{"id":69712,"date":"1979-12-21T00:00:00","date_gmt":"1979-12-20T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/state-of-uttar-pradesh-vs-klshori-lal-minocha-on-21-december-1979"},"modified":"2017-02-25T05:16:48","modified_gmt":"2017-02-24T23:46:48","slug":"state-of-uttar-pradesh-vs-klshori-lal-minocha-on-21-december-1979","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/state-of-uttar-pradesh-vs-klshori-lal-minocha-on-21-december-1979","title":{"rendered":"State Of Uttar Pradesh vs Klshori Lal Minocha on 21 December, 1979"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">State Of Uttar Pradesh vs Klshori Lal Minocha on 21 December, 1979<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1980 AIR  680, \t\t  1980 SCR  (2) 724<\/div>\n<div class=\"doc_author\">Author: A Gupta<\/div>\n<div class=\"doc_bench\">Bench: Gupta, A.C.<\/div>\n<pre>           PETITIONER:\nSTATE OF UTTAR PRADESH\n\n\tVs.\n\nRESPONDENT:\nKlSHORI LAL MINOCHA\n\nDATE OF JUDGMENT21\/12\/1979\n\nBENCH:\nGUPTA, A.C.\nBENCH:\nGUPTA, A.C.\nTULZAPURKAR, V.D.\nVENKATARAMIAH, E.S. (J)\n\nCITATION:\n 1980 AIR  680\t\t  1980 SCR  (2) 724\n 1980 SCC  (3)\t 8\n CITATOR INFO :\n E\t    1984 SC 993\t (27)\n D\t    1984 SC1326\t (13)\n\n\nACT:\n     Constitution of India 1950, Article 299 and U.P. Excise\nAct 1910,  S. 39-Rule  357(5)  of  Excise  Manual  requiring\npurchaser at  excise action  to deposit\t one-sixth of annual\nfee on\tconclusion of  sale-Purchaser  not  making  deposit-\nResale by  excise authorities fetching lesser price-Original\npurchaser whether liable to pay deficiency in price.\n     U.P. Excise  Act 1910,  S. 77 &amp; Excise Manual Rule 357-\nRule not published as required-Whether has the force of law.\n\n\n\nHEADNOTE:\n     The respondent  who was  a bidder\tat the annual excise\nauction offered\t the highest  bid for  two groups of country\nliquor shops,  and which were knocked down in his favour. He\naffixed his  signature to the respective bid sheets in token\nof his\tacceptance and\talso in\t the register  of Settlement\nRecord. He,  however, did  not\tdeposit\t l\/6th\tof  the\t bid\namounts on  conclusion of  the sales  as required  under the\nExcise Rules but took time for deposit. In spite of repeated\nreminders he  did not  pay the\tadvance deposits. The Excise\nAuthorities resold  the excise\tprivileges in respect of the\ntwo groups  of shops and in the re-auction the shops fetched\na lesser  amount than  what the\t respondent had offered. The\nState Government,  appellant directed the respondent to make\ngood the  loss. Since  he failed,  a suit  for recovery\t was\ninstituted by  the appellant.  The suit\t was contested,\t the\nrespondent  pleading   (1)  that  there\t were  no  completed\ncontracts between  the\tState  Government  and\thimself\t and\nconsequently there could be no breach of contracts; (2) that\nthe entire  auction proceedings,  having  been\tagainst\t the\nrules and  instructions of  the Government  were illegal and\nvoid; (3)  the contracts, if any, were unenforceable as they\ndid not\t satisfy the  conditions mentioned in Article 299 of\nthe Constitution;  and (4)  that the State Government having\naccepted his prayer to be relieved from the bids made by him\nand subsequently re-auctioning the groups of shops to others\nwas estopped  from fixing  any civil  liability on  him. The\ntrial court decreed the suit.\n     On appeal,\t the High  Court dismissed  the suit  on the\nview that  there  was  no  valid  contract  which  could  be\nenforced by  the appellant  as the-requirements\t of  Article\n299(1) of  the Constitution  had not been complied with. It,\nhowever, held  that the\t failure to  deposit 1\/6  of the bid\namount did  not make  the proposal  incomplete and  that the\nabsence of the approval of the Excise Commissioner which was\nin the\tnature of  a power  vested in  him  to\treverse\t the\nacceptance of  a bid made by the officer holding the auction\ndid not\t in  any  way  exonerate  the  respondent  from\t the\nliability if he was otherwise liable.\n     In the appeal to this Court on the question whether the\nrespondent would  not be  liable to  make good the loss even\nthough\tno   contract  in   writing  had  been\texecuted  in\naccordance with Article 299 of the Constitution.