Punjab-Haryana High Court
Haryana State vs Pawan Kumar on 29 April, 2024
Neutral Citation No:=2024:PHHC:063665
2024:PHHC:063665 RSA-1551-1998 (O&M) -:1:-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
RSA-1551-1998 (O&M)
Date of Decision:-29.04.2024
State of Haryana through Collector & Deputy Commissioner and Another
... Appellants
Versus
Pawan Kumar and Another
... Respondents
-.-
CORAM: HON'BLE MRS. JUSTICE RITU TAGORE
-.-
Argued by:- Ms. Safia Gupta, AAG, Haryana
for the appellants.
Mr. R.K. Gupta, Advocate
for the respondents.
-.-
RITU TAGORE, J.
1. This appeal is directed against the judgment dated 13.01.1998
passed by learned Additional District Judge, Bhiwani, by virtue of which
judgment dated 06.08.1994, passed by the learned trial Court, in civil suit
No.239 of 1988 titled as Pawan Kumar vs. State of Haryana through
Collector and Another, has been reversed and suit of the respondents
(plaintiffs before the learned trial Court) have been decreed, restraining the
appellants (defendants before the learned trial Court) from recovering
`60,2000/- from the respondents on the basis of letter No.1864/EX dated
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13.05.1988 and withholding the bid money of `15,300/- deposited by the
respondents at the time of auction.
2. For sake of convenience, the parties shall be referred to as per
their status before the learned trial Court.
3. Relevant facts for the adjudication of this appeal are that the
plaintiffs under the name and style of M/s Dalbir Singh and Company
participated in an auction held on 10.03.1988 of Country Liquor vends of
District Rewari, including L14-A Vend of Paintawas Kalan Village and were
declared the highest bidders. Accordingly, as per the terms and conditions of
the auction, plaintiffs deposited 5% of the bid money as security towards the
total purchase price of `3,06,000/- for the Licence of vend L-14/A Paintawas
Kalan and 11-2/3rd% of the bid money was to be deposited within 10 days
from the date of auction. Further, according to the version of plaintiffs, their
offer was to be accepted subject to the approval by the Financial
Commissioner, who is the Excise & Taxation Commissioner of Excise
Department, Haryana under the Punjab Excise Act, 1914.
4. It is also the case of the plaintiffs that two liquor vends in nearby
area of village Paintawas Kalan were created by the department, which were
not announced at the time of auction and Gram Panchayat, Paintawas Kalan
also passed a Resolution against running of the vend. Sensing loss to their
business and threat to their lives at the hand of villagers, the plaintiffs
revoked their offer before it was accepted by the Financial Commissioner
and defendants were informed on 11.03.1988 by postal letter (under
certificate of posting) and were requested not to approve the vend of the
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plaintiffs. On 21.03.1988, a telegram was also sent to Financial
Commissioner by plaintiff No.2, reiterating their act of revocation of their
offer with request not to approve their contract. The plaintiffs pleaded that
despite that they received a notice issued by the Collector designated under
the Excise Act, seeking explanation against non-deposit of 11-2/3rd% amount
as security and also issued show cause notice of terminating / cancelling the
license of the plaintiffs under Section 86(c) of Excise Act and forfeiture of
security amount deposited by the plaintiffs and recovery of deficient amount
and charges on account of re-auction of the vend in question.
5. According to plaintiffs, they filed their reply, disputing the action of
the defendants being contrary to the terms of the bid. The plaintiffs alleged
that since they had withdrawn their offer, prior to the acceptance by the
designated authority, they were not liable for any penal action, as proposed.
The plaintiffs termed the action of defendants as illegal, contrary to the terms
of auction/bid and filed the suit, pleading to restrain the defendants from
preceding against them.
