, Advocate in WP(C) 31-33
7. Arguments of Mr. Rakesh Sharma, Advocate in 33-34
8. Arguments of Mr. Nitin Bhasin, Advocate in WP(C) 34-35
9. Arguments of Mr. D C Raina, Advocate General on 35-40
behalf of UT of J&K
& connected petitions.
10. Arguments in Rebuttal 40-46
A. Scope of Judicial Review in matters of 46-50
tenders/auctions.
B. Whether a vested right has been accrued to the 50-52
petitioners by virtue notified as highest bidders?
C. Whether the exclusive privilege of the Government in 53-63
sale / manufacture of liquor grant any higher degree of
fair play in the joints to the Government in executive
decisions concerning the same?
D. Whether the guarantee of a minimum revenue per 63-64
vend/ minimum reserve bid price renders the decision
to cancel the auction on the basis of poor response and
less competition as arbitrary?
E. Whether the decision to cancel the auction and the 65-84
subsequent order for re-auctioning is arbitrary,
discriminatory, or mala fide so as to warrant judicial
interference?
F. Whether the order of cancelling the auction process is 84-87
sought to be justified by way of fresh reasons?
12. Conclusion 87-89
& connected petitions.
1. In this bunch of writ petitions, since common questions of law and
facts arise for consideration, they were heard analogously and are being decided
by this common judgment. For the facility of reference, brief facts from each of
the petitions are being referred to as under:
FACTS:
2. The petitioner is aggrieved of the order No.100-EC of 2024 dated
13.02.2024, whereby respondent No.2 has arbitrarily withdrawn the bid and
cancelled the auction result with regard to liquor vend situated at Excise Range
City North, JMC Ward No.5A. Respondent no.2 issued notice for e-auction of
305 retail liquor vend (JKEL-2) license for sale of liquor for the year 2024-25 in
the UT of J&K and for Excise Range City North, JMC Ward No.5-A, three
vends were proposed for auction and the petitioner participated in the bidding
process, where the minimum reserve bid price was earmarked Rs.15.00 lacs and
petitioner submitted his bid for Rs.15.00 lacs, and subsequently, was declared as
H1. To the surprise of the petitioner, vide order impugned, the petitioner‟s bid
among others were cancelled, due to poor response and less competition.
Aggrieved whereof, the petitioner has approached this court by way of filing the
instant petition.
3. The facts, that emerge from the perusal of this writ petition, are that
consequent upon issuance of Excise Policy, 2024-25, the Excise Commissioner
& connected petitions.
issued notice vide No.100-EC of 2024 dated 13.02.2024, for e-auction of 305
retail liquor vends (JKEL-2) licenses, including the location, Ward No.54-D in
Excise Range City South. Bid document for e-auction of JKEL-2 vends for the
year 2024-25 was also issued simultaneously. The Annexure appended to Bid
document reveals that the minimum guaranteed revenue per shop per month for
the year 2024-25 was Rs. 24.00 lacs, MGQ of J&K special whisky/country
liquor/local IMFL brand per shop p.a. was 66000 and minimum reserve bid price
was Rs.30.00 lacs.The petitioner participated in the e-auction process for the
vend in question by submitting his bid for the location in question and was
adjudged as the H1 at Rs.30.00 lacs. Accordingly, the petitioner was informed
that he is the highest bidder and was advised to deposit 100% bid price within
five bank workings days. Much to the dismay of the petitioner, vide impugned
order dated 13.02.2024, he was informed of the cancellation of the e-auction
process for the location for which he has submitted his bid. Aggrieved of the
aforesaid action of the respondents, the petitioner has approached this court by
way of filing the instant writ petition.
4. In this petition, e-auction of liquor vends for the year 2024-25 for 10
locations, including the location Panchayat Upper Dhangri in Excise Range
Rajouri-Poonch for which the petitioner participated, deposited participation fee,
earnest money deposit and also uploaded the requisite documents on the web site
designed for conducting e-aution, has been cancelled by the respondent no.2, due
to poor response and less competition, vide impugned order dated 13.02.2024, in
spite of the fact that the petitioner is adjudged as highest (H1). Dissatisfied
& connected petitions.
whereof, the impugned order has been challenged by way of filing this writ
petition.
5. In this petition, the petitioner haschallenged order No.100-EC of 2024
dated 13.02.2024 issued by respondent no.2, whereby, amongst others, e-auction
of liquor vends for the year 2024-25 for 10 locations, including for the location
Rajgarh Panchayat, Rajgarh in Excise Range Doda-Kishtwar-Ramban in
reference to Bid document for e-auction of JKEL-2 vends for the year 2024-25
has been cancelled on the ground of poor response and less competition.
6. It is averred in the petition that the petitioner, being fully eligible with
respect to terms and conditions of the notice for e-auction dated 28.03.2023
applied for participated in the e-auction process for the vend location in question
and deposited participation fee, Earnest Money Deposit (EMD) and uploaded the
requisite documents. The e-auction proceedings were conducted by the
respondents w.e.f. 10.02.2024. The further case of the petitioner is that in
Annexure appended to bid document dated 01.02.2024, location Rajgarh,
Panchayat Rajgarh in Excise Range Doda-Kishtwar is shown at Serial No.23, in
which Minimum guaranteed revenue per shop per month for the year 2024-25 is
shown at Rs.7.00 lac, MGQ of J&K Special Whisky/country liquor/local IMFL
brand per shop p.a. for the year 2024-25 is shown 42,000 and Minimum reserve
bid price is fixed at Rs.15.00 lacs.
7. It is further averred in the petition that petitioner was adjudged as
highest (H1) at Rs.15.00 lacs and the petitioner was informed the same by
& connected petitions.
respondent no.2 and was further advised to deposit 100% within 05 bank
working days.
8. It is a matter of record that just after one day of declaration of result,
respondent no.2, all of a sudden, without giving any plausible reasons, has
cancelled the e-auction process for locations, including the location for which the
petitioner was declared highest bidder. Hence the instant petition.
9. Facts, which give rise to throw challenge to the impugned order in this
writ petition, are that the petitioner has participated in the e-auction process for
location of vend situated at Excise Range City North, JMC Ward No.11. It is
averred in the petition that the petitioner was adjudged as H1. Annexure annexed
with bid document, shows the position for Excise Range City North, JMC Ward
No.11, at Serial No.19, which would further reveals that one vend is sought to be
auctioned, wherein the Minimum reserved bid price for the year 2024-25 is Rs.
15.00 lacs. The petitioner submitted his bid of Rs.15.00 lacs for the aforesaid
location and eventually was declared as H1. It is averred that respondent no.2
has passed the impugned order without any rhyme and reason and the auction
result for vend location JMC Ward No.11 has been cancelled in terms of Clause
XXIII of bid document 2024-25, which has been challenged in the instant
petition.
10. Brief facts involved, in this case, succinctly summarized are that
respondent no.2 issued Bid Document No.58-EC of 2024 dated 01.02.2024 of e-
auctioning of retail liquor vends (JKEL-2) for different locations falling under
& connected petitions.
different Excise Ranges reflected in the Annexure, which in the instant case is
for Excise Range City North, Jammu Municipal Corporation, Ward No.5C, at Sr.
No.8, wherein while participating in the bid, petitioner deposited participation
fee to the tune of Rs.50,000/- and EMD of Rs.10.00 lacs. It is further averred in
the petition that petitioner was declared H1 bidder for the location in question
and in terms of letter of acceptance was directed to deposit bid amount within
seven working days and complete the requisite formalities.Subsequently, the
respondent no.2, abruptly, cancelled the auction result of the petitioner by way of
impugned order dated 13.02.2024, which is challenged by the medium of this
writ petition.
11. In this case, vide order No.100-EC of 2024 dated 13.02.2024,
respondent no.2, amongst others, has cancelled the e-auction of liquor vends for
the year 2024-25 for 10 locations, including for the location JMC Ward No.4-B
in Excise Range City North in reference to Bid document for e-auction of JKEL-
2 vends for the year 2024-25 issued vide No.58-EC of 2024 dated 01.02.2024.
The petitioner is aggrieved of the aforesaid order and an Annexure appended
with bid document at serial No.5 for the location of the liquor vend in question,
wherein Minimum guaranteed revenue per shop per month is shown as Rs. 9 lac,
MGQ of J&K Special Whisky/country liquor/local IMFL brand per shop p.a. for
the year in question is shown as 30000 and Minimum reserve bid price was fixed
at Rs. 15.00 lac.
12. That the petitioner submitted his bid for the location in question i.e.
Ward No.4-B in Excise Range City North and was adjudged H1 at Rs.15.00 lacs.
& connected petitions.
vide e-mail dated 12.02.2024. The petitioner was informed of the same and
advised to do the needful and just after one day of declaration of result declaring
petitioner H1, his bid has been cancelled by the respondent no.2 vide impugned
order. Hence, the instant petition.
13. Challenge in this writ petition is to the order No.44-FD of 2024 dated
26.02.2024, to the extent it pertains to the cancellation of bid submitted by the
petitioner, qua the location Plassi Panchayat, Excise Range Kathua. It is averred
in the petition that auction process has been cancelled, in view of poor response
and less competition. The petitioner has participated in the e-auction proceedings
in respect of liquor vend for the location Plassi Panchayat, Excise Range Kathua,
which is mentioned at Serial No. 29 of the Annexure-A appended with the bid
document, wherein it is clearly reflected that number of vends sought to be
auctioned is one, Minimum guaranteed revenue per shop per month for the year
2024-25 is Rs.10 lacs, MGQ of JK Special Whisky/Country Liquor/Local IMFL
brand per shop p.a. for the year 2024-25 is 66000 bottles (having capacity of 750
ml each); and the Minimum reserve bid price is fixed at Rs.15 lacs.
14. That the bid of the petitioner has been adjudged as the highest (H1) at
Rs.16.00 lacs against Minimum reserved bid price of Rs.15.00 lacs. It is averred
in the petition that in spite of petitioner being H1, he did not receive any message
from the respondents for depositing 100% amount and other requisite
formalities. On getting no response from the respondents, the petitioner
approached the authorities and was conveyed that the location Plassi Panchayat
at Serial No.29 for Excise Range Kathua will be re-auctioned again due to poor
& connected petitions.
response and less competition. It is the aforesaid act of the respondents, which is
being challenged by way of filing this writ petition.
15. Facts which, lead to the filing of the instant petition are that the
petitioner submitted his bid for the location JMC Ward No.24 B in Excise Range
City North. The Annexure appended with the bid document mentioned the
location in question at Sr. No.43, wherein Minimum guaranteed revenue per
shop per month for the year 2024-25 is shown Rs. 13 lacs, MGQ of JK Special
Whisky/Country Liquor/ Local IMFL brand per shop p.a. for the year 2024-25
(in bottles of 750 ml) is 40000; and Minimum reserve bid price in the year 2024-
25 is Rs.30.00 lacs. The petitioner being fully eligible, participated in the bid
process, and finally adjudged as highest bidder at Rs.30.00 lacs. However, vide
order No.43-FD of 2024 dated 26.02.2024, the respondent no.2, has cancelled
the e-auction of liquor vends for the year 2024-25 for 3 locations, including the
location, for which the petitioner has participated i.e. JMC Ward No.24 B in
Excise Range City North on the ground of poor response and less competition.
The petitioner in the backdrop of the aforesaid facts of the case is aggrieved of
the impugned order dated 26.02.2024, which is sought to be challenged by way
of filing of this writ petition.
16. The brief facts of the case are that consequent upon issuance of the
Excise Policy, 2024-25, the respondent No.2 issued notice for e-auction of 305
& connected petitions.
retail liquor vends (JKEL-2) licenses under endorsement notice No.EC/Exc/e-
auction/2024-25/7182 dated 01.02.2024. After that, the respondent no.2 issued
bid document for e-auction of JKEL-2 vends vide No.58-EC of 2024 dated
01.02.2024. The petitioner, being fully eligible, applied for allotment of JKEL-2
license for the location Excise Range City North, JMC Ward No.36, which is
mentioned at Serial No.52 of the Annexure appended to the bid document,
perusal whereof, would further show that MGR per shop per month was fixed at
Rs.14 lacs, MGQ of JK Special Whisky/country liquor/Local IMFL brand per
shop p.a.. for the year 2024-25 was 60000; and Minimum reserve price in the
year 2024-25 was 30 lacs. The petitioner deposited participation fee, Earnest
Money Deposit (EMD) and also uploaded the required documents; that the e-
auction proceedings were conducted w.e.f 11.02.2023 to 13.02.2024. The
petitioner was ultimately declared as highest bidder at Rs.31.00 lacs; the
petitioner was informed by the respondents that his bid amounting to Rs. 31.00
lacs was highest bidder for the location in question and was advised to do the
needful. However, on 27.02.2024, the respondent no.2 issued order No.Ec/Exc/e-
auction/2024-25/7762 dated 27.02.2024 and cancelled the auction result of
locations including the location for which the petitioner has been declared
highest in view of poor response and less competition. It is this order which is
impugned in the present petition.
17. The facts which emerge, in this case, are that petitioner has applied for
participating in the e-auction process for the vend Location Poonch MC ward
& connected petitions.
No.10, which is shown at serial No.20 of the Annexure of the bid document in
Excise Range Rajouri-Poonch where no. of vend is shown as 01, Minimum
Guaranteed Revenue per shop per month for the year 2024-25 has been shown at
Rs.12.00 Lac, MGQ of J&K Special Whisky/country liquor/local IMFL brand
per shop p.a. for the year 2024-25 is shown as 40000 and Minimum reserve bid
price for the year 2024-25 was fixed at Rs.15.00 lacs.
18. It is stated in the petition that the petitioner was adjudged as highest
(H1) at Rs.15.00 lacs and was informed, accordingly, and was advised vide
email dated 12.02.2024 by respondent no.2 that his bid amounting to Rs.15.00
lacs is highest for the aforesaid location and he has to deposit 100% of bid
amount within 07 bank working days and also to complete the requisite
formalities.After declaring the petitioner as higher bidder, the respondent no.2
has issued the impugned order No.100-EC of 2024 dated 13.02.2024, whereby
the auction result of the location Poonch MC ward No.10 has been cancelled on
vague grounds. Further, one more notification was issued by respondent No.2,
which is impugned in this writ petition, i.e. notification No.EC/Exc/e-
auction/2024-25/7762 dated 27.02.2024, wherein call is made to re-auction for
retail liquor vends for the location including location of Poonch MC Ward
No.10. The aforesaid two notifications/orders are made subject matter of
challenge in this writ petition.
19. The facts, which emerge in this case are that petitioners have applied
for participating in the e-auction process for the vend Location JMC Ward
No.15E, Jammu reflected at serial No.26 of Annexure appended to bid document
& connected petitions.
and location JMC Ward No.10D Jammu reflected at serial No.18 of the said
Annexure appended to the bid document, respectively, in reference to Bid
document for e-auction of JKEL-2 vends for the year 2024-25 issued vide
No.58-EC of 2024 dated 01.02.2024. Petitioners, being fully eligible and
qualified, applied for the aforesaid locations and deposited participation fee,
EMD and uploaded the required documents.The bids submitted by the
petitioners for the locations of JMC Ward No.15E and JMC Ward No.10D was
adjudged as the highest at Rs.15.00 lacs and they were informed, accordingly,
and were advised to deposit the 100% bid amount within 5 days.
