{"id":63317,"date":"1976-03-23T00:00:00","date_gmt":"1976-03-22T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/a-damodaran-anr-vs-state-of-kerala-ors-on-23-march-1976"},"modified":"2015-05-19T13:41:45","modified_gmt":"2015-05-19T08:11:45","slug":"a-damodaran-anr-vs-state-of-kerala-ors-on-23-march-1976","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/a-damodaran-anr-vs-state-of-kerala-ors-on-23-march-1976","title":{"rendered":"A. Damodaran &amp; Anr vs State Of Kerala &amp; Ors on 23 March, 1976"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">A. Damodaran &amp; Anr vs State Of Kerala &amp; Ors on 23 March, 1976<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1976 AIR 1533, \t\t  1976 SCR  (3) 780<\/div>\n<div class=\"doc_author\">Author: M H Beg<\/div>\n<div class=\"doc_bench\">Bench: Beg, M. Hameedullah<\/div>\n<pre>           PETITIONER:\nA. DAMODARAN &amp; ANR.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF KERALA &amp; ORS.\n\nDATE OF JUDGMENT23\/03\/1976\n\nBENCH:\nBEG, M. HAMEEDULLAH\nBENCH:\nBEG, M. HAMEEDULLAH\nRAY, A.N. (CJ)\nSINGH, JASWANT\n\nCITATION:\n 1976 AIR 1533\t\t  1976 SCR  (3) 780\n 1976 SCC  (3)\t61\n CITATOR INFO :\n R\t    1980 SC 680\t (19)\n R\t    1984 SC1326\t (12)\n\n\nACT:\n     Kerala Abkari Act (1 of 1967), Ss. 18A and 28-`Grantee'\nwho is-Right  of Government to recover dues from persons who\nwere permitted\tto carry  on business of selling liquor even\nthough no agreements were executed or licences granted.\n     Section 18A(1)  of the  Kerala Abkari  Act, 1967, shows\nthat the  exclusive or\tother privilege of selling liquor by\nretail may  be granted on payment of rental in consideration\nof the\tgrant. The  amount  of\trental\tmay  be\t settled  by\nauction, negotiation  or by  any other\tmethod.\t Section  28\nprovides that  all amounts  due to  the\t Government  by\t any\ngrantee of  a privilege\t may be\t recovered from\t the  person\nprimarily liable  to pay  as if\t they were  arrears of\tland\nrevenue.\n\n\n\nHEADNOTE:\n     The appellants  bid at  auction  sales  of\t some  toddy\nshops. The conditions of the sales, notified in pursuance of\nthe statutory  provisions, were:  (a) It  was incumbent upon\nthe bidder to pay immediately 10% of the amount due; (b) The\nsuccessful bidder  had to deposit 30% of the amount payable,\non demand  by the  Assistant Commissioner,  and\t to  execute\nagreements before getting the necessary licences; and (c) If\nthe contract  could not be executed, the whole amount was to\nbe forfeited  and the  shop itself  was to  be\tresold.\t The\nappellants deposited  the necessary  amounts on\t demand\t and\nwere allowed  to start\tbusiness even before agreements were\nexecuted or  licences were issued. But the appellants failed\nto pay the balance due to the State. The amounts were sought\nto be  recovered under\ts.  28,\t and  the  proceedings\twere\nchallenged, but the High Court held against the appellants.\n     In appeal\tto this Court, the appellants contended that\nas no  agreement was executed between the appellants and the\nGovernment in  the manner  prescribed by  Art.\t299  of\t the\nConstitution, the  appellants had  not become the `grantees'\nof any\tprivilege and  hence were  not\tliable\tto  pay\t the\namounts sought to be recovered\n     Dismissing the appeal,\n^\n     HELD :  The Government  had  to  perform  its  duty  of\ngranting licences  as soon  as the  appellants fulfilled the\nconditions by paying up the remainder of the amounts due. In\nthe present  case, Government  had  performed  its  part  by\nallowing the  appellants to start selling liquor even before\nexecution of  the agreements  and the grant of licences. The\nappellants, therefore,\tbecame liable  and bound  to perform\ntheir  corresponding   obligations.  This   reciprocity\t  of\nobligations, quite  apart from\tits basis  in agreement, had\nthus  acquired\tan  operative  force  resting  on  statutory\nsanction and equity. [784G-785B]\n     (1) It  is not  a condition precedent to recovery of an\namount due  and recoverable  under the Act that it should be\ndue under  a formally  drawn up and executed contract. Under\nthe notification,  in the  event of  the non-execution\tof a\ncontract, even if due to the unwillingness or inability of a\nbidder to  pay, the  whole amount  due could  be  forfeited.