6. Upon being put to the notice by the leaned trial Court, the
defendants caused their appearance in the suit and filed the written statement,
pleading that plaintiffs had participated in the auction of liquor vend
including L-14/A vend of village Paintawas Kalan, and as per the conditions
of auction publicized widely and made known to all, the offer given by the
plaintiffs was accepted on the fall of the hammer, and they were declared
highest bidder. The plaintiff deposited 5% i.e. `15,300/- of total bid money
but failed to deposit security amount i.e. 11-2/3rd% of the bid money within
10 days of the date of auction.
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7. According to defendants, as per terms of clause No.6(ii) of the
bid Rules, winner of bid, if refuses to accept the license, he is liable to pay
deficient license amount and expenses of license amount in case of reselling
of vend in open auction and amount is recoverable as per Section 60 of
Punjab Excise Act, 1914. The defendants admitted to have received reply of
the plaintiffs to the show cause notice given by them, however, asserted their
entitlement to recover `60,200/-, from plaintiffs as arrears of land revenue in
accordance with Rules 36(27) of the Haryana Liquor License Rules, 1970.
The defendants denied to have received any letter or telegrams of revocation
of the bid proposal and also denied that bid was subject to any approval by
Financial Commissioner. The defendants asserted that contract was complete
on the acceptance of bid, on fall of the hammer by the Presiding Officer on
10.03.1988 and deposit of 5% bid amount and signing of bid sheet. The
defendants claimed that plaintiffs were not competent to withdraw from the
contract once accepted and are liable to pay the penalty and charges on
refusal to perform the contract as per terms and conditions of the contract
and applicable rules. On the above material assertions, defendants prayed for
dismissal of the suit of the plaintiffs.
8. The plaintiffs filed replication, reiterating their stand by denying
version of the defendants. From the pleading of the party, learned trial Court
framed the following issues:-
1. Whether the recovery letter dated 13.05.1988 whereby the
defendants have sought to recover an amount of `60,200/- from the
plaintiffs is illegal, null and void and without jurisdiction? OPP
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2. Whether the suit is bad for want of notice under section 80 CPC?
OPD
3 Whether the plaintiff has got no locus standi or cause of action to
sue? OPD
4. Whether the suit is bad for non-joinder of necessary parties, if so its
effect? OPD.
5. Whether the suit is not valued properly for the purposes of court fee
and jurisdiction? OPD
6. Whether the jurisdiction of the civil court is barred in view of
Section 158 of the Punjab Land Revenue Act? OPD
7. Relief.
9. The parties led their evidence as detailed in the judgment of the
learned Courts below. The learned trial Court on appraisal of evidence and
rules governing the contract and purchase of liquor vend license, concluded
that plaintiffs defaulted and breached the terms and conditions of the
contract, and were held liable to pay the notice amount. Consequently,
dismissed the suit.
10. Being aggrieved from the judgment and decree of the learned
trial Court, the plaintiffs filed the appeal and the learned Appellate Court on
reassessment of the evidence, terms and conditions of the bid and Purchase
Rules of license of liquor vend, found learned trial Court erred in
appreciating the evidence and law properly, reversed the findings and
concluded that before the acceptance of their bid offer, plaintiffs had
withdrawn their offer and revoked it within the stipulated period of 10 days,
as per the conditions No.6(i) and 6(ii) of the Auction Rules, therefore, not
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liable to pay the notice amount and decreed the suit of the plaintiff by
reversing the findings of learned trial Court.
11. The defendants being dissatisfied from the decision of First
Appellate Court, filed this Regular Second Appeal.
12. Learned counsel for the appellants-State submitted that it is
admitted position that plaintiffs had participated in the bid in question for the
license of liquor vend L-14/A of village Paintawas Kalan and were declared
highest bidder. The plaintiffs deposited 5% of the bid amount but they later
on refused to perform the other terms of the contract and did not deposit 11-
2/3rd% security amount and the vend was re-auctioned.
