ORDER
N.K. Patil, J.
1. The petitioner in the instant Writ Petition is questioning the legality and validity of the order dated 30th July, 2002, in proceedings No. FD 148 EDC 2002 on the file of the 1st respondent vide Annexure-C and to quash the consequential Notification issued by the 2nd respondent in so far as it relates to the petitioner vide Notification bearing No. ECS:8: AUG:2002 dated 1-8-2002 vide Annexure-D.
2. The grievance made out by the learned Counsel for the petitioner in the instant Writ Petition is that, the petitioner was the highest bidder in respect of right to vend arrack in polythene sachets for the Excise Year 2002-03 in respect of Sandur Taluk, Bellary District. The bid of the petitioner for a sum of Rs. 62,00,000/- lakhs par month was accepted and he was allowed to vend arrack in polythene sachets for the period from 1-7-2002 to 30-6-2003. Accordingly, the petitioner’s bid was provisionally accepted on 3-6-2002 and it was sent to the 2nd respondent for confirmation. The 2nd respondent confirmed his bid for sandur Taluk on 5-6-2002 and the order of confirmation was served on the petitioner on 30-6-2002. The petitioner was then granted temporary license to start the business on 1-7-2002, which is as per Rules 16 & 17 of the Karnataka Excise (Lease of Right of Retail vend of Liquor) Rules, 1969. Accordingly, he has entered into an agreement of lease with the 1st respondent incorporating the terms and conditions under which the right of retail vend of arrack was leased in his favour within 15 days from the date of confirmation order dated 30-7-2003. As stipulated under the relevant provisions that is Rule 17(1)(a) within 15 days from the date of receipt of confirmation order as it is 30-6-2002 the petitioner had to make an application by furnishing the security deposit for an amount equivalent to one month’s rent in the form of cash deposit or Government securities or other Securities recognised by the Government or an irrevocable guarantee given by a Scheduled Bank.
3. Admittedly, the petitioner did not comply with the furnishing of the 1st Bank Guarantee itself that was due on 15-7-2002 nor complied with Rules 16 & 17 of the Karnataka Excise (Lease of Retail Vend of Liquor) Rules, 1969. The petitioner did not even seek for extension of time before the Government on or before 28-9-2002 and also that the petitioner did not furnish the bank guarantee within 15 days from the receipt of confirmation order and did not pay the monthly rental for July, 2002, in time, i.e., on or before 10th of every month but, however, he continued to carry on the business without making any payment or furnishing bank guarantee inspite of making repeated request.
4. When things stood thus, the 3rd respondent with the approval from the Deputy Commissioner, Revenue, Bellary and after repeated requests to the petitioner to comply with the first proviso of Rule 16 and 17(1)(b) of the Rules sent his recommendation to the 2nd respondent for cancellation of the confirmation order dated 16-6-200. The 2nd respondent, The Excise Commissioner on 27-7-2002 submitted a report to the 1st respondent. The 1st respondent has passed an order under Rule 18 of the Karnataka Excise (Lease of Right of Retail vend of Arrack) Rules, 1969, cancelling the confirmation order for the Lease of Right of Retail Vend of Arrack, for Sandur Taluk and forfeited his deposit. That order was served on the petitioner on 31-7-2002. Immediately on service of said order to the petitioner the Department took over departmental vending and thereafter the respondents made alternative arrangement to dispose of the lease of right to retail vend of arrack, by tender-cum-nagotiations and the same was awarded to one Sri D. Puttaswamy, Excise contractor and he was given the Lease of Right of Retail Vend of Arrack for Sandur Taluk of Bellary District on 5-9-2002. Having regard to this background, the petitioner felt necessitated to present the instant Writ Petition assailing the correctness of the impugned orders vide Annexures-C & D as referred to above on the ground that the before cancelling the confirmation order issued to the petitioner the respondents have not issued any notice which is in clear violation of principles of natural justice.
5. The principal submission canvassed by the learned Counsel for the petitioner is that the impugned order vide Annexure-C passed by the 1st respondent and consequential notice issued by the 2nd respondent vide Annexure-D are violative of principles of natural justice, and in a matter of this nature, before passing the order under Rule 18 of 1969 Rules, respondent No. 1 ought to have issued notice to the petitioner by giving him an opportunity to put forth his case. Further, he vehemently contended that cancelling the lease and forfeiting the Earnest Money Deposit entails civil consequences and therefore issue of a show cause notice is a must and it is implicit, in Rule 18 of the Rules of 1969. Under Rule 18 of the 1969 Rules, discretion is giver, to the Government either to cancel or not to cancel the lease; either to forfeit or not to forfeit the Earnest Money Deposit, when such is the situation, under Rule 18 of the 1969 Rules, the 3rd respondent ought to have issued notice to the petitioner to put forth his case. However, he also vehemently contended that cancelling the lease and forfeiting the Earnest Money Deposit entails civil consequences. Therefore, issue of show cause notice is a must and the impugned order and the Notification issued are in violation of principles of natural justice. Even otherwise also the impugned order passed suffers from improbabilities. To substantiate his case he relied on the ruling of the Apex Court in the case of State Govt. Houseless Harijan Employees Association v. State of Karnataka and Ors. reported in AIR 2000 (1) SC 437 and submitted that compliance of principles of natural justice is mandatory before cancelling and forfeting the Earnest Money Deposit. Therefore, he submitted that in view of violation of Rule 18 and the law-laid down by the Apex court the impugned order and the Notification vide Annexures-C & D are liable to be quashed.