\n[782C; 783E-F]\n     2(a) The acquisition of the status of a grantee for the\npurpose of  s. 18A, does not depend on the actual receipt of\na licence.  Section 18A(2)  lays down that no grantee of any\nprivilege under\t sub-s. (I)  shall exercise it until the has\nreceived  a   licence.\tThis   provision  contemplates\t the\nstatutory status  of a\t`grantee' even before the successful\nbidder becomes\tentitled,  as  of  right,  to  exercise\t the\nprivileges of  a grantee on receipt of a licence even before\nhe receives his licence he is described as a grantee. [783F-\nG, H-784A]\n781\n     (b) The word `grantee' used in s. 28 carries this wider\nconnotation of persons who have been permitted by the excise\nauthorities, in\t recognition of\t their rights to receive and\nin anticipation\t of the receipt of licences, to exercise the\nprivileges of  grantees, and  not necessarily only those who\nhave executed  the written  contracts and received licences.\n[784A-C]\n     Madhavan  v.  Assistant  Excise  Commissioner,  Palghat\nI.L.R. [1969] 2 Kerala 71, approved.\n\n\n\nJUDGMENT:\n<\/pre>\n<p>     CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1464 of<br \/>\n1971.\n<\/p>\n<p>     From the Judgment and order dated 18-3-71 of the Kerala<br \/>\nHigh Court in Writ Appeal No. 126 of 1971.\n<\/p>\n<p>     K. R.  Sudhakaran and N. Sudhakara and P. K. Pillai for<br \/>\nthe Appellants.\n<\/p>\n<p>     K. T. Harindranath and K. M. K. Nair for Respondent.<br \/>\n     The Judgment of the Court was delivered by<br \/>\n     BEG, J.-The  appellants before  us, by certification of<br \/>\nthe case,  had filed  a petition  to quash  revenue recovery<br \/>\nproceedings started  against them  for\trealisation  of\t the<br \/>\nremainder of  the amounts  due on  account of  their bids at<br \/>\nauction sales  of some toddy shops for the period 1st April,<br \/>\n1967, to  31st March, 1969, by the Government of Kerala. The<br \/>\namounts at which the shops were knocked down were:\n<\/p>\n<pre>\t  1. Shop No. 1\t      =\t   84,000\/-\n\t  2. Shop No. 4\t      =\t   46,500\/-\n\t  3. Shop No. 8\t      =\t   56,100\/-\n\t  4. Shop No. 11      = 1,50,000\/-.\n<\/pre>\n<p>     The notified  conditions of  the auction  sales made it<br \/>\nincumbent upon\tthe bidder  to pay  immediately 10%  of\t the<br \/>\namount due  and to  provide personal  security for the rest.<br \/>\nThere  was  no\tassurance  or  guarantee  given\t there\tthat<br \/>\nprohibition will  not be removed in future by the Government<br \/>\nin any area in the State or about any other matter of future<br \/>\npolicy of  the Government relating to intoxicants. According<br \/>\nto  notified  conditions,  the\tsuccessful  bidders  had  to<br \/>\ndeposit 30%  of the  total amount  payable on  demand by the<br \/>\nAssistant Commissioner and also to execute agreements before<br \/>\ngetting\t the   necessary  licences.   The  petitioners\t had<br \/>\ndeposited the  necessary amounts  on demand.  They were also<br \/>\nallowed to  start the  business of running their toddy shops<br \/>\neven before the licences were issued in their favour.\n<\/p>\n<p>     The petitioners&#8217;  case is that, at the time of bidding,<br \/>\nthere was  an understanding  that the  respondent State will<br \/>\nnot  remove  prohibition  so  that  they  expected  adequate<br \/>\nprofits. As observed above, there is nothing in the notified<br \/>\nconditions to indicate this. It appears that in April, 1967,<br \/>\nthe respondent\tState announced\t removal of prohibition from<br \/>\n1st May,  1967. The  appellants allege\tthat  they  suffered<br \/>\nheavy losses due to this policy of the State and were unable<br \/>\nto make\t the remainder\tof the payments which were sought to<br \/>\nbe recovered under section 28 of the Abkari Act (hereinafter<br \/>\nreferred to  as `the  Act&#8217;). It is difficult to see what the<br \/>\nremoval of prohibition had to do with alleged<br \/>\n<span class=\"hidden_text\">782<\/span><br \/>\nlosses to  the appellants. Abandonment of Prohibition either<br \/>\ntotally or partially, should, ordinarily, not diminish sales<br \/>\nof liquor.  