20. It is stated in the petition that only after one day of declaration of the
result declaring the petitioners as highest bidder for the said locations, the
respondent No.2, without any power or authority has issued the order No.100-EC
of 2024 dated 13.02.2024, which is impugned in the present petition.
21. Petitioner, in this petition, is challenging the notice bearing No.EC/E-
auction/2024-25/7540-47 dated 15.02.2024 to the extent it pertains to the
declaring the result of the bid submitted by the petitioner for location Bann
Panchayat Excise Range Kathua as inclusive due to technical glitch in the portal.
The substantial bid of Rs. 32.00 lacs submitted by the petitioner for the location
Bann Panchayat against minimum bid price of Rs.30.00 lacs was accepted on
9:25:05 and was declared as H1 for the aforesaid location and the bid time was
closed at 9.35 a.m. The bidding process was completed successfully and the
petitioner‟s bid was accepted as H1. The petitioner immediately informed the
respondents about acceptance of the bid and extension of 5 minutes more than
& connected petitions.
the usual closing time i.e. 9.30 am in the portal and was expecting email with
regard to the depositing of the bid amount. The respondents did not sent the
email or telephonically inform the petitioner about the cancellation of the bid of
the petitioner as inconclusive due to technical glitch. Aggrieved of the aforesaid
act of the respondents, the petitioner has approached this court by way of filing
this writ petition.
ARGUMENTS ON BEHALF OF MR. GAGAN BASOTRA, SR.
ADVOCATE. In WP(C) No.317/2024.
22. Mr. Gagan Basotra, learned Senior counsel submits that the executive
instructions, by way of bid document, cannot be contrary to the policy decision
of the Government, which has statutory force. The learned counsel has referred
to the policy objectives of the said decision, a perusal whereof, reveals that it has
no commercial aspect. He further submits that as per Clause 2.3.2 of the policy
decision, the re-auction could have been possible only in cases where no
response is received in the e-auction. This situation has not arisen in the present
case and, thus, the action of the respondents by virtue of order impugned for re-
auctioning, is bad in the eyes of the law. He further places reliance upon Clause
2.3.4 of the policy, a perusal whereof reveals that although the bidder can
participate for number of vends but he has to pay EMD separately for each bid.
Since his bid has been rejected, so grave prejudice has been caused as he has
been deprived of participation for other vends.
23. He further placed reliance on Clause 2.3.8 of the said policy, a perusal
whereof, makes it abundantly clear that the bidder shall make his own
arrangement for the shop/premises in a specified area owned, leased or rented
& connected petitions.
and the suitability for location for vend to be ensured by the bidder. The above
clause further stipulates that the bidder shall ensure that the premises
selected/identified by him meet the requirements of the J&K Excise Act/Rules.
The learned Senior counsel has also referred to para 4 of the reply of the
Government that the order which is impugned in the present case has been issued
by the Excise Commissioner on the directions of the Finance Department,
Government of Jammu and Kashmir. Thus, as on date, it is not known whether
the said decision, which is impugned in the present petition has been taken by
the Government or by the Finance Department and what weighed with the
authorities to change the decision just after 12 hours, when as per the record the
bid of the petitioner was accepted on 12.02.2024 and was cancelled on
13.02.2024 by the Excise Commissioner.
24. He further emphasised that the Government cannot substitute the
reasons by way of objections, which do not find mention in the order impugned,
as the order impugned reflects that the bid of the petitioner was cancelled only
on two counts i.e. poor response and less competition.However, the respondents
while filing reply have added that it has been cancelled because of consequent
loss to the Govt. exchequer as reflected in para 5 of the reply. The reasoning
given by the respondents in the reply affidavit that it was because of the loss to
the Govt. exchequer has not been spelled out in the order impugned, rather this
reason has been added by virtue of objections, which according to him cannot be
done.
25. Mr. Basotra has requested this court to summon the record of the
respondents with a view to verify that what deliberations were held and what
& connected petitions.
weighed with the authorities to cancel the bid document just within 12 hours
after accepting the bid of the petitioner and how there is an abrupt change of
policy in a day which lead to the passing of the aforesaid order.
26. The learned Senior counsel has also placed reliance on clause 2.3.10 of
the said policy, which talks of Minimum Guaranteed Revenue on monthly basis,
which should be as per the location. Learned Senior counsel further referred to
the policy in which detail figures have been specified with respect to various
locations, number of vends, Minimum Guaranteed Revenue per shop per Month
for the year 2024-25, Minimum Guaranteed Revenue of JK Special
Whisky/Country Liquor/Local IMFL brand per shop P.A. for the year 2024-25
and Minimum Reserve Bid Price in the year 2024-25 and he figures at serial no.6
of JMC Ward No.5-A, wherein three vends have been identified and the
Minimum guaranteed revenue per shop has been fixed seven lakhs and the
Minimum bid price has been fixed as fifteen lakhs, which according to the
learned counsel is the license fee.
27. With a view to substantiate his arguments, learned counsel has referred
to Clause (viii) of the Conditions to be fulfilled by the successful bidder, wherein
it is emphatically made clear that the bid amount shall be the license fee only and
every licensee shall have to deposit the Minimum Guaranteed Revenue (MGR)
on account of applicable Excise Duty/Fee as shown against each vend as per the
procedure prescribed and MGRs were required to be deposited by or before 1st of
every month compulsorily by the licensee which would ultimately be adjusted
against the actual amount of duties accruing on the stock of the liquor lifted by
the retailer.
& connected petitions.
28. He further submits that the Government under the garb of Clause
(XXIII) of the Bid Document has cancelled the bid of the petitioner, wherein the
Govt. has been given unbridled powers to add/delete/de-notify/change any of the
locations/cancel the auction process in respect of all/any of the location(s)
without specifying any reason at any time prior/during or after the auction
process. He further submits that this clause, which has been pressed into service
by the respondents while passing the order impugned was not there in the excise
policy, which has statutory force and the respondents, by no stretch of
imagination, could have added this clause, which gives them unbridled powers in
the bidding document. The bidding document has to be in consonance with the
excise policy and not in contravention to the same and, thus, the very
incorporation of the aforesaid clause in the bidding document and placing
reliance upon the same is contrary to law and liable to be rejected.
29. The learned counsel submits that since the bid of the petitioner has
been cancelled, grave prejudice has been caused to him. Further, a right has
accrued to the petitioner when his bid was accepted and once that right has
accrued and the Government has entered into correspondence with the petitioner,
then that right cannot be taken away, without following due process of law or
providing an opportunity of being heard to the petitioner as the same will be
violative of fundamental rights of the petitioner.
30. Lastly, learned senior counsel has argued that the respondents, by no
stretch of imagination, could have added the ground of loss of Government
exchequer the reason for cancelling the bid of the petitioner, when no such
reason has been spelled out in the order impugned. The bid of the petitioner was
& connected petitions.
cancelled only in view of the poor response and less competition in the bidding
and the loss of the Govt. exchequer was nowhere in the order impugned and the
respondents, by no stretch of imagination, could enlarge the scope of reasoning
in the objections, when no such reasoning have been spelled out in the order
impugned. On this count also, the order impugned, according to him cannot
sustain the test of law and is liable to be quashed.
ARGUMENTS ON BEHALF OF MR. M K BHARDWAJ, SR.
ADVOCATE IN WP(C) NO.416/2024
31. Mr. M.K. Bhardwaj, learned Senior counsel appearing on behalf of the
petitioner has argued that once the petitioner has been declared as the highest
bidder, a right has accrued to him and, once the Government has entered into a
correspondence with the petitioner by declaring him as the highest bidder, then
that right cannot be taken away without adopting due process of law. In the
present case, according to him, no such process has been followed by the
respondents. Therefore, the action of the respondents in cancelling the bid of the
petitioner is arbitrary, as the petitioner has not been provided any opportunity of
being heard before issuance the order impugned.
32. He has laid emphasis on the issue that the only reason, which has been
assigned by the respondents in rejecting the bid of the petitioner, is poor
response and less competition and this ground is not available to the respondents,
insofar as the case of the petitioner is concerned. He has also drawn the attention
of this Court to the Government order dated 26.02.2024, which is impugned in
the present petition, a perusal whereof reveals that for the vend location Plassi
Panchayat Excise Range, Kathua, there were only two bids and after initiation of
& connected petitions.
the process by the respondents in conformity with the terms and conditions of
the bidding document, the petitioner has been declared as the highest bidder and,
thus, it does not lie in the mouth of the respondents to state that there was poor
response or less competition, which could be a justifiable reason for cancelling
the bid of the petitioner.
33. The learned Senior counsel has provided a copy of temporary license,
which has been issued in favour of Sh. Prakash Chand for the location Panchayat
Draman, Kathua, whereby, the said person has been declared as a successful
bidder and he was the sole participant for the said vend location and yet his bid
has been declared as successful and a temporary license has been issued in his
favour, however, the auction of the petitioner‟s vend has been cancelled
allegedly on the ground of poor response and less competition.
34. According to him, the Government, while distributing the State
largesse, cannot adopt pick and choose policy, and action of the respondents, in
the instant case, is an arbitrary exercise of power, where the respondents, acting
on their whims and caprice, have cancelled the bid of the petitioner and, on the
other hand, where there was a sole participant, has finalized the said bid. Thus,
the argument of the learned counsel that the action of the respondents, in
distributing the State largesse, smacks of mala fide considerations and the said
action is an arbitrary exercise of power.
35. The next argument, which has been advanced by him, is that the
moment petitioner has been declared as a highest bidder, he was required to
deposit an amount of Rs. 10 lacs and, thus, with the said deposit, he is debarred
from participating in other bids. As a consequence thereof, a grave prejudice has
& connected petitions.
been caused to the petitioner, as the petitioner has been deprived of participating
for other bids. He further submits that such a right cannot be taken away, without
following due process of law.
36. Lastly, learned senior counsel for the petitioner has drawn attention of
this Court, with respect to the guidelines issued by the Ministry of Finance and
also with respect to the general instructions on procurement and project
management. Although, the aforesaid instructions have been issued by the
Ministry of Finance with respect to the procurement and project management,
yet with a view to lay emphasis that even a single bid cannot be rejected, he has
placed reliance on the same. He has drawn the attention of the Court to Clause
11.8, which relates to the rejection of the single bid.
37. Thus, a bare perusal of the aforesaid clause reveals that the lack of
competition shall not be determined solely on the basis of number of bidders and
even if there is one bidder, the process should be considered valid.
38. Mr. M.K. Bhardwaj, learned Senior counsel for the petitioner in
WP(C) No. 464/2024 submits that the petitioner, in this case, has participated for
Bann Panchayat vend and the only reason, which has been given by the
respondents in rejecting the bid of the petitioner for this particular vend i.e. Bann
Panchayat is due to technical glitch in the portal. Consequently, the bids could
not be concluded due to inability of bidders to offer incremental bids within the
period of outage and, thereby, resulted in non-conclusive H1 bidder for the
location, which finds mention in the order impugned dated 15.02.2024.
& connected petitions.
39. Learned Senior counsel, with a view to substantiate his claim, has
drawn the attention of the Court to Annexure-III of his petition, a perusal
whereof, reveals that the bid of the petitioner was uploaded well in time as the
date and timing has been reflected in the aforesaid document and the said bid has
also been accepted. After having accepted the said bid, the respondents have
arbitrarily rejected the bid of the petitioner, by virtue of order impugned on the
ground, which is factually incorrect and contrary to record. The minimum price,
which has been fixed by the respondents was Rs. 30 lacs and the petitioner has
offered Rs. 32 lacs, which is higher than the minimum price fixed by the
Government.
ARGUMENTS OF MR. SUNIL SETHI, LEARNED SENIOR COUNSEL
APPEARING ON BEHALF OF THE PETITIONERS in WP(C) Nos.276,
279, 281 & 433/2024.
40. As per the learned Senior counsel, Mr. Sunil Sethi, the only ground,
for which the cases of the petitioners have been rejected, by virtue of the order
impugned, is that there was less competition and poor response. The further
argument of learned counsel for the petitioners is that the reasons, which have
been spelt out in the order impugned, have no logical basis with the object
sought to be achieved or based on any reasonable classification in light of the
fact that once the minimum price has been fixed by the Government by way of a
rational policy, then, in that eventuality, the rejection of the petitioners‟ bid on
the ground that there is less competition has no logical basis.
41. Once the object of the Government to have a minimum price is
achieved, then the rejection of the cases of the petitioners for lack of competition
loses its significance. The prime concern of the Government is to have the
& connected petitions.
minimum guaranteed revenue/ minimum bid price by way of a policy, which
was achieved in the instant case when the same was offered by the petitioners
and despite that the Government has gone for re-auctioning by not finalizing the
bid offered by the petitioners.
42. Thus, according to the learned counsel for the petitioners, once the
object of the Government to have a minimum bid price is achieved, then the
rejection of the bid of the petitioners for lack of competition is illegal and cannot
sustain the test of law and liable to be set aside. As per him, what the
Government is going to achieve by way of re-auction is not forthcoming from
the record. Once the minimum price, which has been fixed by the Government
and offered by the petitioners and later on accepted by the Government, then the
Government cannot backtrack from the said promise to finalize the said bid in
favour of the petitioners by assigning the reason that there was lack of
competition or there was poor response.
43. The learned counsel has further argued that it is not a case, where the
Government has not fixed the minimum price for the particular bid, where they
wanted to have the maximum competition or level playing field, rather it is a
case, where the Government after rationalizing the last year bid price and
keeping in view all the relevant factors has fixed the minimum bid price for a
particular vend, by way of a policy, then, the Government, by no stretch of
imagination, can backtrack from the said policy, when the said object, which is
sought to be achieved, by way of a bid,has been achieved. What laudable object
the Government is going to achieve by way of re-auction is not forthcoming
& connected petitions.
from the record and the decision, which is impugned in the present petition, does
not seem to be logical.
44. The next argument of the learned senor counsel for the petitioners is
that, once the Government has entered into a correspondence with the petitioners
by accepting the offer of the bid of the petitioner, then right has accrued to the
petitioners, which cannot be taken away, without following the due process of
law. The due process of law, in the instant case, could be issuance of notice and
providing an opportunity of being heard to the petitioners, which has not been
done and thus, the action of the respondents in cancelling the bid offered by the
petitioners, by virtue of the order impugned, cannot sustain the test of law.
45. The learned counsel further submits that the Government does not
have an unfettered right of cancelling the offer of bid by relying upon Clause
XXIII of the bid document, which gives unbridled power to the Government to
cancel the offer without assigning any reason. He points out that the said
condition can be pressed into service only in case of emergency. In case, if this
condition has to be pressed into service, then what is the purpose of providing
the other Clauses in the tender document, as the incorporation of this clause will
give arbitrary power to the Government to cancel any contract, without assigning
any reason.