6. Per contra, the learned Government Pleader appearing for the respondents, inter alia, contended and substantiated the impugned orders and contended that the cancellation Notification issued is in strict compliance of the mandatory provisions of the Excise Rules, 1969. Further, he has filed detailed objections to meet all the contentions urged by the petitioner and submitted that the contract is a statutory one and there is no need to provide him with an opportunity of hearing before passing the impugned order and there is no need to issue any notice to the petitioner in this regard. Admittedly, no such lease agreement has been entered into. Hence, the question of affording an opportunity does not arise at all and inspite of giving sufficient opportunity to the petitioner he has failed to comply with the mandate of the Rules. Therefore, the 1st respondent was fully justified in issuing the impugned order and Notification, muchless the petitioner has not made out any ground to interfere with the same and therefore he submitted that the Writ petition may be dismissed as being devoid of merits.
7. I have heard the learned Counsel for the petitioner and the learned Government Pleader appearing for the respondents for considerable length of time.
8. After considering the rival contentions urged by both the counsel and after careful perusal of the impugned order and the Notification vide Annexure-C & D and after evaluation of the relevant material available on the file, the only question that arises for consideration is whether the impugned order and Notification issued are in accordance with the relevant provisions of the Karnataka Excise and License (General conditions & Rules), Karnataka Excise Rules, 1969.
8. After perusal of the impugned order dated 30-7-2002 on the file of the 1st respondent and the Notification issued by the 2nd respondent vide Annexure-D it is manifest on the basis of the impugned order and the Notification that the competent authority of the respondent has not committed any error of law muchless material irregularity. It is significant to note that, after careful perusal of Rule 17(1)(b) r/w Rule 18, admittedly, the petitioner has not complied with the statutory requirement.
9. It is pertinent to note that the contract is a statutory one and there is no need to provide him with an opportunity of being heard before passing the impugned order nor there is any provision to issue notice as envisaged under Rule 17(3) of the Karnataka Excise Act and providing an opportunity arises only when the lease agreement has been entered into between the petitioner and respondent No. 1. Admittedly, no such lease-cum-agreement has been entered into. Therefore, the question of affording an opportunity does not arise at all.
10. After careful perusal of Rule 18 of the Rules, it reveals that once there is no compliance of Rule 16 & 17 of the Rules, the respondent is left with no option except to cancel the right of confirmation. In the instant case, inspite of giving sufficient opportunity to the petitioner to comply with the mandatory provisions of the Rules, the petitioner has not complied with the same. once he has failed to comply with the mandatory provisions, being a Excise contractor he is a wall qualified person, having knowledge of the terms and conditions of the relevant Rules and he has participated in the bid and his highest bid has been accepted and confirmation order has been communicated to him, such person is not entitled to turn back and take a specific ground before this Court, stating that the cancellation order and the Notification issued is without issuing notice and without compliance of principles of natural justice. The said specific ground urged by the learned Counsel for the petitioner cannot be accepted. Therefore, I am of the considered view that the respondent was fully justified in passing the impugned order and the same does not suffer from any illegality or infirmity and does not require any interference by this Court, invoking extraordinary jurisdiction as envisaged under Article 226 of the Constitution of India.
11. Further, it is pertinent to note that the Apex Court in the case of State Of Karnataka v. Saveen Kumar Shetty reported in 2002 AIR SCW 1042 has observed that on interpretation of Rule 18 in the instant case, it is clear that once a discretion has been exercised by the Government under Rule 18 to cancel the bid then a forfeiture of the amounts deposited is a consequence to the said act of cancellation and there is no discretion in the Government whether to exercise the right of forfeiture or not. This being so, the question of affording an opportunity to the petitioner before effecting the forfeiture cannot arise. Opportunity was granted before cancelling the bid and admittedly, there was a default in non-compliance with the provisions of Rules 16 and 17. This being so, the competent authority was right in its decision to cancel the bid and to forfeit the amount deposited under Rule 18(1) of the Rules.
12. It is significant to note that the instant case also comas within 15 days of the confirmation, the petitioner was under an obligation to make the deposit under Rule 17(1)(b) and to execute the lease deed under Rule 16. When the petitioner failed to do so, the competent authority under the first part of Rule 18(1) exercised the jurisdiction in not cancelling the bid, but extended the temporary license. When there was a further default and non-compliance of Rules 16 & 17, it is only thereafter the competent authority exercised its discretion. After affording an opportunity to the petitioner once the bid was cancelled than the law under first part of Rule 18 (1) comes to play and the deposit made by such persons is liable to be forfeited and nothing more is required to be done. When the petitioner is fully qualified and was aware of the terms and conditions of the said bid and it is well within the knowledge of the petitioner and he has also participated and when once he has accepted the same, it is his duty to comply with the mandatory provisions of Rules 16 & 17. In the instant case, admittedly he has not complied with the same.
13. Having regard to the facts & circumstances of the case on hand and the of natural justice and also in view of the decision rendered by the Apex Court in similar matters, I do not find any justification or ground to interfere with the impugned order passed by the competent authority cancelling the confirmation order issued to him and consequential order forfeting the Earnest Money Deposit made by the petitioner.
14. For the foregoing reasons and having regard to the facts & circumstances of case on hand, I do not find any good ground or justification to interfere with the impugned order issued by the competent authority. Accordingly, the writ Petition is dismissed as being devoid of merits.