One should expect such a development to increase<br \/>\nsales of liquor.\n<\/p>\n<p>     The  appellants  contend  that,  as  no  agreement\t was<br \/>\nexecuted between them and the Govt. in the manner prescribed<br \/>\nby Article  299 of  the Constitution, they are not liable to<br \/>\npay the\t amounts sought\t to be recovered. This is their main<br \/>\ncontention.\n<\/p>\n<p>     A learned\tJudge of the Kerala High Court who heard the<br \/>\npetition held  that the\t notification in  persuance of which<br \/>\nthe shops  in question\twere auctioned provided that, if the<br \/>\ncontract could\tnot be\texecuted, the whole amount was to be<br \/>\nforfeited and  the shop\t itself was to be resold. Thus, non-<br \/>\nexecution of  the  contract  due  to  the  unwillingness  or<br \/>\ninability of  a bidder\tto pay was not a contingency outside<br \/>\nthe notification  for auction  the validity  of which is not<br \/>\nchallenged. The\t notification did not lay down that, in that<br \/>\ncase, the  payment of the remainder will be remitted. On the<br \/>\nother hand,  the condition  was that  the whole\t amount\t due<br \/>\ncould, in such an event, be &#8220;forfeited&#8221;.\n<\/p>\n<p>     The Kerala High Court held that, despite the absence of<br \/>\na contract  executed in\t accordance with  the provisions  of<br \/>\nArticle 299  of the  Constitution, the\tamounts due could be<br \/>\nrecovered under\t Section  28  of  the  Act  which  reads  as<br \/>\nfollows:\n<\/p>\n<blockquote><p>\t  &#8220;28 Recovery\tof duties.-All\tduties, taxes, fines<br \/>\n     and fees  payable to the Government direct under any of<br \/>\n     the foregoing  provisions of this Act or of any licence<br \/>\n     or permit\tissued under  it, and all amounts due to the<br \/>\n     Government by  any grantee\t of a  privilege or  by\t any<br \/>\n     farmer under  this Act  or by  any person on account of<br \/>\n     any contract  relating to\tthe Abkari  Revenue  may  be<br \/>\n     recovered from  the person\t primarily liable to pay the<br \/>\n     same or  from his\tsurety (if  any)  as  if  they\twere<br \/>\n     arrears of\t Land Revenue,\tand, in case of default made<br \/>\n     by a  grantee  of\ta  privilege  or  by  a\t farmer\t the<br \/>\n     Commissioner may take grant or farm under management at<br \/>\n     the risk  of the  defaulter or may declare the grant or<br \/>\n     farm forfeited,  and re-sell it at the risk and loss of<br \/>\n     the defaulter. When a grant or farm is under management<br \/>\n     under this\t section, the  Commissioner may\t recover any<br \/>\n     moneys due\t to the\t defaulter by any lessee or assignee<br \/>\n     as if they were arrears of Land Revenue.&#8221;<\/p><\/blockquote>\n<p>     The  appellants   submit  that   they  had\t not  become<br \/>\n&#8220;grantee&#8221;  of\tany  privilege\t without  the  execution  of<br \/>\ncontracts complying  with the requirements of Article 299 of<br \/>\nthe Constitution. The learned Judge of the Kerala High Court<br \/>\nrelied\ton   Madhavan  v.   Assistant  Excise  Commissioner,<br \/>\nPalghat, affirmed  by a Division Bench in Damodaran v. State<br \/>\nof Kerala.  It appears that, although the Division Bench did<br \/>\nnot specifically  consider whether a bidder at an auction of<br \/>\nthe kind  before us  was the &#8220;grantee&#8221; of a privilege within<br \/>\nthe meaning  of Section 26 of the Act, yet, it held that the<br \/>\nliability to  satisfy the  dues arising\t out of\t a  bid\t was<br \/>\nenforceable under Section 28 of the Act quite<br \/>\n<span class=\"hidden_text\">783<\/span><br \/>\napart from  any contractual  liability. Reference  was\talso<br \/>\nmade, in  this connection,  to the decision of this Court in<br \/>\n<a href=\"\/doc\/1961694\/\">Union of  India v.  