46. Lastly, learned senior counsel has argued that the law has been settled
by the Hon‟ble Supreme Court in various authoritative pronouncements that, in a
case, where the minimum price for the bid has been fixed by the authority in the
tender document, even if, there is one bid, the same cannot be rejected on the
ground that there is less competition. Thus, the decision of the Government in
& connected petitions.
rejecting the case of the petitioners, after having accepting the same, is illogical
and in contravention to the law laid down by the Apex Court in various
authoritative pronouncements.
47. Mr. Sethi, learned senior counsel also laid emphasis that the
Government is not averse with regard to the process of auction, rather the
Government has objection with regard to the output of the auction, more
particularly, when the initiation of the auction process is in conformity with the
terms and conditions of the bid. Thus, the Government cannot reject the output
of the said bid, whereby the petitioners‟ bid has been accepted, being the lowest.
Another point, which has been raised by learned senior counsel, is that the
Government cannot substitute reasons for rejection of the bid, by way of filing
objections, when no such reasons are spelt out in the order impugned. In absence
of any reasons, which are logical, the order impugned cannot sustain the test of
law.
ARGUMENTS OF MR. SUMIT MOZA, LEARNED COUNSEL FOR
PETITIONER IN WP(C) NO. 319/2024
48. Mr. Sumit Moza, learned counsel for the petitioner has argued that the
respondents have cancelled the bid of the petitioner for poor response and less
competition and also, on the ground that the same could not fetch the maximum
revenue, which is not reflected in the order impugned.
49. Hefurther argued that the data, which has been placed on record,
reveals that there are certain vends, which were auctioned in the previous year
for a particular price, which have been reduced this year and yet, in those cases,
the respondents have not cancelled their bids, rather finalized them.In the instant
& connected petitions.
case, the respondents have cancelled the bid of the petitioner, on the ground of
poor response and not fetching the maximum revenue. He further submits that it
is not understandable that, how this ground of not fetching the maximum
revenue, is available to the respondents, when the respondents themselves have
fixed the minimum price for a particular vend and if that minimum price is being
offered by the participants and the Government has achieved that target in
receiving that particular price, the said ground is not available to the respondents.
50. Thus, according to him, the rejection of the case of the respondents is
palpably bad in the eyes of law and liable to be rejected.
ARGUMENTS OF MR. VIRENDER BHAT, LEARNED COUNSEL IN
51. Mr. Virender Bhat, learned counsel for the petitioner has laid emphasis
that the invitation of a bid is an offer and any bidding process comes to an end,
when that process is finalized and culminates into contract. He also submits that
Clause (XXIII) of the Bid Document, which gives unbridled powers to the
respondents, can be exercised before the contract is complete or else before the
bid is finalized and once, the bid is finalized, then the said power cannot be
resorted to by the respondents.
52. The learned counsel further submits that once the acceptance has
reached the concerned person and the offer of acceptance, although conditional,
is accepted, then the contract is finalized and a right is accrued to the party,
which cannot be taken away, without following due process of law or resorting
to the unbridled powers, as envisaged under Clause XXIII of the bid document.
After the acceptance of the bid, it is illegal and irrational, on the part of the
& connected petitions.
respondents, to resort to the aforesaid powers, which give unfettered right to the
respondents to cancel the bid. There is no quarrel with respect to the aforesaid
power, which can be exercised before the bid is finalized and the offer is
accepted.
53. Learned counsel for the petitioner has drawn attention of this Court to
Section 2 (a) (b) (d), Section 3 and 4 and also Section 23 of the Indian Contract
Act, 1872. He submits that, whatever has been argued, has statutory backing and
the learned counsel has laid emphasis that the communication of acceptance can
be revoked before the same is accepted and once it is accepted, there will be a
contractual obligation and the communication and the proposal get complete,
when the same is accepted by the other side. For the facility of reference,
Sections 3 and 4 of the Contract Act are reproduced hereunder:
―3. Communication, acceptance and revocation of proposals.-
The communication of proposals, the acceptance of proposals,
and the revocation of proposals and acceptances, respectively,
are deemed to be made by any act or omission of the party
proposing, accepting or revoking, by which he intends to
communicate such proposal, acceptance or revocation, or
which has the effect of communicating it.
4. Communication when complete.- The communication of a
proposal is complete when it comes to the knowledge of the
person to whom it is made.'
The communication of an acceptance is complete,-
as against the proposer, when it is put in a course of
transmission to him, so as to be out of the power of the
acceptor;
as against the acceptor, when it comes to the knowledge of the
proposer.
The communication of a revocation is complete.-
as against the person who makes it, when it is put into a course
of transmission to the person to whom it is made, so as to be out
of the power of the person who makes it;
as against the person to whom it is made, when it comes to his
knowledge.‖
& connected petitions.
54. Lastly, he has referred to Section 23 of the Contract Act, which reads
as under:-
"23. What considerations and objects are lawful and what
not.-
The consideration or object of an agreement is lawful,
unless-
it is forbidden by law; or
is of such nature that, if permitted, it would defeat the
provisions of any law;
or
is fraudulent; or involves or implies injury to the person or
property of another or; the Court regards it as immoral, or
opposed to public policy.
In each of these cases, the consideration or object of an
agreement is said to be unlawful. Every agreement of which
the object or consideration is unlawful, is void."
A perusal of Section 23 of the Contract Act reveals that the
consideration or object of an agreement is said to be unlawful and void, if the
parameters enumerated in the aforesaid section are not met.
55. Lastly, learned counsel for the petitioner has submitted that once the
offer is accepted and revoked thereafter, the said revocation will be void and
illegal, as the same will be in derogation to the mandate and spirit of Section 3
and 4 of the Contract Act.
ARGUMENTS OF MR. RAKESH SHARMA, LEARNED COUNSEL IN
56. Mr. Rakesh Sharma, learned counsel for the petitioner submits that the
petitioner has already deposited an amount of Rs. 10 lacs as an earnest money
and Rs.50,000/- as registration feebefore participating in the bid process. It is
submitted that the respondents, despite fully knowing the fact that there was only
one bidder in the bidding process, declared the petitioner as successful bidder.
& connected petitions.
Therefore, it does not lie in the mouth of the respondents to agitate that there was
only one bidder or there was poor response.
57. After having prior knowledge with respect to number of participating
bidders, the respondents proceeded with the bidding process and thus the
respondents by, no stretch of imagination, can cancel the bid on the ground of
poor response.
58. Lastly, learned counsel for the petitioner has laid emphasis on the fact
that the excise policy has come into force w.e.f. 01.04.2024 and will continue to
remain in force till 31.03.2025, which is evident from a bare perusal of the
notification issued by the Government of Jammu & Kashmir in the Finance
Department. He further submits that because of the issuance of the order
impugned, much time has squandered and even the license ought to have
commenced from 1st April and one month has already lapsed. The loss, which
has been suffered by the petitioner, is liable to be compensated by the
respondents, if the petition is allowed, as she has been deprived of her accrued
right for no fault of her.
ARGUMENTS OF MR. NITIN BHASIN, LEARNED COUNSEL IN
59. Mr. Nitin Bhasin, learned counsel for the petitioner has argued that
the conditions, which have been pressed into service in the order impugned are
arbitrary and could not be applied to the case of the petitioner. He has further
argued that once the government has achieved the minimum target, which has
been fixed in the bidding process, then the condition of having poor response for
not having maximum competition pales into insignificance. Thus, the rejection
& connected petitions.
of the case of the petitioner for poor response and subsequently objection raised
by the respondents that e-auction could not fetch maximum revenue, is not
sustainable in the eyes of law and liable to be rejected.
60. Learned counsel for the petitioner further submits that if the
Government wanted maximum competition, in that eventuality, the Government
could have reduced the price of the bidding process further to have maximum
competition, which has not happened in the instant case.
ARGUMENTS OF MR. D. C. RAINA, LEARNED ADVOCATE
GENERAL ON BEHALF OF THE STATE:
61. It has been argued by the learned Advocate General that the liquor
trade does not vest any right on the petitioners and it is an absolute privilege of
the Government to part with such privilege and nobody has an unfettered right of
having such a privilege. He further submits that the liquor trade is a privilege,
which the Government parts and, the scope of interference by courts in fiscal
matters is minimal as compared to normal contractual obligations.
62. The learned Advocate General has further argued that even the highest
bidder has no right till the license is issued and before that stage, it is up to the
Government to withdraw the said process and no one has an unfettered right of
challenging the same. He further argued that the parameters of judicial
interference in economic and contractual mattes are different from other ordinary
matters. He has even gone to the extent of submitting that it is the privilege and
right of the Government to withdraw the policy, till this process is finalized, and
one of the laudable objects in the economic matters is to generate more revenue,
which is the basis of the excise policy.
& connected petitions.
63. The learned Advocate General has further argued that in absence of
any malafide or bias or arbitrariness, in any of the writ petitions, the issue, which
has been projected, and relief, which has been sought in these petitions, cannot
be gone into.
64. The learned Advocate General has further laid emphasis that principle
of natural justice has no role in contractual and fiscal matters. He has further
argued that once the petitioners have participated in the bidding process,
knowing fully well the terms and conditions of the bidding document, in which,
Clause XXIII gives an unfettered right to the Government, then perhaps, it is not
right of the petitioners to agitate that the said clause was not in consonance with
the excise policy, more particularly, when the petitioners have participated in the
bidding process without demur and eyes wide open. After having participated in
the bidding process, which is in conformity with the terms and conditions of the
bidding document, the petitioners are estopped in law to question the same, at
this belated stage.
65. Mr. Raina, has further laid emphasis that the Government has more
latitude, insofar as, the economic matters are concerned and grant of license to
the manufactures / sale of liquor would essentially be a matter of economic
policy, where it is settled law that the Courts normally do not
intervene.However, this Court is not precluded to test the action of the
respondents, if the same is arbitrary, irrational or malafide. Since there is no
allegation of arbitrariness or malafide or foundation laid down in the petition, the
action of the respondents cannot be tested in the present petitions.
& connected petitions.
66. The learned Advocate General has further laid emphasis that the power
of the judicial review will not be permitted to be invoked to protect the private
interest, at the cost of the public interest, or to decide the contractual dispute. In
the instant case, as per him, the unsuccessful bidders have imaginary grievances
and thus, the Court cannot interfere, either at the initial or at the final stage, as
there is no public interest involved.
67. The learned Advocate General has laid stress on the principle that,
insofar as, the trade of liquor is concerned, no one has legal or fundamental right
to trade in liquor and the matters relating to the policy decision governing the
commercial / economic aspects are to be treated differently than the normal
contractual matters. In absence of any motive, malafide or gross arbitrariness, the
judicial interference is minimal. With a view to fortify his contention, the learned
Advocate General has placed reliance in the Tata Cellular vs. Union of India
reported in (1994) 6 SCC 651.
68. The perusal of the aforesaid judgment shows that the Government has
freedom of contracts, which can only be decided by the application of
Wednesbury principle of reasonableness and the same must be free from
arbitrariness not affected of bias or actuated by mala fides. In absence of any
such allegation, the said decision of the Government to go for re-auction cannot
be gone into. The law, according to the learned Advocate General, is settled that
evaluating tenders of awarding contracts are essential commercial functions and
thus, principles of equity and natural justice,have to be kept at bay.
69. The learned Advocate General has further argued that the Court does
not sit as a Court of appeal in fiscal matters, as the authority floating the tenders
& connected petitions.
is the best judge of its requirement.Therefore, according to him, the Courts‟
interference should be minimal. He further laid emphasis that the authority,
which floats the tender and the tender document is the best judge as to how the
documents have to be interpreted/drafted. Even, law has been settled to this
extent that, if there are two interpretations which are possible, then the
interpretation of the author must be accepted and the Courts can only interfere to
prevent the arbitrariness, irrationality, bias, mala fide or perversity. The learned
Advocate General has also drawn the attention of the Court to the excise policy
with particular reference to Clause 1.3 which reads as under:-
―1.3 To rationalize the number of taxes/duties and other
levies to optimize revenues for common good‖
70. Thus, from perusal of the aforesaid objective of the excise policy, the
learned Advocate General submits that the same is to optimise revenue and to
use that revenue for common good. He also laid emphasis on Clause 1.7 of the
excise policy, which is reproduced hereunder:
―1.7. Tapping of full potential of existing liquor industry to
promote ancillary industries and raising new avenues of
employment.‖
71. The learned Advocate General has also drawn attention of the Court to
the relevant provision of the Excise Act and the rules framed there under with
particular reference to the definition clause of the „Excise Revenue‟ as laid down
in Section 3(I),which reads as under:-
3. Interpretation. - In this Act, unless there be something repugnant
in the subject or context,---
(1)―Excise Revenue‖ - ―Excise Revenue‖ means revenue derived or
derivable from any duty, fee, tax, fine 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.
& connected petitions.
72. The learned Advocate General has also referred to Section 15 of the
Excise Act, which deals with the exclusive privileges of manufacture etc. may be
granted, which is reproduced as under:
―15. Exclusive privileges of manufacture etc may be granted.-
It shall be lawful for the Government to grant to any person or
persons, on such conditions and for such period as may seem
fit, the exclusive or other privilege-
(i) of manufacturing or supplying by wholesale, or
(ii) of selling by retail, or
(iii) of manufacturing or supplying by wholesale and
selling by retail, any country liquor or intoxic drug within
any local area.
No grantee of any privilege other this section shall exercise the
same until he has received a license in that behalf from the
Commissioner.‖
73. The learned Advocate General has further referred to the law laid
down by the Apex Court in the case of Har Shanker &ors. v. Deputy Excise &
Taxation Commissioner, reported in AIR 1975 Supreme Court 1121, wherein
the Apex Court has held that while considering the applicability of Article 14 in
such a case with particular reference to the trade or business in liquor, the Court
must be slow to interfere with respect to the policy laid down by the Government
for grant of license for manufacture and sale of liquor and, in such like situation,
the Court would allow a large measure of latitude to the Government to
determine its policy for regulating manufacture and trade of liquor, as the grant
of license for manufacture and sale of liquor would essentially fall in the realm
of economic policy.
74. He further submits that the policy decisions of the Government are not
susceptible to judicial review. The learned Advocate General has laid emphasis
that there is no applicability of Article 14 or the equality clause, insofar as, the
& connected petitions.
economic matters or the liquor vends are concerned and as each vend is different
so,different yardstick will apply.
75. He further submits that, in the instant case, the private party has been
pitted against the Government and huge public interest is involved and, thus, the
decision to going for re-auction has been taken in consultation with the Finance
Department as well as the Excise Department. The private commercial interest
has to give way to larger public interest.
ARGUMENTS IN REBUTTAL
76. Heard M/S Sunil Sethi, & Gagan Basotra, Sr. Advocates and Varinder
Bhat, Advocate by way of rebuttal to the arguments advanced by Mr. D.C.