13. Learned counsel for the appellants-State further argued that as
per the terms of the auction, the contract was concluded on the acceptance of
bid offer given by the plaintiffs, by fall of the hammer before the Presiding
Officer. The payment of 5% of the bid amount and signing of the bid sheet
reinforces the completion of contract. There was no requirement of any
approval from the higher authority i.e. Financial Commissioner as projected
by the plaintiffs. The learned counsel stated that learned Appellate Court
wrongly interpreted the terms and conditions of the bid and other governing
rules, and fell in error to conclude that the plaintiffs had withdrawn their
offer before it was approved by the Financial Commissioner, thereof not
liable to pay the amount as demanded under the notice. The bid was not
subject to approval from any authority but was subject to acceptance by the
Presiding Officer present at the auction, fully empowered and authorized to
accept the offer at the spot as per rules and terms of the bid. In support of
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her submissions, placed reliance on judicial pronouncement titled as State
of Haryana and Other vs. Lal Chand and Others, 1984 AIR (Supreme
Court) 1326, in which, it is observed that "in case of default in payment of
installment, the petitioner is liable to pay the difference of amount, he agreed
to pay at the time of first auction and re-auction". The learned counsel for
the appellants-State thus urged that appeal be accepted by setting aside the
judgment and decree dated 13.01.1998 of the First Appellate Court, and by
restoring that of learned trial Court.
14. Contra, learned counsel for the respondents defended the
findings of the learned First Appellate Court, stating they are based on sound
exposition of law in the given facts and evidence. Learned counsel urged
that material facts are not in dispute to the extent that plaintiffs were declared
highest bidder in the purchase of license of vend of village Paintawas Kalan.
It it stated that it is proved on record that plaintiffs had withdrawn their offer
immediately after the bid, through letter dated 11.03.1988 and telegram dated
21.03.1988, and even learned trial Court had given the findings in this
regard. It is further stated that as per Rules, offer was to be accepted by the
Financial Commissioner and plaintiffs could withdraw from the offer before
its acceptance by the concerned authority, and no contract can be said to be
concluded with the plaintiffs. It is stated that learned Appellate Court, rightly
dealt with the material issues and negated the contentions of the
defendants/appellants that per conditions No.6(i) and 6(ii), plaintiffs had no
right to withdraw from their offer and bid proposal was not subject to the
acceptance by the Financial Commissioner, as per Rules. The learned
counsel stated that similar question of law was answered against the
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Government while interpreting the Delhi Liquor License Rules in Union of
India and Others vs. Bhimsen Walaiti Ram, 1971 AIR (Supreme Court)
2295 and in Ram Lal vs. State of Punjab and Others, 1979 PLR 314,
where bid was released in favour of petitioner and was not approved, it was
held that auction bidder was at liberty to withdraw his bid. Learned Counsel
for the respondents/plaintiffs stated that plaintiffs have validly withdrawn
their offer and are not liable to pay the amount under the notice. It is stated
that appeal is devoid of merits and be dismissed.
15. I have considered the submissions of learned counsel for the
parties in the light of the evidence on record and hold that appeal is without
substance and no case is made out to interfere in the well-reasoned
conclusions and findings recorded by the learned Appellate Court, for
reasons stated infra:-
16. The moot points before this Court are as under:-
i. Whether with acceptance of the bid by the defendants in
favour of plaintiffs, amounts to a complete contract?
ii. Whether plaintiffs could withdraw from their offer (bid-
proposal) before the acceptance by the Financial
Commissioner?
iii. Whether the bid was required to be approved by the
Financial Commissioner for concluding the contract?
17. Ex.D1 is the announcement document, which contains the
conditions with reference to License for retail to be made at the time of
auction of license for retail vends of country spirit (L-14 and L-14-A) and
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foreign liquor (L-2) in Haryana for the financial year 1988-89, which was to
be announced at the time of auction and were required to be fulfilled. This
document is not disputed between the parties. The condition No.1 is read as
under:-
"1. All licenses, whether for wholesale or for retail sale, shall be
granted subject to the provisions of the Punjab Excise Act, 1914 (1 of
1914) and the rules framed thereunder from time to time, as
applicable to Haryana. The minimum license fee fixed for each vend
shall be announced at the time of auction."