A. L. Ralia Ram,<\/a> for contending that the<br \/>\nabsence of a formal contract is not fatal in all cases so as<br \/>\nto make the whole transaction null and void ab initio.\n<\/p>\n<p>     Statutory duties  and liabilities\tmay be\tenforced  in<br \/>\naccordance with\t statutory provisions. Equitable obligations<br \/>\nmay also  arise and  be enforced  by decrees of Courts quite<br \/>\napart  from   the  requirements\t  of  article\t299  of\t the<br \/>\n<a href=\"\/doc\/948679\/\">Constitution.  Mulamchand  v.  State  of  Madhya  Pradesh<\/a>(2)<br \/>\naffords an  instance where  on a  claim for  compensation or<br \/>\nrestitution under Section 70 of the Contract Act, this Court<br \/>\nrelied upon the principle stated, in Nelson v. Harbolt(3) as<br \/>\nfollows (at p. 222) :\n<\/p>\n<blockquote><p>\t  &#8220;It is no longer appropriate to draw a distinction<br \/>\n     between law  and equity.  Principles  have\t now  to  be<br \/>\n     stated in the light of their combined effect. Nor is it<br \/>\n     necessary to  convass the\tniceties of the old forms of<br \/>\n     action. Remedies  now depend  on the  substance of\t the<br \/>\n     right, not\t on  whether  they  can\t be  fitted  into  a<br \/>\n     particular framework. The right here is not peculiar to<br \/>\n     equity or\tcontract or tort, but falls naturally within<br \/>\n     the important  category of cases where the Court orders<br \/>\n     restitution if the justice of the case so requires&#8221;.<\/p><\/blockquote>\n<p>     In the case before us, we are concerned really with the<br \/>\nlegality of proceedings under Section 28 quoted above of the<br \/>\nAct. It\t is evident  that these\t proceedings can be taken in<br \/>\nrespect of &#8220;all amounts due to the Government by any grantee<br \/>\nof a  privilege or  by any  farmer under  this Act or by any<br \/>\nperson on  account of  any contract  relating to  the Abkari<br \/>\nRevenue&#8221;. It  is clear that dues may also be &#8220;recovered from<br \/>\nthe person  primarily liable  to pay  the same\tor from\t his<br \/>\nsurety (if  any)&#8221;.  It\tis  not\t a  condition  precedent  to<br \/>\nrecovery of  an amount due and recoverable that it should be<br \/>\ndue under a formally drawn up and executed contract.\n<\/p>\n<p>     Section 18 of the Act shows that the exclusive or other<br \/>\nprivilege of  selling liquor  by retail\t may be\t granted  on<br \/>\npayment of  rental in  in consideration\t of the\t grant.\t The<br \/>\nappellants made\t all the initial payments of rent. We do not<br \/>\nthink that  acquisition of  the status of a grantee, for the<br \/>\npurposes of  Section 18A, need await the actual receipt of a<br \/>\nlicence. The  conditions of the grant are to be laid down by<br \/>\nthe Government.\t The amount  of rental\t&#8220;may be\t settled  by<br \/>\nauction, negotiation  or by  any  other\t method\t as  may  be<br \/>\ndetermined by  by the  Government, from\t time to  time&#8221;. The<br \/>\namounts due  &#8220;may be  collected to  the exclusion  of, or in<br \/>\naddition to,  the duty or tax leviable under Sections 17 and\n<\/p>\n<p>18.<br \/>\n     Section 18A(2)  lays  down\t that  &#8220;no  grantee  of\t any<br \/>\nprivilege made sub-section (1) shall exercise the same until<br \/>\nhe  has\t  received  a\tlicence\t in  that  behalf  from\t the<br \/>\nCommissioner&#8221;.\tIt   will  be\tseen  that   this  provision<br \/>\ncontemplates the statutory status of a &#8220;grantee&#8221; even before<br \/>\n<span class=\"hidden_text\">784<\/span><br \/>\nhe becomes entitled, as of right, to exercise the privileges<br \/>\nof a grantee on the receipt of a licence. What is noticeable<br \/>\nis that\t even before he receives his licence he is described<br \/>\nas a  &#8220;grantee&#8221;. The  successful bidders, in the case before<br \/>\nus,  had  been\tpermitted  by  the  excise  authorities,  in<br \/>\nrecognition of\ttheir rights  to receive and in anticipation<br \/>\nof receipt  of\tlicences,  to  exercise\t the  privileges  of<br \/>\ngrantees. They were thus treated as grantees in anticipation<br \/>\nof execution  of contracts  and grants of licences. Grantees<br \/>\nunder Section  29 of the Act are those who have received the<br \/>\nprivilege and  not necessarily\tonly those who have received<br \/>\nthe written  contracts and licences. The word &#8220;grantee&#8221; used<br \/>\nthere seems to us to carry this wider connotation with it.