Raina, learned Advocate General.
77. Mr. Gagan Basotra, learned Senior counsel, by way of rebuttal,
submits that once the Government has framed a policy, then the respondents
have to take a decision strictly in accordance with the said policy and the
Government cannot discriminate amongst the bidders. Learned senior counsel
has placed reliance upon Sections 14-A & 15 of the Excise Act, which provide as
under:-
―14-A Regulation of the sale of liquor in the State-(1) Not
withstanding anything to the contrary contained in any other
law, rule, order, agreement or any other instrument or any
order, judgment or decree of any court, the government shall
regulate the sale of country liquor in the State ―by auctioning
or operating departmental vends,‖ the country liquor shops
on such conditions and for such period as it may deem fit;
Provided that the departmental shops existing for the
sale of country liquor at the time of first auction shall
continue to run at such places and for such period as may be
specified by the Government by a special or general order.
15. Exclusive privileges of manufacture, etc. may be granted.- It
shall be lawful for the Government to grant to any person or
& connected petitions.
persons, on such conditions and for such period as may seem fit
the exclusive or other privilege,--
(1) of manufacturing or supplying by wholesale, or
(2) of selling by retail, or
(3) of manufacturing or supplying by wholesale and selling
by retail any country liquor or intoxicating drug within
any local area.
No grantee of any privilege under this Section shall
exercise the same until he has received a license in that behalf
from the Commissioner.‖
78. In support of his submissions, learned senior counsel has also placed
reliance upon the judgment of the Apex Court rendered in case titled, "Gwalior
Distilleries Pvt. Ltd. Vs. The State of Madhya Pradesh and ors. reported in
2020 (12) SCC 690", wherein he submits that there is no quarrel with regard to
proposition of law that no one can claim as a matter of right to trade in liquor, as
against the State, who has the right to carry on trade or business in liquor and the
State cannot be compelled to part with its exclusive right or privilege of
manufacturing and selling liquor. But when the State decided to grantsuch right
or privilege to others, then the State cannot escape the rigor of Article 14 of the
Indian Constitution. It cannot act arbitrarily or at its sweet will. It must comply
with the equality clause while granting the exclusive right or privilege of
manufacturing or selling liquor.
79. Mr. Basotra, also submits that once the bid of the petitioners has been
accepted, then a right is accrued to the petitioners and that right cannot be taken
away without following due process of law and the State, in that eventuality,
cannot escape the rigour of Article 14. He has also placed reliance upon the
Constitutional Bench judgment of the Apex Court rendered in case titled,
"Mohinder Singh Gill Vs. The Chief Election Commissioner, New Delhi and
ors., reported in 1978 (1) SCC 405" with particular reference to para-8, which
& connected petitions.
deals with the proposition that the State cannot substitute an opinion of rejection
or reasons, which does not find any mention in the order of rejection. The
reasons cannot be supplemented by filing reply and in the instant case also, the
ground of fetching revenue has not been laid down in the order of rejection and
instead, the same has been reflected in the reply filed by the State.
80. He further submits that the point, which has been canvassed by the
learned Advocate General while filing reply and rejecting the case of the
petitioners, on the ground of not fetching maximum revenue, perhaps, is not
available to the Government, in light of the fact that the same is not the laudable
object which is sought to be achieved by the Government in light of the policy so
framed. From the bare perusal of the Policy Objectives, fetching more revenue is
not the avowed object in the said policy.
81. Mr. Varinder Bhat, learned counsel for the petitioners has argued that
the regulations are subservient to the policy framed by the Government in this
regard and any condition, which overrides policy which is statutory in force,
cannot be relied upon, as any regulation cannot be larger than the policy. He
further submits that once a process is issued, it can be cancelled only if there is
any violation of law or the same is faulty and not otherwise.
82. With a view to fortify his claim, learned counsel has relied upon
Section 3 of the Contract Act, which deals with the communication, acceptance
and revocation of proposals. He further submits that the communication of a
proposal is complete when it comes to the knowledge of a person, to whom it is
made. He further submits that the revocation of the proposal and acceptance has
& connected petitions.
been laid down in Section 5 of the Contract Act, which provides that a proposal
may be revoked at any time before the communication of its acceptance is
complete as against the proposer, but not afterwards. An acceptance may be
revoked at any time before the communication of the acceptance is complete as
against the acceptor, but not afterwards.
83. Learned counsel further submits that once the said proposal has been
accepted, the revocation could be made only in the following four eventualities,
which have been laid down in Section 6 of the Contract Act, which provides as
under:-
"6. Revocation how made.--A proposal is revoked--
(1) by the communication of notice of revocation by the proposer to
the other party;
(2) by the lapse of the time prescribed in such proposal for its
acceptance, or, if no time is so prescribed, by the lapse of a
reasonable time, without communication of the acceptance;
(3) by the failure of the acceptor to fulfill a condition precedent to
acceptance; or
(4) by the death or insanity of the proposer, if the fact of his death or
insanity comes to the knowledge of the acceptor before acceptance.‖
84. Thus, according to him, the decision of the Government in going for
re-auction is in derogation to the mandate and spirit of the provisions of the
Contract Act with particular reference to Sections 3, 4, 5 and 6 of the Act. He
further submits that any regulatory provision, on which the reliance has been
placed by Government under Section 23 of the Contract Act cannot be in
derogation and mandate of the Excise Policy, which has statutory force and
cannot override the other statutory provision.
85. He has further submitted that the Government can withdraw the
proposal only in the eventuality, if the petitioners fail to fulfill the conditions, as
laid down in the said proposal. Lastly, he has argued that once a scheme has been
& connected petitions.
laid down and the procedure has been provided for inviting the bids, then the
process and game have to be completed strictly in four corners of the rules of the
game and not otherwise.
86. Mr. Sunil Sethi, learned senior counsel, by way of rebuttal, has relied
upon Clause XXIII of the biding document and has laid emphasis that once the
absolute power is there in terms of the aforesaid clause, this power is subject to
certain restrictions and parameters, which are that this exercise of power should
not be arbitrary, unreasonable or mala fide. He further submits that what should
be known to the petitioners is the mind of the authority while rejecting the cases
of the petitioners, which has been made known by virtue of the rejection order
and not the mind of the learned Advocate General, which finds mention by virtue
of a detailed reply filed by him, wherein the reason for not fetching more revenue
has been assigned.
87. Thus, according to the learned Senior counsel, the Government by, no
stretch of imagination, can substitute an opinion while filing reply and not
assigning those reasons in the order of rejection, wherein only two reasons have
been specified while going for re-auction, i.e., less competition and poor
response. Even the ground of not fetching the maximum revenue vis-à-vis last
year revenue is not available, as there was no rider imposed in bidding document
or the excise policy that the bid value has to be higher than the last year bid. The
Government, by virtue of a comprehensive policy, has worked out the revenue of
each and every bid by taking all the components into consideration,including
fetching the revenue last year. After having considered all the relevant
& connected petitions.
parameters, a comprehensive policy has been evolved by the Government, which
is the excise policy for the current year and in pursuance to which, the bidding
process has been initiated, then the rejection of the bid of the petitioners on the
ground of not fetching maximum revenue, after having been accepted, is not
available to the respondents, more particularly, when the minimum bid has been
fixed by the Government.
88. It is not a case, where petitioners are not willing to fulfill the requisite
formalities after their bid has been accepted, rather the Government on its own
just after twelve hours, has unilaterally gone for re-auction, on the ground of
poor response and less competition, more particularly, when the bid, which was
offered has been accepted by the Government.
89. The learned Senior counsel has placed on record the detailed data of
various bids of different financial years, which leads to an irresistible conclusion
that the bid price, which has been offered in various years varies and in some
cases, if the bid price of last year is compared with the bid price of this year,
there is a huge difference and this aspect of the matter has already been worked
out by the respondents while formulating a detailed comprehensive policy by
keeping in mind the relevant factors, such as, the number of bids in a particular
area and the price component for the last year. After having worked on all the
components, a detailed comprehensive excise policy has been formulated,
wherein the minimum guaranteed revenue per month for a particular year and
MGQ of J&K Special Whisky/country liquor/local IMFL brand per shop for the
year has also been worked out, besides fixing the minimum bid price in a
particular area, then in that eventuality, what weighed with the authority to
& connected petitions.
change the aforesaid policy just after twelve hours after having accepted the bid
price of the petitioners. Learned senior counsel submits that in view of the
aforesaid submissions, the impugned order No.100-EC of 2024 dated 13.02.2024
be quashed and respondents be directed that they shall allow the petitioners to
open and run the duly allotted liquor vends by amending the letter of acceptance
of bid or by issuing fresh letter of acceptance.
Legal Analysis
90. From rival contentions, the short controversy which falls for
consideration before this Court appears to be that the petitioners in the case at
hand, who were H-1 Bidders in the auction, are aggrieved of the subsequent
cancellation of auction based on the grounds of poor response and less
competition.
91. The petitioners, inter alia, contend that once they were declared as the
highest bidder by virtue of the Government entering into correspondence with
them, a right was accrued to the them, which cannot be taken away without
adopting due process of law especially, when the moment a bidder is declared as
the highest bidder, he/she is required to deposit an amount of ₹10 lakhs and is
also barred from participating in other bids.
A. Scope of judicial review in matters of tenders/auctions
92. In the case at hand, the petitioners, inter alia, have challenged the
cancellation of auction as arbitrary, mala fide and unreasonable. Before
proceeding to examine the case on its merits, at the cost of repetition for the
umpteenth time, it would be apposite to remind ourselves of the scope of judicial
review available to courts in matters of contracts and tenders conducted by
& connected petitions.
public authorities. In the landmark decision of Tata Cellular v. Union of India,
(1994) 6 SCC 651, having reviewed the law on award of public contracts, the
Supreme Court laid down the following guiding principles:
―1) The modern trend points to judicial restraint in
administrative action.
2) The Court does no sit as a court of appeal but merely
reviews the manner in which the decision was made.
3) The Court does not have the expertise to correct the
administrative decision. If a review of the administrative
decision is permitted it will be substituting its own
decision, without the necessary expertise which itself
may be fallible.
4) The terms of the invitation to tender cannot be open
to judicial scrutiny because the invitation to tender is in
the realm of contract. Normally speaking, the decision to
accept the tender or award the contract is reached by
process of negotiations through several tiers. More often
than not, such decisions are made qualitatively by
experts.
5) The Government must have freedom of contract. In
other words, a fair play in the joints is a necessary
concomitant for an administrative body functioning in
an administrative sphere or quasi-administrative sphere.
However, the decision must not only be tested by the
application of Wednesbury principle of reasonableness
(including its other facts pointed out above) hut must be
free arbitrariness not affected by bias or actuated by
mala fides.
6) Quashing decisions may impose heavy administrative
burden on the administration and lead to increased and
unbudgeted expenditure.‖
& connected petitions.
93. This view has been further considered by the Supreme Court
in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 , wherein it was
observed as under:
―22. Judicial review of administrative action is intended
to prevent arbitrariness, irrationality, unreasonableness,
bias and mala fides. Its purpose is to check whether
choice or decision is made ―lawfully‖ and not to check
whether choice or decision is ―sound‖. When the power
of judicial review is invoked in matters relating to
tenders or award of contracts, certain special features
should be borne in mind. A contract is a commercial
transaction. Evaluating tenders and awarding contracts
are essentially commercial functions. Principles of
equity and natural justice stay at a distance. If the
decision relating to award of contract is bona fide and is
in public interest, courts will not, in exercise of power of
judicial review, interfere even if a procedural aberration
or error in assessment or prejudice to a tenderer, is
made out. The power of judicial review will not be
permitted to be invoked to protect private interest at the
cost of public interest, or to decide contractual disputes.
The tenderer or contractor with a grievance can always
seek damages in a civil court. Attempts by unsuccessful
tenderers with imaginary grievances, wounded pride and
business rivalry, to make mountains out of molehills of
some technical/procedural violation or some prejudice to
self, and persuade courts to interfere by exercising
power of judicial review, should be resisted. Such
interferences, either interim or final, may hold up public
works for years, or delay relief and succour to thousands
and millions and may increase the project cost manifold.‖
94. Subsequently, in Michigan Rubber (India) Ltd. v. State of Karnataka,
(2012) 8SCC216, the Supreme Court noted:
―Therefore, a Court before interfering in tender or
contractual matters, in exercise of power of judicial
review, should pose to itself the following questions:
(i) Whether the process adopted or decision made by the
authority is mala fide or intended to favour someone; or
whether the process adopted or decision made is so
& connected petitions.
arbitrary and irrational that the court can say:―the
decision is such that no responsible authority acting
reasonably and in accordance with relevant law could
have reached‖; and
(ii) Whether the public interest is affected. If the
answers to the above questions are in negative, then
there should be no interference under Article 226.‖
95. The Supreme Court in a recent judgment in Silppi Constructions
Contractors v. Union of India, (2020) 16 SCC 489 held as under :
―20. The essence of the law laid down in the judgments
referred to above is the exercise of restraint and caution;
the need for overwhelming public interest to justify
judicial intervention in matters of contract involving the
State instrumentalities; the courts should give way to the
opinion of the experts unless the decision is totally
arbitrary or unreasonable; the court does not sit like a
court of appeal over the appropriate authority; the court
must realise that the authority floating the tender is the
best judge of its requirements and, therefore, the court's
interference should be minimal. The authority which
floats the contract or tender, and has authored the
tender documents is the best judge as to how the
documents have to be interpreted. If two interpretations
are possible then the interpretation of the author must
be accepted. The courts will only interfere to prevent
arbitrariness, irrationality, bias, mala fides or perversity.
With this approach in mind we shall deal with the
present case.‖
96. While there are a catena of decisions of the Hon‟ble Supreme Court on
this issue, the law on this point is rather well settled to merit any further
discussion. From the aforesaid legal position, it is clear that the scope of judicial
review in tender/auction process is extremely limited. Admittedly, the Court
cannot adjudge the soundness of a decision and it must concern itself only with
the manner in which the decision was made. The Government and other public
& connected petitions.
authorities have the freedom of contract and in the absence of manifest
unreasonableness, patent arbitrariness or clear mala fides, the Court should show
due deference to the decision of the public authority. Consequently, the scope of
interference by the Court in matters like these is exceptionally minimal.
B. Whether a vested right has been accrued to the petitioners by
virtue of being notified as highest bidders?
97. In the aforementioned backdrop, let us examine the question whether a
vested right has been accrued to the petitioners by virtue of being notified as H-1
bidders.