Condition No.2 provides that :-
"2. The Financial Commissioner, may reject, without assigning
any reasons, any bid accepted by the collector or presiding officer, as
the case may be, within ten days from the date of the auction."
Condition No.6(i):-
"6(i) The successful bidder shall deposit by way of security an
amount of equivalent to 16-2/3rd% of the annual license fee or an
equivalent of 2 months licence fee (bid money). He shall have to pay
a sum equal to 5% of the total amount of bid money in cash at the fall
of the hammer and the remaining amount of 11-2/3rd% within a
period of ten days of the date of auction. xxxx"
Condition No.6(ii):-
"6(ii) If any person whose bid has been accepted at the auction fails
to make deposit of the amount of security or if he refuses to accept
the license, the license may be resold by public auction or private
contract by the competent authority and any deficiency in license fee
and all expenses of such resale or attempted resale shall be
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recoverable from the said person in the same manner as laid down in
Section 60 of the Punjab Excise Act (1 of 1914)."
18. In view of the above material conditions read with the
substantive provisions of the Indian Contract Act, 1872, the poser before this
Court is :- whether the acceptance of bid in favour of the plaintiffs, on fall of
hammer before the Presiding Officer and deposit of 5% of the bid money by
the plaintiffs, amounts to completion of the contract on the same day or, the
contract was yet not concluded/completed on that day and same was to be
completed after any communication was received from the designated
authority, accepting the offer given by the plaintiffs?
19. At this stage, it is desirable to recall the provisions of Sections 3
and 4 of the Indian Contract Act, 1872, which inter-alia provides that the
communication of proposals, the acceptance of proposals and the revocation
of proposals and acceptances respectively; are deemed to be made by any 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. The communication of a proposal is complete,
when it comes to the knowledge of the person to whom it is made, whereas
the communication of an acceptance is complete as against the proposal
when it is put into a course of transmission to him so as to be out of the
power of the acceptor.
20. At this stage, illuminating reference can be made to observations
made in Lal Chand and Others case (supra), wherein it was observed as
under:-
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"xxxx that an offer can always be withdrawn before it is finally
accepted and that a conditional acceptance is not an acceptance in
law. In Bhim Sen Walaiti Ram's case, supra, the Court held that the
contract of sale was not complete till the bid was confirmed by the
Chief Commissioner and till such confirmation the person whose
bid had been provisionally accepted was entitled to withdraw his
bid and that when the bid was withdrawn before the confirmation
by the Chief Commissioner, the bidder was not liable for damages
on account of any breach of contract or for the shortfall on the re-
sale."
21. Now coming to the facts of present case, Ex.D1 the material
documents detailing rights and obligations of the parties to the auction,
specifically provides that all licenses were to be granted subject to the
provision of Punjab Excise Act, 1914 and Rules framed thereunder from time
to time. This means that the terms and conditions laid down in Ex.D1 cannot
be read in absence of the Punjab Excise Act, 1914 and rules framed
thereunder.
22. Now, condition No.2 of Ex.D1 specifically provides that
Financial Commissioner may reject, without assigning any reason, any bid
accepted by the Collector or Presiding Officer, as the case may be within 10
days from the date of auction. In these circumstances, Rule 24 of the
Haryana Liquor License Rules, 1970 needs to be gone into, which read as
under:-
"The Collector shall forward to the Financial Commissioner for
approval statements in Form M-14 and M.I-A showing the locality
of each vend sold, the minimum licence fee determined under sub-
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rule (1) the name, parentage and full permanent address of the
person to whom the vend has been sold at the highest bid and in
any case in which the vend has not been sold to the highest bidder,
a short statement of the reasons for rejecting it. If no intimation to
contrary is received within 10 days from the date of the auction,
the Collector shall assume that the Financial Commissioner has
accepted the proposal. The Deputy Excise & Taxation
Commissioner shall forward a list of all licenses and the vends
obtained by them to the Superintendent of Police in the district
and the managers of all the distilleries licensed in Haryana".