\n<\/p>\n<p>     In Madhavan&#8217;s  case (supra)  K. K. Mathew, J., repelled<br \/>\nthe  contention\t that  the  execution  of  an  agreement  in<br \/>\naccordance  with  the  provisions  of  Article\t299  of\t the<br \/>\nConstitution was  a condition precedent to the creation of a<br \/>\nliability to  be proceeded  against under  Section 28 of the<br \/>\nAct for\t recovery of the balance of the rentals due. He said<br \/>\n(at p. 94) :\n<\/p>\n<blockquote><p>\t  &#8220;It was  contended on behalf of the petitioners in<br \/>\n     some of these cases that no agreements were executed by<br \/>\n     them, and therefore, the Government are not entitled to<br \/>\n     recover any  amount by  way  of  rental.  Reliance\t was<br \/>\n     placed upon the decisions of the Supreme Court in <a href=\"\/doc\/173865\/\">H. P.<br \/>\n     Chowdhry v.  State\t of  M.P.  (AIR<\/a>\t 1967  SC  203)\t and<br \/>\n     Mulamchand v.  State of  M.P. (1969(II)  S.C.W.R. 397),<br \/>\n     for the  proposition that\tunless there is an agreement<br \/>\n     executed in  accordance with  the provisions of Article<br \/>\n     299 of  the Constitution,\tthe petitioners\t in the case<br \/>\n     where no  agreements have\tbeen executed,\twould not be<br \/>\n     liable  to\t pay  rental.  The  argument  was  that\t the<br \/>\n     liability\tto   pay  rental  arises  only\tout  of\t the<br \/>\n     agreement, and  if there is no agreement, then there is<br \/>\n     no liability  to be  enforced. As\tI have indicated the<br \/>\n     liability to  pay the  rental arises not only by virtue<br \/>\n     of the  agreement but also by the provisions of section<br \/>\n     28 of  the Act. The decision of the Supreme Court in H.<br \/>\n     P. Chowdhry  v. State  of M.P. would make it clear that<br \/>\n     if there  are provisions  in the  Act, the liability to<br \/>\n     pay the rental can be enforced. I think that even if no<br \/>\n     agreement has  been executed,  there was  the liability<br \/>\n     under section  28 of  the Act,  and that  the liability<br \/>\n     could be  enforced under  the provisions of the Revenue<br \/>\n     Recovery Act. (See Sections 6 and 62 of the T.C.Act)&#8221;.<\/p><\/blockquote>\n<p>     The appellants became entitled to get licences from the<br \/>\nGovernment which  had to perform its duty to execute written<br \/>\nagreements and\tgrant licences\tas soon\t as  the  appellants<br \/>\nfulfilled required  conditions by paying up the remainder of<br \/>\nthe amounts  due. The  Government had  performed its part of<br \/>\nthe bargain and even allowed the appellants to start selling<br \/>\nliquor. The  appellants also  became  liable  and  bound  to<br \/>\nperform their corresponding obligations under the<br \/>\n<span class=\"hidden_text\">785<\/span><br \/>\nconditions of the auctions imposed in pursuance of statutory<br \/>\nprovisions. This  reciprocity of  obligations,\tquite  apart<br \/>\nfrom its  basis in agreement, had thus acquired an operative<br \/>\nforce resting on statutory sanction and equity.\n<\/p>\n<p>     Consequently, we  affirm the  view of  the Kerala\tHigh<br \/>\nCourt and dismiss this appeal.\n<\/p>\n<p>     Parties will bear their own costs throughout.\n<\/p>\n<pre>V.P.S.\t\t\t\t\t   Appeal dismissed.\n<span class=\"hidden_text\">786<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India A. Damodaran &amp; Anr vs State Of Kerala &amp; Ors on 23 March, 1976 Equivalent citations: 1976 AIR 1533, 1976 SCR (3) 780 Author: M H Beg Bench: Beg, M. Hameedullah PETITIONER: A. DAMODARAN &amp; ANR. Vs. RESPONDENT: STATE OF KERALA &amp; ORS. DATE OF JUDGMENT23\/03\/1976 BENCH: BEG, M. HAMEEDULLAH BENCH: [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-63317","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>A. 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