98. In State of Punjab v. Mehar Din, (2022) 5 SCC 648, a similar
question arose, wherein, the Hon‟ble Apex Court reiterated the settled position
that even the highest bidder has no vested right to have the auction concluded in
his favour especially in light of the limited scope of judicial review under Article
226. The relevant extract from the judgment is as under :
―19. This Court has examined right of the highest bidder
at public auctions in umpteen number of cases and it
was repeatedly pointed out that the State or authority
which can be held to be State within the meaning of
Article 12 of the Constitution, is not bound to accept the
highest tender of bid. The acceptance of the highest bid
or highest bidder is always subject to conditions of
holding public auction and the right of the highest
bidder is always provisional to be examined in the
context in different conditions in which the auction has
been held. In the present case, no right had accrued to
the respondent even on the basis of statutory provisions
as being contemplated under Rule 8(1)(h) of Chapter III
of the Scheme of the 1976 Rules, and in terms of the
conditions of auction notice notified for public auction.
& connected petitions.
27. This being a settled law that the highest bidder has
no vested right to have the auction concluded in his
favour and in the given circumstances under the limited
scope of judicial review under Article 226 of the
Constitution, the High Court was not supposed to
interfere in the opinion of the executive who were
dealing on the subject, unless the decision is totally
arbitrary or unreasonable, and it was not open for the
High Court to sit like a court of appeal over the decision
of the competent authority and particularly in the
matters where the authority competent of floating the
tender is the best judge of its requirements, therefore,
the interference otherwise has to be very minimal.
28. To the contrary, the limited scope of judicial review
for which interference could have been permissible to
prevent arbitrariness, irrationality, bias, mala fides or
perversity, if any, in the approach of the authority while
dealing with the auction proceedings, was never the case
of the respondent at any stage. The High Court has
recorded a finding to the contrary that the appellants
have failed to show any irregularity or illegality in the
auction proceedings and in the absence whereof, the
auction proceedings could not be held to be vitiated. The
premise on which the High Court has proceeded in
recording a finding, particularly, in the matters of
auction of public properties is unsustainable in law and
that apart, it is also not in conformity with the scheme of
auction of public properties as defined under Chapter
III of the 1976 Rules.‖
99. Thus, from the aforesaid enunciation of the law, it becomes clear that
acceptance of the highest bid or highest bidder is always subject to conditions of
holding public auction and the right of the highest bidder is always provisional to
be examined in the context of different conditions in which the auction has been
held.
& connected petitions.
100. Consequently, even the highest bidder has no vested right to have the
auction concluded in his favour and owing to the circumstance of a limited scope
of judicial review under Article 226, unless a decision is totally arbitrary or
unreasonable, there is no occasion for the Court to interfere in the action of
calling for a re-auction.
101. In the facts of the present case, a perusal of the communication issued
by the Excise Department to the successful bidders via e-mail reveals that the
same was provisional in nature and subject to the fulfilment of certain
conditions. The communication, thus, only declared the highest bidder and in
light of the law laid down by the Hon‟ble Supreme Court, such bidder has no
vested right to have the auction concluded in his/her favour.
102. In addition to the aforementioned, there is nothing in the
communication to suggest that a binding obligation has come into existence in
favour of a bidder by virtue of being declared as the successful bidder. The
communication is ex-facie of a provisional nature as it only declares that the bid
in question is highest for the auction and subsequently, lays down the procedure
and conditions to be followed for the grant of temporary/regular license in terms
of Rule 30 (8) of the J&K Liquor License and Sale Rules, 1984. Thus, the basic
conditions for the emergence of vested rights through offers or conditions made
and accepted appear to be wanting in this case. At this stage of acceptance at
least, the essentials of a binding agreement and the mutuality of obligations are
found to be absent in the case at hand.
& connected petitions.
C. Whether the exclusive privilege of the Government in
sale/manufacture of liquor grant any higher degree of fair play in the
joints to the Government in executive decisions concerning the same?
103. It is not out of place to mention that this Court finds force in the
argument made by the learned Advocate General that the special character of the
liquor trade vests the UT Administration with the power to grant the exclusive
privilege to carry on trade in the manufacture and sale of liquor and
consequently, does not vest any right on the petitioners.
104. This Court is fortified by the view taken by the Hon‟ble Supreme
Court in Lakhanlal v. State of Orissa, (1976) 4 SCC 660, wherein, the position
that the mere acceptance of a bid at an auction does not create binding
obligations on part of the Government, especially, when such acceptance is
tentative and subject to the fulfilment of certain conditions. Additionally, the
Court also concluded that such auctions which pertain to the grant of exclusive
privileges of the Government because they relate to the sale or manufacture of
liquor are not ordinary auctions, where binding agreements could be deemed to
be concluded at the fall of the hammer, thereby, creating mutually enforceable
obligations. The relevant extract from the judgement is reproduced hereunder:
―22. The High Court has held that after the acceptance
of the bid all that remained was to issue a license and
that the Collector committed an illegality in ordering a
reauction under the directions of the State Government.
Such a view presupposes that a binding obligation had
come into existence in favour of the bidder by accepting
a deposit from him even though this was done on the
express condition that it was tentative and was not an
acceptance of his bid. We do not think that what the
High Court held to be an ―acceptance of the bid‖ at the
& connected petitions.
―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 agreed 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 rejection by the State Government.
The essentials of any agreement and the mutuality of
obligations were thus absent altogether.
23. 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 Government 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 Government. 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
of liquor. It will be recalled that Section 22(1) provides
that the State Government ―may grant to any person, on
such conditions and for such periods as it may think fit,
the exclusive privilege‖ in question. Sub-section (2) of
Section 22 enacts that a grantee of such a privilege shall
not exercise it ―unless or until he has received a license
in that behalf from the Collector or the Excise
Commissioner‖.
& connected petitions.
105. The same principle was reiterated in Laxmikant v. Satyawan, (1996) 4
SCC 208. The relevant part of the judgment is reproduced hereunder:
―4. ...From a bare reference to the aforesaid conditions,
it is apparent and explicit that even if the public auction
had been completed and the respondent was the highest
bidder, no right had accrued to him till the confirmation
letter had been issued to him. The conditions of the
auction clearly conceived and contemplated that the
acceptance of the highest bid by the Board of Trustees
was a must and the Trust reserved the right to itself to
reject the highest or any bid. This Court has examined
the right of the highest bidder at public auctions in the
cases of Trilochan Mishra v. State of Orissa [(1971) 3
SCC 153] , State of Orissa v. Harinarayan
Jaiswal [(1972) 2 SCC 36] , Union of India v. Bhim Sen
Walaiti Ram [(1969) 3 SCC 146 : (1970) 2 SCR 594]
and State of U.P. v. Vijay Bahadur Singh [(1982) 2 SCC
365] . It has been repeatedly pointed out that State or the
authority which can be held to be State within the
meaning of Article 12 of the Constitution is not bound to
accept the highest tender or bid. The acceptance of the
highest bid is subject to the conditions of holding the
public auction and the right of the highest bidder has to
be examined in context with the different conditions
under which such auction has been held. In the present
case no right had accrued to the respondent either on
the basis of the statutory provision under Rule 4(3) or
under the conditions of the sale which had been notified
before the public auction was held.‖
106. Again, in Rajasthan Housing Board v. G.S. Investments, (2007) 1
SCC 477 : 2006 SCC OnLine SC 1127, the Apex Court noted as under:
―8. The auction notice dated 3-2-2002 contained a
condition to the effect that the Chairman of the Housing
Board shall have the final authority regarding
acceptance of the bid. The second auction notice issued
on 19-2-2002 mentioned that the conditions of the
auction will be same as mentioned in the earlier auction
notice. In view of this condition in auction notice it is
obvious that a person who had made the highest bid in
the auction did not acquire any right to have the auction
& connected petitions.
concluded in his favour until the Chairman of the
Housing Board had passed an order to that effect. Of
course the Chairman of the Housing Board could not
exercise his power in an arbitrary manner but so long as
an order regarding final acceptance of the bid had not
been passed by the Chairman, the highest bidder
acquired no vested right to have the auction concluded
in his favour and the auction proceedings could always
be cancelled. What are the rights of an auction bidder
has been considered in several decisions of this Court.
However, we will refer to only one such decision
viz. Laxmikant v. Satyawan [(1996) 4 SCC 208] which is
almost identical on facts as it related to auction of a plot
by the Nagpur Improvement Trust. The auction notice in
this case contained a condition that the acceptance of
the highest bid shall depend upon the Board of Trustees
and further the person making the highest bid shall have
no right to take back his bid and the decision of the
Chairman of the Board of Trustees regarding
acceptance or rejection of the bid shall be binding on the
said person. After taking note of the aforesaid conditions
it was held: (SCC pp. 211-12, para 4)
―From a bare reference to the aforesaid conditions, it
is apparent and explicit that even if the public auction
had been completed and the respondent was the highest
bidder, no right had accrued to him till the confirmation
letter had been issued to him. The conditions of the
auction clearly conceived and contemplated that the
acceptance of the highest bid by the Board of Trustees
was a must and the Trust reserved the right to itself to
reject the highest or any bid. This Court has examined
the right of the highest bidder at public auctions
in Trilochan Mishra v. State of Orissa [(1971) 3 SCC
153] , State of Orissa v. Harinarayan Jaiswal [(1972) 2
SCC 36] , Union of India v. Bhim Sen Walaiti
Ram [(1969) 3 SCC 146] and State of U.P. v. Vijay
Bahadur Singh [(1982) 2 SCC 365] . It has been
repeatedly pointed out that State or the authority which
can be held to be State within the meaning of Article 12
of the Constitution is not bound to accept the highest
tender or bid. The acceptance of the highest bid is
subject to the conditions of holding the public auction
and the right of the highest bidder has to be examined in
context with the different conditions under which such
& connected petitions.
auction has been held. In the present case no right had
accrued to the respondent either on the basis of the
statutory provision under Rule 4(3) or under the
conditions of the sale which had been notified before the
public auction was held.‖
9. This being the settled legal position, the respondent
acquired no right to claim that the auction be concluded
in its favour and the High Court clearly erred in
entertaining the writ petition and in not only issuing a
direction for consideration of the representation but also
issuing a further direction to the appellant to issue a
demand note of the balance amount. The direction
relating to issuance of the demand note for balance
amount virtually amounted to confirmation of the
auction in favour of the respondent which was not the
function of the High Court.‖
107. More recently, in 2022, the Supreme Court has again settled this
position in Municipal Committee, Barwala vs Jai Narayan and Company, 2022
SCC OnLine SC 376. The relevant paragraph of the judgment is reproduced
hereunder:
―11. Therefore, no concluded contract ever came into
force. Reference may be made to the judgment of this
Court reported as Haryana Urban Development
Authority v. Orchid Infrastructure Developers Private
Limited5, wherein this Court held as under:
―13. Firstly, we examine the question whether there
being no concluded contract in the absence of
acceptance of bid and issuance of allotment letter, the
suit could be said to be maintainable for the declaratory
relief and mandatory injunction sought by the plaintiff.
The plaintiff has prayed for a declaration that rejection
of the bid was illegal. Merely by that, plaintiff could not
have become entitled for consequential mandatory
injunction for issuance of formal letter of allotment.
& connected petitions.
Court while exercising judicial review could not have
accepted the bid. The bid had never been accepted by
concerned authorities. It was not a case of cancellation
of bid after being accepted. Thus even assuming as per
plaintiff's case that the Administrator was not equipped
with the power and the Chief Administrator had the
power to accept or refuse the bid, there had been no
decision by the Chief Administrator. Thus, merely by
declaration that rejection of the bid by the Administrator
was illegal, the plaintiff could not have become entitled
to consequential relief of issuance of allotment letter.
Thus the suit, in the form it was filed, was not
maintainable for relief sought in view of the fact that
there was no concluded contract in the absence of
allotment letter being issued to the plaintiff, which was a
sine qua non for filing the civil suit.
14. It is a settled law that the highest bidder has no
vested right to have the auction concluded in his favour.
The Government or its authority could validly retain
power to accept or reject the highest bid in the interest of
public revenue. We are of the considered opinion that
there was no right acquired and no vested right accrued
in favour of the plaintiff merely because his bid amount
was highest and had deposited 10% of the bid amount.
As per Regulation 6(2) of the Regulations of 1978,
allotment letter has to be issued on acceptance of the bid
by the Chief Administrator and within 30 days thereof,
the successful bidder has to deposit another 15% of the
bid amount. In the instant case allotment letter has
never been issued to the petitioner as per Regulation 6(2)
in view of non-acceptance of the bid. Thus there was no
concluded contract....‖
108. The Hon‟ble Supreme Court has effectively settled the law on the
aspect that owing to the exclusive privilege of the State in the sale and
manufacture of liquor, a greater degree of latitude must be afforded to it in
administrative decisions concerning the same. In Har Shankar v. Excise &
Taxation Commr., (1975) 1 SCC 737, the Apex Court noted as under:
& connected petitions.
53. In our opinion, the true position governing dealings
in intoxicants is as stated and reflected in the
Constitution Bench decisions of this Court in Balsara
case [1951 SCC 860 : AIR 1951 SC 318 : 1951 SCR 682
: 52 Cri LJ 1361] , Cooverjeecase [AIR 1954 SC 220 :
1954 SCR 873] , Kidwai case [AIR 1957 SC 414 : 1957
SCR 295] , Nagendra Nath case [AIR 1958 SC 398 :
1958 SCR 1240] , Amar Chakraborty case [(1972) 2
SCC 442 : (1973) 1 SCR 533] and the R.M.D.C. case
[AIR 1957 SC 699 : 1957 SCR 874] , as interpreted in
Harinarayan Jaiswal case [(1972) 2 SCC 36 : (1972) 3
SCR 784] and Nashirwar case [(1975) 1 SCC 29] . There
is no fundamental right to do trade or business in
intoxicants. The State, under its regulatory powers, has
the right to prohibit absolutely every form of activity in
relation to intoxicants -- its manufacture, storage,
export, import, sale and possession. In all their
manifestations, these rights are vested in the State and
indeed without such vesting there can be no effective
regulation of various forms of activities in relation to
intoxicants. In American Jurisprudence, Vol. 30 it is
stated that while engaging in liquor traffic is not
inherently unlawful, nevertheless it is a privilege and not
a right, subject to governmental control (p. 538). This
power of control is an incident of the society's right to
self-protection and it rests upon the right of the State to
care for the health, morals and welfare of the people.
Liquor traffic is a source of pauperism and crime (pp.
539, 540, 541).
109. Clarifying the law in this regard further, in State of M.P. v. Nandlal
Jaiswal, (1986) 4 SCC 566, the Apex Court noted that when the State decides to
grant such right or privilege to others, the State cannot escape the rigour of
Article 14. However, bearing in mind the nature of the liquor trade, the Court
would be slow to interfere with the policy laid down by the State as it is
essentially a matter of economic policy which should be viewed with greater
& connected petitions.
latitude. Consequently, it emerges that the Court while adjudging the validity of
an executive decision relating to economic matters must grant a certain measure
of freedom or play in the joints to the executive. The relevant part of the
judgment is extracted hereunder:
―33. But, before we do so, we may at this stage
conveniently refer to a contention of a preliminary
nature advanced on behalf of the State Government and
Respondents 5 to 11 against the applicability of Article
14 in a case dealing with the grant of liquor licences.