23. The existence of the aforesaid Rule is not disputed. This Rule
when read with condition No.2 of Ex.D-1 clearly makes out that Financial
Commissioner was the authority to reject any bid ascertained by the
Collector or the Presiding Officer, as the case may be, within 10 days from
the date of auction. It means contract was not completed, even if requisite
amount bid, by way of offer amount was deposited by the highest-bidder,
herein plaintiffs, at the time of auction, because it was still open for the
Financial Commissioner to reject it. Thus, the offer of plaintiffs could
conclude into a contract till was communicated to plaintiffs that their offer
has not been rejected but accepted. Evidently, the rules do not provide for
any specific form of communication, required to be given, yet on completion
of 10 days waiting period of rejection by the Financial Commissioner, the
acceptance of the offer can be deemed as accepted. This again lead to hold
that proposal of sale was subject to approval by the Financial Commissioner,
till then it was mere a proposal and not a concluded contract, which can
attract the penal clause under which plaintiffs have been asked to pay the
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money under the notice. The learned Appellate Court has rightly concluded
by referring to the Rule 24 and other Rules of the bid, as detailed therein,
read with principles of law defining contract under the Indian Contract Act,
1872 that contract had not been concluded till it was expressly
approved/accepted or deemed to have been accepted by Financial
Commissioner, after the expiry of 10 days from the bid, with no
communication of rejection of proposal of the plaintiffs. It is, thus, rightly
observed by learned Appellate Court that the plaintiffs were at liberty to
withdraw from their offer given by way of payment of bid amount, within 10
days or prior to receiving any communication of acceptance of their
proposal. In given discussion, it is held that contract was not concluded at
the time of acceptance of bid by the Presiding Officer in favour of the
plaintiffs. It was merely an offer of the plaintiffs, which was yet to be
accepted by the Financial Commissioner as per the Rules and Conditions
(ibid) laid. It is thus, unerringly held that findings of learned Appellate Court
are valid and requires no interference.
24. Admittedly, auction was held on 10.03.1988. The plaintiffs by
placing on record, copy of letter dated 11.03.1988 of revocation of the bid
addressed to the Commissioner Excise and Taxation, Haryana Chandigarh
(Ex.P-1), copy of under postal certificate (Ex.P-2), have proved that the
plaintiffs withdrew their offer immediately and intimated to the
defendants/appellants. They also proved sending of telegram on 21.03.1988
(Ex.P-14), reiterating their withdrawal from the proposal. Though, appellants
tried to deny having received any such communication, but failed to lead any
cogent evidence in this regard. This aspect of evidence was also rightly dealt
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with by the learned Appellate Court. Learned counsel for the Appellants-
State though vehemently urged that learned Appellate Court wrongly
interpreted the evidence on this aspect, however, failed to impress this Court
to have a different view.
25. Once it is held that plaintiffs had informed the defendants of
their intention of withdrawal of their proposal given in the bid before same
could be concluded into a contract, it cannot be said that plaintiffs had
breached the terms of the contract. In the given factual matrix and the
governing rules of the auction in question and law of contract, plaintiffs are
held not liable to pay the amount of notice issued by the defendants.
Accordingly the moot points formulated above stands answered against the
appellants.
26. In view of what has been stated above, it is held that learned
Appellate Court has rightly drawn the conclusions on the basis of evidence,
as such, the findings are legal and valid and are upheld accordingly; and
requires no interference by this Court. The question of law stand answered
against the appellants/defendants. Accordingly, present regular second
appeal is hereby dismissed.
27. Since the main case has been decided, pending miscellaneous
application(s), if any, are also disposed of accordingly.
( RITU TAGORE)
29.04.2024 JUDGE
Gaurav Sorot
Whether reasoned / speaking? Yes / No
Whether reportable? Yes / No
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