The contention was that trade or business in liquor is so
inherently pernicious that no one can claim any
fundamental right in respect of it and Article 14 cannot
therefore be invoked by the petitioners. Now, it is true,
and it is well settled by several decisions of this Court
including the decision in Har Shanker v. Deputy Excise
& Taxation Commissioner [(1975) 1 SCC 737 : AIR
1975 SC 1121 : (1975) 3 SCR 254] that there is no
fundamental right in a citizen to carry on trade or
business in liquor. The State under its regulatory power
has the power to prohibit absolutely every form of
activity in relation to intoxicants -- its manufacture,
storage, export, import, sale and possession. No one can
claim as against the State the right to carry on trade or
business in liquor and the State cannot be compelled to
part with its exclusive right or privilege of
manufacturing and selling liquor. But when the State
decides to grant such right or privilege to others the
State cannot escape the rigour of Article 14. It cannot
act arbitrarily or at its sweet will. It must comply with
the equality clause while granting the exclusive right or
privilege of manufacturing or selling liquor. It is,
therefore, not possible to uphold the contention of the
State Government and Respondents 5 to 11 that Article
14 can have no application in a case where the licence to
manufacture or sell liquor is being granted by the State
Government. The State cannot ride roughshod over the
requirement of that article.
& connected petitions.
34. But, while considering the applicability of Article 14
in such a case, we must bear in mind that, having regard
to the nature of the trade or business, the Court would
be slow to interfere with the policy laid down by the State
Government for grant of licences for manufacture and
sale of liquor. The Court would, in view of the
inherently pernicious nature of the commodity allow a
large measure of latitude to the State Government in
determining its policy of regulating, manufacture and
trade in liquor. Moreover, the grant of licences for
manufacture and sale of liquor would essentially be a
matter of economic policy where the Court would
hesitate to intervene and strike down what the State
Government has done, unless it appears to be plainly
arbitrary, irrational or mala fide. We had occasion to
consider the scope of interference by the Court under
Article 14 while dealing with laws relating to economic
activities in R.K. Garg v. Union of India [(1981) 4 SCC
675 : 1982 SCC (Tax) 30 : AIR 1981 SC 2138 : (1982) 1
SCR 947] . We pointed out in that case that laws relating
to economic activities should be viewed with greater
latitude than laws touching civil rights such as freedom
of speech, religion, etc. We observed that the legislature
should be allowed some play in the joints because it has
to deal with complex problems which do not admit of
solution through any doctrinaire or strait jacket formula
and this is particularly true in case of legislation dealing
with economic matters, where, having regard to the
nature of the problems required to be dealt with, greater
play in the joints has to be allowed to the legislature. We
quoted with approval the following admonition given by
Frankfurter, J. in Morey v. Dond [354 US 457] :
―In the utilities, tax and economic regulation cases,
there are good reasons for judicial self-restraint if not
judicial deference to legislative judgment. The
legislature after all has the affirmative responsibility.
The courts have only the power to destroy, not to
reconstruct. When these are added to the complexity of
economic regulation, the uncertainty, the liability to
error, the bewildering conflict of the experts, and the
number of times the Judges have been overruled by
& connected petitions.
events -- self-limitation can be seen to be the path to
judicial wisdom and institutional prestige and stability.‖
What we said in that case in regard to legislation
relating to economic matters must apply equally in
regard to executive action in the field of economic
activities, though the executive decision may not be
placed on as high a pedestal as legislative judgment
insofar as judicial deference is concerned. We must not
forget that in complex economic matters every decision
is necessarily empiric and it is based on experimentation
or what one may call ―trial and error method‖ and,
therefore, its validity cannot be tested on any rigid a
priori considerations or on the application of any strait
jacket formula. The Court must while adjudging the
constitutional validity of an executive decision relating
to economic matters grant a certain measure of freedom
or ―play in the joints‖ to the executive. ―The problem of
Government‖ as pointed out by the Supreme Court of
the United States in Metropolis Theatre Co. v. State of
Chicago [57 L Ed 730] ‖
―are practical ones and may justify, if they do not
require, rough accommodations, illogical, it may be, and
unscientific. But even such criticism should not be
hastily expressed. What is best is not discernible, the
wisdom of any choice may be disputed or condemned.
Mere errors of Government are not subject to our
judicial review. It is only its palpably arbitrary exercises
which can be declared void.‖
The Government, as was said in Permian Basin Area
Rate cases [20 L Ed (2d) 312] is entitled to make
pragmatic adjustments which may be called for by
particular circumstances. The Court cannot strike down
a policy decision taken by the State Government merely
because it feels that another policy decision would have
been fairer or wiser or more scientific or logical. The
Court can interfere only if the policy decision is patently
arbitrary, discriminatory or mala fide. It is against the
background of these observations and keeping them in
mind that we must now proceed to deal with the
contention of the petitioners based on Article 14 of the
Constitution.
& connected petitions.
110. Viewed thus, it emerges that while adjudicating upon the validity of an
executive decision, owing to the exclusive privilege of the State in the
sale/manufacture of liquor, the State must be allowed a greater degree of latitude
or play in the joints. The Court, in its power of judicial review must be conscious
of the complexity of economic matters of which, of course, it is not an expert. As
a consequence thereof, the validity of such decisions cannot and must not be
tested on any rigid a priori considerations or on the application of any strait-
jacket formula. The scope of judicial review, therefore, is not that the Court
should strike down a policy decision taken by the State merely because it feels
that another policy decision would have been fairer or wiser or more scientific or
logical. It is only the palpably arbitrary, discriminatory or male fide exercise
which can be declared as void.
D. Whether the guarantee of a minimum revenue per vend/minimum
reserve bid price render the decision to cancel the auction on the basis
of poor response and less competition as arbitrary?
111. In this context, it is apposite to examine the argument made by learned
senior counsels and other counsels for the petitioners in unison that once, the
Minimum Guaranteed Revenue per vend/Minimum Reserve bid price was fixed
by the Government by way of a policy, then, in that eventuality, the rejection of
the petitioners‟ bid on the ground that there is less competition or poor response
to the bid, is arbitrary and irrational.
112. Before dealing with this question on its merits, it becomes imperative
to delineate that the Court can only interfere when there is a strong foundation in
the writ petitions with respect to the allegations of mala fide, favouritism, or
arbitrariness in the procedure for re-auction. The court cannot interfere with the
& connected petitions.
policy decision of re-auctioning on the premise that another course of action
would have been fairer, wiser or more logical. In other words, the Court cannot
interfere with the soundness of the decision but can only examine the manner in
which such decision was made. In its limited power of judicial review, it is not
for this Court to examine what object the Government is achieving by re-
auctioning, once, the Minimum Guaranteed Revenue/Minimum Reserve Bid is
already fixed as it would tantamount to encroaching upon the latitude and fair
play in the joints accorded to the Government, especially in matters affecting
economic policy. This view is further reinforced in light of the fact that the
present case pertains to the realm of sale/manufacture of liquor, which is an
exclusive privilege of the Government, and consequently, there exists a greater
degree of freedom for the Government in taking administrative decisions in this
regard.
113. Even otherwise, the mere fact that the policy postulated a provision
for minimum guaranteed revenue does not disentitle the Government from
cancelling the auction on the basis of poor response and less competition. Thus,
it can safely be concluded that the mere fixation of the minimum guaranteed
revenue / minimum reserve bid price for a particular vend does not take away the
power of the Government to cancel the said auction process on the ground of
poor response and less competition as not only the Government is empowered to
do so under Clause XXIII of the Bid document but even after examination of the
original record and note file the rationale behind the decision of the Government
cannot be termed as arbitrary, mala fide or unreasonable.
& connected petitions.
E. Whether the decision to cancel the auction and the subsequent
order for re-auctioning is arbitrary, discriminatory, or mala fide so as
to warrant judicial interference?
114. The petitioners have been unable to establish any palpably arbitrary,
discriminatory, or mala fide exercise of power in the process of re-auctioning.
The learned Advocate General has argued that the rationale for calling re-auction
was poor response in the auction and less competition. It follows that the logic
behind the subsequent action was to allow more bidders to participate in the
auction process, which would lead to greater competition and in turn, help in
securing a more favourable deal to the respondent Government. In this regard,
the Hon‟ble Supreme Court of India in Centre for Public Interest Litigation v.
Union of India, (2012) 3 SCC 104, held that:
―In the field of contracts, the State and its
instrumentalities should design their activities in a
manner which would ensure competition and not
discrimination. They can augment their resources but
the object should be to serve the public cause and to do
public good by resorting to fair and reasonable
methods.‖
115. Subsequently, in Natural Resources Allocation, In Re : Special
Reference No. 1 of 2012, (2012) 10 SCC 1, after reviewing a number of its
previous decisions, including those in Akhil Bhartiya Upbhokta Congress v.
State of Madhya Pradesh, (2011) 5 SCC 29 and Sachidanand Pandey v. State
of West Bengal, (1987) 2 SCC 295, the Hon‟ble Supreme Court held as under:
―On a reading of the above paragraphs, it can be noticed
that the doctrine of equality; larger public good,
adoption of a transparent and fair method, opportunity
of competition; and avoidance of any occasion to scuttle
& connected petitions.
the claim of similarly situated applicants were
emphasized upon.‖
116. The importance of tendering authorities promoting healthy
competition while inviting tenders was also emphasized in Union of India v.
Hindustan Development Corporation, (1993) 3 SCC 499, wherein the Supreme
Court has observed as under:
―In our earlier order we indicated that these big
manufacturers formed a different category namely that
they may be in a position to supply at that rate as is
evident from their own commitment but to apply the
same price which is much lower than the reasonable and
workable price fixed by the Tender Committee to other
smaller manufacturers would again result in ending the
competition between the big and the small which
ultimately would result in monopoly of the market by the
three big manufacturers. That is a very important
consideration from the point of view of public interest.‖
117. On the appreciation of the law laid down by the Hon‟ble Supreme
Court in this regard, it would be apposite to conclude that in tenders/auctions, the
authority must strive to ensure that there is greater competition amongst the
prospective bidders as it would aid the authority in securing a better deal for
itself and resultantly, be in furtherance of public interest. It can be reasonably
deduced that the objective of promoting competition in the award of a
license/contract is both legitimate and in public interest.
118. Thus, in so far as the reasoning behind cancellation of the auction
based on poor response and less competition of the auction, the same does not
seem implausible or mala fide, as suggested by the counsels for the petitioners
& connected petitions.
more so, when it is a fact on record that the some of the vends under auction did
in fact receive a single bid. In these circumstances, this Court discerns no
arbitrariness or irrationality in the decision of the Government. Therefore, this
Court holds that the decision of the respondent Government cannot be faulted
with.
119. This Court has summoned and examined the original record, in detail,
which led to the passing of the order impugned and a perusal whereof, reveals
that the decision to re-auction was not loathed with any mala fide consideration
or arbitrariness, rather, the same was taken with a view to have maximum and
healthy competition in lieu of the poor response to the bids in question. Even
otherwise, it has already been discussed and decided in the preceding paragraphs
that the petitioners did not have any vested right in the outcome of the auction
simply by virtue of being declared as the highest bidder.
120. In addition to the aforesaid, even the excise policy formulated by the
Government postulates rationalizing the revenues as a stated objective, which
may be done by ushering healthy competition. The relevant part of the policy is
reproduced here under: -
1. Policy Objectives-
1.1 To bring about greater social consciousness and awareness
about the harmful effects of consumption of alcoholic beverages
and drug abuse;
1.2 To encourage transition from high to low alcoholic content
beverages;
1.3 To rationalize the number of taxes/duties and other levies to
optimize revenues for common good;
1.4 To check bootlegging/smuggling of liquor and narcotic drugs in
the Union Territory of Jammu and Kashmir from neighbouring
States/Union Territories;
1.5 To provide choice of liquor brands and places for consumption
to its consumers and a level playing field to all the stakeholders;
& connected petitions.
1.6 To rationalize the production and sale of JK Special Whisky and
JK Country liquor to curb illicit distillation;
1.7 Tapping of full potential of existing liquor industry to promote
ancillary industries and raising new avenues of employment;
and
1.8 Complete digitalization in liquor manufacturing, distribution
and sale from production till retail consumption.
Thus, the reasoning relied upon by the Government is in line with the stated
objectives of the policy and does not appear to be manifestly arbitrary or
unreasonable. The order issued by the Excise Commissioner was on the
directions of the Finance Department, Government of Jammu & Kashmir, and
the same was confirmed by the Government in the Finance Department vide
No.FD-ET/122/2021-03 dated 14.02.2024.
121. This Court is fortified by the view taken by the Supreme Court in
Lakhanlal v. State of Orissa, (1976) 4 SCC 660, wherein, it was held that in the
absence of any vested right of the highest bidder, it could not be said that the
Government was acting unreasonably or in a mala fide manner by issuing
directions for re-auction when it found that the bids at the auction were
unsatisfactory in nature. The relevant extract of the judgment is reproduced
below:
―24. The powers of the Government to reject a bid were
thus reserved both under the provisions of law and by
the express declarations made before the auction. At any
rate we do not find any basis for the creation of a right
merely by making a bid. The extent of the powers of the
government in such matters has been indicated by this
Court in State of Orissa v. Harinarayan Jaiswal. So long
as these powers are not used in an unreasonable or mala
fide manner, their exercise cannot be questioned. In the
cases before us, it could not be said that either the
Government or any of its officers abused the power by
& connected petitions.
acting either unreasonably or in a mala fide manner,
and we find no justification for the argument that it was
not permissible for the State Government to issue the
directions for re-auction even when it found that the
bids at the auction were unsatisfactory.‖
122. The learned counsel for the petitioners has placed reliance on Eva
Agro Feeds Private Limited vs Punjab National Bank, 2023 INSC 809 to
submit that the liquidator cannot cancel a valid auction on the mere expectation
of fetching a higher price. Consequently, they have argued that there exists no
unfettered discretion to cancel the auction process.
123. However, this Court is of the view that the aforementioned judgment is
distinguishable with the present case, both on law and facts. Firstly, the said
decision was rendered in a completely different context, wherein, the exclusive
privilege of the Government in the sale/trade of liquor was not in question as the
case pertained to the cancellation of an auction by the liquidator, under the
auspices of the Insolvency and Bankruptcy Code, 2016. Secondly, in this
decision, no reasons at all were assigned by the liquidator for the cancellation of
auction, which is admittedly, not the case before hand. Thus, it was the total non-
application of mind and non-disclosure of reasons and not the sufficiency of
reasons so relied upon for cancelling the auction, which was in question in Eva
Agro Feeds Private Limited (Supra). To substantiate the distinction between the
case relied upon by the petitioners, and the instant case, the relevant extract from
Eva Agro Feeds Private Limited (Supra) is reproduced as under: -
50. From the aforesaid, we find that no reasons were
assigned by the Liquidator for cancellation of the e-
auction held on 20-7-2021. The appellant was simply
& connected petitions.
informed that the e-auction was cancelled in terms of
Clause 3(k) of the E-Auction Process Information
Document. Clause 3(k) as discussed above only declares
that the Liquidator has absolute right to accept or reject
any or all bids or adjourn/postpone/cancel the e-auction,
etc. at any stage without assigning any reason therefor.
We will advert to this clause a little later.
71. A conjoint reading of the aforesaid provisions would
make it clear that while the highest bidder has no
indefeasible right to demand acceptance of his bid, the
Liquidator if he does not want to accept the bid of the
highest bidder has to apply his mind to the relevant
factors. Such application of mind must be visible or
manifest in the rejection order itself. As this Court has
emphasised the importance and necessity of furnishing
reasons while taking a decision affecting the rights of
parties, it is incomprehensible that an administrative
authority can take a decision without disclosing the
reasons for taking such a decision.
Resultantly, the reliance placed by the learned counsel for the petitioners
on this judgment does not come to their aid and is distinguishable.
124. Reliance was also placed on the Division Bench decision of the Delhi
High Court in PKF Sridhar Santhanam vs Airports Economic Regulatory
Authority of India2022 SCC OnLine Del 122, by the learned counsel for the
petitioners to submit that even when the clause stipulates that the authority may
not assign reasons for not accepting any bid, or rejecting the bid, it does not
mean that they should not have any valid reasons to justify their conduct.
However, even in this case, this Court fails to see how the aforementioned
judgment advances the case of the petitioners. Firstly, in the present case, the
respondents have disclosed reasons for the cancellation of auction, which, as
discussed previously, do not appear insufficient or implausible to this Court.
& connected petitions.
Secondly, in the case cited by the petitioners, the Delhi High Court in order to
ascertain the validity of reasons relied upon by the authority to cancel the tender,
directed them to produce the original record. After examining the record, the
Delhi High Court concluded as under: -
―20. From the above, it appears to us that the decision
taken by the respondent in cancelling the tendering
process in question, wherein the petitioner emerged as
the L-1 bidder cannot be said to be unreasonable or
arbitrary. The respondent could not be expected to
accept high rates, which are not commensurate with the
rates prevailing in the industry. Since, the respondent
itself has invited the other tenders, and it is an
organisation dealing with the aspect of fixation of tariffs
for grant of airport services, the respondent is aware of
the rates prevalent in the industry. The decision taken by
the respondent, therefore, appears to be an informed
decision and founded upon germane considerations.
21. We have taken note of the fact that the rates received
by the respondent in the subsequent tendering process or
the same assignment have, in fact, turned out to be more
competitive. This, in our view, validates the decision of
the respondent to cancel the tender in question and to
re-invite the same.
23. For the aforesaid reasons, we do not find any merit
in this petition and dismiss the same, leaving the parties
to bear their respective costs.‖
125. Similarly, in the present case, this Court directed the respondents to
produce the original record, so that it could satisfy itself as to whether the
respondent had any justifiable reason for the cancellation of the auction in
question, after inviting the bid, wherein, the petitioners had emerged as H-1
bidders. It was on the examination of the original record, as discussed
previously, which led this Court to conclude that the decision to cancel the
& connected petitions.
auction cannot be said to be unreasonable or arbitrary and it appears to be an
informed decision and founded upon germane considerations.
126. For facility of reference, the paras 113, 114 & 170 of the note sheets of
the Original File of the Excise Department regarding e-auction of JKEL-2 vends
for the year 2024-25, which led to the passing of the order impugned is
reproduced as under: -
―113. May kindly peruse Government Order No.43-FD of
2024 and Order No.44-FD of 2024 both dated 26.02.2024
received from the Finance Department, Civil Secretariat, J&K
wherein the Government in view of poor response and less
competition in bidding at 06 locations in the e-auction of liquor
vends for the year 2024-25 issued vide e-auction Notice
No.EC/Exc/e-auction/2024-25/7182 dated 01.02.2024, the
auction results of the below mentioned 06 locations are hereby
cancelled in terms of para XXIII of the bid document 2024-25
issued vide No.58-EC of 2024 dated 01.02.2024:-
S. Excise Range Area/MC/ Vend Location Number
No. District of Bids
1. Udhampur-Reasi Reasi Kanthan- Arnas, Pyt. Arnas 2
114. Further, it is submitted that vide this office Order
No.100-EC of 2024 dated 13.02.2024, this office has already
cancelled the e-auction of following 10 locations in view of
poor response and less competition in bidding in the e-auction
of liquor vends for the year 2024-25 issued vide e-auction
Notice No.EC/Exc/e-auction/2024-25/7182 dated 01.02.2024,
the auction results at these 10 locations, are hereby cancelled in
terms of para XXIII of the Bid Document 2024-25 issued vide
No.58-EC of 2024 dated 01.02.2024.
S. Excise Range Area/MC/ Vend Location Number
No. District of Bids
1. Doda-Kishtwar- Ramban Rajgarh Panchayat 1
Ramban
Dhangri
& connected petitions.
170. Further, 26 locations were cancelled due to low/poor
response/technical glitch and no bid received at 12 locations.
Status of the e-auction during the 1st round is tabulated below:
S. Particulars No. of vends
No.
3. Result not declared due to technical glitch 10
4. Bids cancelled due to poor response and low 16
bidding
Grand Total 305
127. Further perusal of the original file of the Finance Department
containing various decision making steps taken by the Finance Department in the
cancellation of less competitive/poor bids with substantial decrease in the bid
amount during e-auction of JKEL-2 vends for the year 2024-25, what transpires
from the record is reproduced hereunder:
―(1) Finance Department has received letter No.EC/Exc/e-
auction/2024-25 /7486 dated 13.02.2024 wherein they have
stated that it is submitted that poor response has been received
(only 1 bid) at 10 locations and substantial decrease in the bid
amount has been observed while comparing the bid amount
received during the year 2023-24. In order to have fair and
healthy competition at these locations and also for any such
future instances, the reference from para XXIII of the Bid
Document 2024-25 is desired in the matter. As desired and
discussed, the department has initiated the process for
cancellation and subsequent re-auction at these 10 locations.
However, formal approval of the Government is required in
terms of ibid para of the Bid Document for which the present
proposal has been submitted for seeking kind confirmation of
& connected petitions.
the action taken to make it legally tenable. The para XXIII is
reproduced as under:
XXIII. The Government reserved the right
to add/delete/de-notify/change any of the
locations/cancel the auction process in respect
of all/ any of the location(s) without specifying
any reason at any time prior/during or after
the auction process.
(2) Further stated that as per precedents of the excise e-
auctions, the Highest Bidder (H1) is notified upon bid closure
about their successful bid, accompanied by system generated
email notifying the bidder to deposit the quoted bid amount and
documents in consonance with the J&K Excise Policy
requisites. If any action on cancellation of bids at such
locations with poor response, is to be taken, first and foremost
action on the part of the department (with the approval of the
Government) is to issue notification regarding cancellation of
the auction results at these locations forthwith informing these
H1 bidders through emails about the cancellation of their bid at
such locations before they proceed in terms of earlier emails in
depositing the bid amount. However, in order to avoid any
litigation, there is a requirement of confirmation /approval of
the Government for cancellation of bids in terms of para XXIII
of the Bid Document issued vide No.58-EC of 2024 dated
01.02.2024.
(3) Excise Commissioner has issued a Cancellation Order
for these bids in terms of Para XXIII of the Bid Document vide
No.100-EC of 2024 dated 13.02.2024 under Endorsement
No.EC/Exc/e-auction/2024-25/7481-85 dated 13.02.2024, the
Excise Commissioner has requested for confirmation and also
approval for future such instances where poor response (in the
form of only one bid) is received so that the same is
incorporated in the e-auction notice to be issued in future.
(4) Comparative Bid Price along with number of bids at
these 10 locations is as below:-
Comparison of Vends with 1-2 bids received
S. Area/MC/District Vend Location Bid Price Bid Price Number
No. 2023-24 2024-25 of Bids
Excise Range Doda-Kishtwar-Ramban
1 Ramban RajgarhPyt. Rajgarh 2500000 1500000 1
Excise Range Rajouri-Poonch
2. Rajouri Pyt. Upper Dhangri 5150000 3000000 1
& connected petitions.
Excise Range City North
Excise Range City South
xxxx
(8) The Excise Commissioner has already issued the
cancellation order for the 10 locations mentioned at Note Para
above vide No.100-EC of 2024 dated 13.02.2024 under
Endorsement No.EC/Exc/e-auction /2024-25/7481-85 dated
13.02.2024 (page 55/CF) in terms of aforementioned Para
XXIII of the Bid Document 2024-25 wherein the Government
reserve the right to cancel the auction process in respect of
all/any of the location(s) without specifying any reason at any
time prior /during or after the auction process.
(9) In view of above and as per the request of the Excise
Commissioner, we may, if approved, convey Administrative
confirmation to the order No.100-EC of 2024 dated 13.02.2024
under Endorsement No.EC/Exc/e-auction /2024-25/7481-85
dated 13.02.2024 issued by Excise Commissioner regarding
cancellation of bids for liquor vends at 10 locations with poor
response and for subsequent re-auction thereof.
(Under Secretary)
(25) Clause XXIII is the enabling Clause for cancellation
of auction process. Poor response and substantial decrease in
the bid amount are substantial grounds for cancellation of
auction process. Excise Commissioner in his communication
dated 13.02.2024 has communicated that the cancellation order
of the bids has already been issued in terms of relevant Clause
referred above which provides for cancellation of auction
process by the Government. As such, the action taken by the
Excise Commissioner for cancellation of Bid process may be
required to be confirmed by the Government and may be
approved by Principal Secretary, Finance.
(Law Secretary)‖.
128. The decision of the Law Department, which has been relied upon in
these case, has been reproduced as under:
& connected petitions.
―Note 148.
Returned: In terms of Para XXIII of the Bid Document the
Government reserves its right to add/delete/re-notify/change
any of the locations/cancel the auction process in respect of
all/any of the location(s) without specifying any reason at any
time prior/during or after the auction process. Perusal of the
DNF reveals that there are two set of cases, in one case (i)
where the Minimum Reserve Bid Amount is on lower side, and
in the other set of cases (ii) where the Minimum Reserve Bid
Amount is either equivalent or on higher side than the
Minimum Reserve Bid Amount. In the former case, the
Government has got a valid reason, though not required (in
terms of Para XXIII of the Bid Document) to invoke
cancellation clause however, in the later the Government after
considering all the relevant factors has to satisfy itself that
there was poor response which has resulted in substantial
decrease of the bid amount while comparing the same with
previous year 2023-24 and the cancellation and its re-auction
will generate more revenue as that of the previous years.
The Government may as such in view of the above take an
administrative policy decision in the matter in light of the facts
and circumstances of the case. There may not be any bar for
taking appropriate decision in the matter with the approval of
competent authority.
(Shafiq Hussain Mircha)
Deputy Legal Remembrancer
Department of Law, Justice & P.A.‖
129. Reliance has also been placed by the learned counsel for the
petitioners on General Instructions on procurement and project management
issued vide Notification F.1/1/2021-PPD dated 29th October, 2021 by the
Government of India, Ministry of Finance, Department of Expenditure,
Procurement Policy Division, New Delhi. In the said instructions, the issue of
rejection of single bid has been dealt with and certain guidelines/instructions
have been issued. The relevant clause 11.8 is reproduced hereunder: -
―11.8 Rejection of Single Bid: It has become a practice
among some procuring entities to routinely assume that
open tenders which result in single bids are not
& connected petitions.
acceptable and to go for re-tender as a 'safe' course of
action. This is not correct. Re-bidding has costs: firstly
the actual costs of re tendering; secondly the delay in
execution of the work with consequent delay in the
attainment of the purpose for which the procurement is
being done; and thirdly the possibility that the re-bid
may result in a higher bid. Lack of competition shall not
be determined solely on the basis of the number of
Bidders. Even when only one Bid is submitted, the
process should be considered valid provided following
conditions are satisfied: the procurement was
satisfactorily advertised and sufficient time was given for
submission of bids; (i) the qualification criteria were not
unduly restrictive; and (iii) prices are reasonable in
comparison to market values.‖
130. Subsequently, the learned counsel for the petitioners have submitted
that after the issuance of the aforementioned general instructions, the Financial
Commissioner, UT of Jammu and Kashmir issued a circular dated 10.11.2021
whereby, all the departments were advised to adhere to the aforesaid
instructions. In addition to the abovementioned, as per the learned counsel for
the petitioners, clause 5.6.7 of the manual for procurement of works issued by
the Government of India, Ministry of Finance, similar guidelines concerning
retendering process in the eventuality of lack of competition have been issued.
There relevant clause is reproduced hereunder: -
―5.6.7 Consideration of Lack of Competition
Sometimes, against advertised/ limited tender cases, the
procuring entity may not receive a sufficient number of
bids and/ or after analysing the bids, ends up with only
one responsive bid - a situation referred to as ‗Single
Offer'. As per Rule 21 of DFPR (explanation sub-para),
such situation of ‗Single Offer' is to be treated as Single
Tender. The contract may be placed on the ‗Single
Offer' bidder provided the quoted price is reasonable.
& connected petitions.
However restricted powers of Single tender mode of
procurement would apply. Before retendering, the
procuring entity is first to check whether, while floating/
issuing the enquiry, all necessary requirements and
formalities such as standard conditions, industry
friendly specification, wide publicity, sufficient time for
bidding, and so on, were fulfilled. If not, a fresh enquiry
is to be issued after rectifying the deficiencies. It has
become a practice among some procuring entities to
routinely assume that open tenders which result in
single bids are not acceptable and to go for retender as a
safe course of action. This is not correct. Re-bidding has
costs: firstly the actual costs of retendering; secondly the
delay in execution of the work with consequent delay in
the attainment of the purpose for which the procurement
is being done; and thirdly the possibility that the re-bid
may result in a higher bid. Lack of competition shall not
be determined solely on the basis of the number of
bidders. Even when only one bid is submitted, the
process may be considered valid provided following
conditions are satisfied: i) The procurement was
satisfactorily advertised and sufficient time was given for
submission of bids; ii) The qualification criteria were
not unduly restrictive; and iii) Prices are reasonable in
comparison to market values However restricted powers
of Single tender mode of procurement would apply. In
case of price not being reasonable, negotiations (being
L1) or retender may be considered as justifiable.
Unsolicited offers against LTEs should be ignored,
however Ministries/ Departments should evolve a system
by which interested firms can enlist and bid in next
round of tendering.‖
131. Accordingly, the submission of the counsel for the petitioners in
unison is that the order dated 13.02.2024 which cancelled the auction runs
contrary to the Notification and Circular issued by the Government of India and
Financial Commissioner, UT of J&K, respectively, and as a consequence, the
impugned order deserves to be quashed.
& connected petitions.
132. This Court is unable to accept this argument advanced by the learned
counsels for the petitioners for the reason that the aforementioned Notification,
Circular as well as the Manual comprise of broad guidelines which are
recommendatory in nature. The mere recommendations made by these
guidelines/manual do not disentitle the Government to make any decision in the
economic domain, particularly in a case concerning the exclusive privilege of the
Government, depending upon the peculiarities and circumstances of each case.
In any event, the Court must refrain from interfering with such a decision merely
on the premise that any other decision would have been fairer, wiser or better.
133. A submission was made by Mr. Gagan Basotra, learned Senior
counsel that that the executive instructions and terms of the bid document,
cannot be contrary to the policy decision of the Government, which has statutory
force. However, this Court is unable to accept this submission as well for the
reason that it is now well settled that the terms of the invitation to tender are not
open to judicial scrutiny and the courts cannot whittle down the terms of the
tender as they are in the realm of contract unless they are wholly arbitrary,
discriminatory or actuated by malice. To support this view, reliance is placed on
Global Energy Ltd. v. Adani Exports Ltd., (2005) 4 SCC 435, the relevant
paragraph of which is reproduced hereunder: -
―10. The principle is, therefore, well settled that the
terms of the invitation to tender are not open to judicial
scrutiny and the courts cannot whittle down the terms of
the tender as they are in the realm of contract unless
they are wholly arbitrary, discriminatory or actuated by
malice. This being the position of law, settled by a
catena of decisions of this Court, it is rather surprising
that the learned Single Judge passed an interim
& connected petitions.
direction on the very first day of admission hearing of
the writ petition and allowed the appellants to deposit the
earnest money by furnishing a bank guarantee or a
bankers' cheque till three days after the actual date of
opening of the tender. The order of the learned Single
Judge being wholly illegal, was, therefore, rightly set
aside by the Division Bench.‖
134. The second limb of argument advanced by the learned Senior counsel
is that Clause XXIII of the Bid Document, which has been pressed into service
by the respondents while passing the order impugned, was not there in the excise
policy which has statutory force. Therefore, as per him, the respondents, by no
stretch of imagination, could have added this clause which gives them unbridled
powers in the bidding process. However, in the view of this Court, this ground is
not available to the petitioners after having gladly and voluntarily participated in
the bidding process without any grouse. It does not lie in the mouth of petitioners
to now agitate, at this belated stage, that the terms and conditions of the bid
document are not in consonance with the excise policy, particularly when, they
have participated in the bidding process without any demur. The petitioners,
being fully aware of the said auction conditions participated in the same and
after having participated in the auction, cannot turn around and challenge or
impugn the said auction condition. It is settled law that after participating in a
tender/auction process, the bidder cannot turn around and challenge the
conditions in the bid document.
135. The Court is fortified by the view taken by the Division Bench of the
Delhi High Court in M/s. Opaque Infrastructure Pvt. Ltd. vs Union of India
&Anr., 2015 SCC OnLine Del 8396, wherein it was observed as under: -
& connected petitions.
―21. There is no merit in the contention of the counsel
for the petitioner that the respondents could not have
qualified the NSIC certificate by making it restricted to
the items covered by the tender and NSIC certificate
should have been treated as valid for all items. The
tender document itself stipulated that the certificate must
cover the items tendered. The petitioner, being aware of
the said tender conditions participated in the tender and
having participated in the tender, cannot challenge or
impugn the tender condition. The petitioner having
participated in the tender process can only expect
equality and fair treatment in the matter of evaluation of
competitive bids. The petitioner cannot be permitted to
challenge the terms and conditions of the tender after he
had participated in the same.‖
136. This view was further reiterated in Poorvanchal Caterers v. Indian
Railway Catering and Tourism Corpn. Ltd., 2009 SCC OnLine Del 1012,
wherein, the Division bench of the Delhi High Court on the strength of the
decision of the Hon‟ble Supreme Court in Tafcon Projects (I) (P) Ltd. v. Union
of India, (2004) 13 SCC 788, observed as under:
―21. Learned Counsel for IRCTC has brought to our
notice a decision of the Supreme Court in Tafcon
Projects (I) (P) Ltd. v. Union of India, (2004) 13 SCC
788. Insofar as this decision is concerned, it has been
observed in paragraph 16 of the Report that where a
person has given a bid in response to a tender notice and
participated in the proceedings, it cannot then challenge
the tender notice on the ground that it is vague. In our
view, the observation of the Supreme Court squarely
applies to the present case. The Petitioner participated in
the tender process and after having lost, it cannot now
turn around and claim a different interpretation to the
second part of paragraph 6.2(vi) of the Catering Policy.
The Petitioner participated in the tender process with its
eyes wide open and not having succeeded, it is estopped
from challenging the tender process.‖
& connected petitions.
137. In view of the facts of the present case and the aforesaid settled legal
position, the argument advanced by the learned Senior counsel cannot be
accepted and is accordingly, rejected.
138. In so far as the power of the Government to cancel the auction process
ab initio is concerned, it is imperative to first reproduce the clause (XXIII)of the
bid document relied upon by the respondents to carry out the said action. For
facility of reference, the clause XIII is reproduced hereunder:
―XXIII. The Government reserves the right to add/delete/de-
notify/ change any of the locations/cancel the auction process
in respect of all/any of the location(s) without specifying any
reason at any time prior/during or after the auction process.‖
139. A perusal of the aforementioned clause establishes the right of the
Government to cancel the auction process in respect to all/any of the locations
without specifying any reason at any time prior/during or after the auction
process. Resultantly, it is clear that in terms of the bid document, the respondent
reserves the discretion to cancel the auction. Indisputably, this discretion
emerges from the express terms of the bid document, and this court would not
interfere with the exercise of such discretion, unless it is exercised in a
discriminatory or arbitrary manner. As already stated, the reasons for exercise of
this clause do not appear mala fide or discriminatory and as such, in the limited
power of judicial review, courts must show restraint in interfering with decisions
like these.
& connected petitions.
140. In Air India Ltd. v. Cochin International Airport, (2000) 2 SCC 617,
the Supreme Court on the issue of the State‟s discretion in conducting a public
tender process, held as under:
―The award of a contract, whether it is by a private party
or by a public body or the State, is essentially a
commercial transaction. In arriving at a commercial
decision considerations which are of paramount are
commercial considerations. The State can choose its
own method to arrive at a decision. It can fix its own
terms of invitation to tender and that is not open to
judicial scrutiny. It can enter into negotiations before
finally deciding to accept one of the offers made to it.
Price need not always be the sole criterion for awarding
a contract. It is free to grant any relaxation, for bona
fide reasons, if the tender conditions permit such a
relaxation. It may not accept the offer even though it
happens to be the highest or the lowest. But the State, its
corporations, instrumentalities and agencies are bound
to adhere to the norms, standards and procedures laid
down by them and cannot depart from them arbitrarily.
Though that decision is not amenable to judicial review,
the Court can examine the decision making process and
interfere if it is found vitiated by mala fides,
unreasonableness and arbitrariness. The State, its
corporations, instrumentalities and agencies have the
public duty to be fair to all concerned. Even when some
defect is found in the decision making process the Court
must exercise its discretionary power under Article 226
with great caution and should exercise it only in
furtherance of public interest and not merely on the
making out of a legal point. The Court should always
keep the larger public interest in mind in order to decide
whether its intervention is called for or not. Only when it
comes to a conclusion that overwhelming public interest
requires interference, the Court should intervene.‖
& connected petitions.
141. In transactions of commercial nature, like in the present case, the
Government/State is at liberty to fix the terms of the bid document or notice
inviting tender as they are motivated by commercial considerations, which are
beyond the pale of judicial review. Therefore, the challenge made by the
petitioners to the insertion of such a clause in the bid document is ill-founded as
it is based on commercial considerations and is well within the power of the
Government in such like matters. The Court can examine the decision making
process and interfere if it is found to be vitiated by the vice of mala fides,
unreasonableness and arbitrariness, which is not the case in the present matter.
142. Importantly, even if a case for interference is made out, the Hon‟ble
Supreme Court has sounded a caveat that courts should always keep the larger
public interest in mind in order to decide whether an intervention is called for or
not. Only when it comes to the conclusion that overwhelming public interest
requires interference, the Court should intervene. Public interest, if at all, appears
to be in fostering healthy competition amongst the bidders which was the
rationale behind the decision of cancelling the auction and not in the cause
projected by the petitioners. Thus, the challenge thrown by the petitioners to the
order impugned is ill founded and devoid of any merit.
F. Whether the order of cancelling the auction process is sought to be
justified by way of fresh reasons?
143. Another argument made by the counsel for the petitioners is that the
Government cannot substitute the reasons, which do not find mention in the
& connected petitions.
order impugned, by way of objections as the order impugned reflects that the bid
of the petitioner was cancelled only on two counts i.e. poor response and less
competition. However, the respondents while filing reply have added that it has
been cancelled because of consequent loss to the Government exchequer as
reflected in the reply.
144. In the landmark decision of Mohinder Singh Gill v. Chief Election
Commr., (1978) 1 SCC 405, the Apex Court has observed as under: -
―The second equally relevant matter is that when a
statutory functionary makes an order based on certain
grounds, its validity must be judged by the reasons so
mentioned and cannot be supplemented by fresh reasons
in the shape of affidavit or otherwise. Otherwise, an
order bad in the beginning may, by the time it comes to
court on account of a challenge, get validated by
additional grounds later brought out. We may heredraw
attention to the observations of Bose, J.
in Gordhandas Bhanji [Commr. of Police,
Bombay v. Gordhandas Bhanji, 1951 SCC 1088 : AIR
1952 SC 16] :
―Public orders, publicly made, in exercise of a statutory
authority cannot be construed in the light of
explanations subsequently given by the officer making
the order of what he meant, or of what was in his mind,
or what he intended to do. Public orders made by public
authorities are meant to have public effect and are
intended to affect the actings and conduct of those to
whom they are addressed and must be construed
objectively with reference to the language used in the
order itself.
Orders are not like old wine becoming better as they
grow oldera caveat‖
145. The proposition that the validity of an order must be adjudged on the
basis of reasons so mentioned and cannot be supplemented by fresh reasons in
& connected petitions.
the shape of an affidavit or objections cannot be disputed with. However, with a
view to clinch the controversy in question, the relevant extract of the reply of the
Government is reproduced as under: -
―4. That the Excise Department issued the e-auction Notice
vide No.EC/Exc/e-auction/2024-25/7182 dated 01.02.2024 for
allotment of vends at 305 Locations in UT of J&K in a fair and
transparent manner through e-auction. The petitioner took part
in a e-auction for the Location at JMC Ward No.5-A in City
Excise Range Jammu North. Since, only the petitioner
participated in the vend and in view of auto-generated mail that
is created upon completion of the end time of the bidding by the
e-auction portal/system, the petitioner was declared as H1
bidder by the system generated mail after the end time of
bidding. As there was no other bidder who participated for this
location for which petitioner participated hence there was poor
response and less competition in bidding for this location
including 9 other locations which were cancelled by the
department to give fair chance to other bidders to participate in
the re-auction besides increasing the revenue potential of the
vend.‖
The relevant extract of the reply on behalf of Government in WP(C)
No. 317/2024 is reproduced as under:
―7. That from the e-auction results from these locations,
there is also apprehensions that some of the bidders unitedly
and in collusive and collaborative manner decided to bid for
particular locations including the Location at JMC Ward No.5-
A in City Excise Range Jammu North and others had agreed to
not bid for these locations to take the bid at low price, which
are substantially low than the previous year's bid, if these
bidders will be allowed to get the license, it will be huge loss in
Government revenue.
xxx
6.b. With regard to ground ‗b' of the writ petition, it is
submitted that mere fixation of minimum bid price would not
guarantee the allotment of liquor vend in favour of petitioner,
the Government has to take other parameters also especially the
Government revenue before allotting the liquor vends in favour
of auctioneers.‖
& connected petitions.
146. A holistic view of the reply makes it clear that the Government has not
sought to supplement existing reasons with completely fresh reasons. What the
Government has mentioned in its reply is nothing but a necessary and logical
corollary of poor response and less competition in the bidding process. It only
logically follows that once there is poor response and less competition in the
bidding process, it would have the propensity of causing loss to the State
exchequer. It does not appear to this Court that by taking such a stand, the
Government has sought to defend its stand on the basis of completely fresh
reasons. In any event, even if it were to be assumed that this constitutes a fresh
reason, it would be immaterial as this Court, while adjudicating on the validity of
the Governmental action has only based its conclusion on the basis of reasons,
explicitly mentioned in the order, namely the lack of competition and the poor
response to the bids.
147. Resultantly, the aforesaid submission of the learned counsels for the
petitioners does not come to the aid of the petitioners.
Conclusion
148. This Court hereby summarizes its conclusions and findings as follows: -
I. In view of the exclusive privilege of the Government in
sale/manufacture of liquor, the scope of judicial review in
administrative decisions concerning same is extremely limited.
II. No vested right is accrued to a bidder simply by virtue of the fact
that he/she has been declared as the highest bidder provisionally
and subject to fulfillment of certain conditions in a given auction.
& connected petitions.
III. Bearing in mind the nature of the liquor trade, this Court, being a
constitutional court, should be slow in interfering with the
executive decisions taken by the State as they are essentially a
matter of economic policy in which the Government must be
afforded a greater latitude and fair play in the joints.
IV. The mere existence of a provision for Minimum Guaranteed
Revenue or Minimum Reserve Bid Price in the Excise policy 2024-
25, vide SO 85, does not disentitle the Government from cancelling
the auction/re-auctioning on germane considerations having a
logical nexus with the policy objectives.
V. The decision to cancel the auction and the subsequent order for re-
auctioning cannot be termed as arbitrary, discriminatory, or mala
fide so as to warrant judicial interference.
VI. In any event, this Court cannot interfere with an administrative
decision, merely on the premise that any other decision would
have been fairer, wiser, or more logical especially, when it relates
to the Excise policy.
VII. The cause projected by the petitioners does not subserve an
overwhelming public interest, which must be borne in mind to
decide whether judicial intervention is called for or not.
VIII. The petitioners, being fully aware of the said auction conditions
participated in the same without any demur and after having
participated in the auction, cannot turn around and challenge or
impugn an auction condition unless there is a foundation of
& connected petitions.
manifest arbitrariness or mala fide, which is conspicuously absent
in the instant case.
IX. The reasoning provided by the Government for cancelling the
auction cannot be termed as unreasonable or arbitrary and, after
examining the original record, it appears to be an informed
decision based upon germane considerations.
149. In conclusion, this bunch of writ petitions, which are devoid of any
merit, fail and are dismissed along with all connected applications. As a
necessary corollary, the interim orders passed by this Court stand vacated in all
these petitions. Accordingly, the Government is at liberty to proceed with the re-
auction of various liquor vends, which are subject matter of the instant petitions
pertaining to different ranges, in accordance with law.
150. These petitions are dismissed in the manner indicated above.
(Wasim Sadiq Nargal)
Judge
Jammu:
05.06.2024
Raj Kumar
Whether the judgment is reportable?: Yes.
Whether the judgment is speaking?: Yes.