\n725\n^\n     HELD :[Per Gupta and Tulzapurkar, JJ.]\n     1. The suit must be dismissed as there was no concluded\ncontract between  the parties,\tnor was\t there any statutory\nrule permitting\t recovery of  the deficiency on re-sale from\nthe respondent. [728 B]\n     2. The  last part\tof 5th\tclause to Rule 357 providing\nthat in case of default, if the price fetched at the re-sale\nwas less tan the bid at the first sale the defaulter had not\nbeen published. [729 C]\n     3. Assuming  that different clauses of Rule 357 barring\nthe last  part of  the 5th  clause embody  the condition  of\nsale, it is clear from the 2nd clause that in the absence of\nthe final sanction of the Excise Commissioner the bid cannot\nbe said\t to have  been finally accepted. In the instant case\nit is not claimed that the bid offered by the respondent was\nsanctioned by the Excise Commissioner. [729 E]\n     There  was\t thus  no  concluded  contract\tbetween\t the\nparties to  make the respondent liable for the alleged loss.\n[729 E]\n     <a href=\"\/doc\/1656791\/\">Union of  India and  others v. M\/s. Bhimsen Walaiti Ram<\/a>\n[1970] 2 S.C.R. 594 referred to.\n     (Per Venkataramiah J. dissenting)\n     1. The  respondent should\tbe made\t liable for  the sum\nclaimed in  the suit  and the decree made by the trial court\nshould be restored. [745 G]\n     2. The  respondent was  liable for the sum claimed made\nby the\tState  Government  even\t though\t no  contracts\twere\nformally entered  into between\tthe respondent and the State\nGovernment,[745 B]\n     In the instant case on the pleading and evidence it has\nto be  assumed that the respondent knew that he was under an\nobligation to  deposit with  the officer holding the auction\n1\/6th of the bid amount and that if he committed any default\nin doing  so, the  excise licences  in question\t were to  be\nresold and  that he would be liable to pay any loss suffered\nby the Sate Government on such re-sale. [733 E]\n     3. Condition  No. 5  in  the  sale\t proclamation  which\nprovides that  if the price at the re-sale be less than that\nat the first sale, the difference will be recovered from the\ndefaulter negatives the contention of the respondent that in\nthe absence  of the  approval of the Excise Commissioner, he\nwould bot be liable to make good the loss. [73 H, F]\n     4. There  was no disapproval of the Excise Commissioner\nof the\tbids offered  by the  respondent. On the other hand,\nthe excise  authorities requested  the respondent to perform\nhis part of the obligation under the sale proclamation. [734\nE]\n     5. <a href=\"\/doc\/1656791\/\">In  Union of  India &amp;  Ors. v.\tM\/s. Bhimsen Walaiti\nRam,<\/a> [1970]  2 S.C.R. 594, this Court proceeded on the basis\nthat the  liability of\tthe bidder  could arise\t only  as  a\nconsequence of\tthe  breach  of\t a  completed  contract.  No\nattention appears  to have  been given\tin the\tcase to\t the\nquestion whether  the act of the offering of the highest bid\nwhich was  accepted by\tthe officer  holding the auction and\nwhich resulted in the closure of the auction could by itself\nbecome a  source of liability when the highest bidder failed\nto  comply  with  the  conditions  stipulated  in  the\tsale\nproclamation. [734 F]\n726\n     6. In  section  39,  the  words  \"all  excise  revenue,\nincluding all amounts due to the Government by any person on\naccount of  any contract relating to the excise revenue, may\nbe recovered  from the\tpersons primarily  liable to pay the\nsame\"\tby him\ton account  of any  contract relating to the\nexcise revenue. The words \"on account relating to the excise\nrevenue\"  include   within  their   scope  not\t merely\t any\ncompensation which  a person may be liable to pay on account\nof the\tbreach\tof  contract  committed\t by  him  after\t the\ncontract is  completed\t but also  any other amount that may\nbecome due  on account\tof a  contract which would come into\nexistence if  all  the\tformalities  are  completed,  having\nregard\tto  the\t scheme\t and  manner  in  which\t the  excise\nprivilege is  disposed of by the excise authorities. [735 E-\nF]\n     7. A  reading of  clauses 1  and 2\t of Rule  357 of the\nExcise Manula  show that  the officer  holding the  sale was\nempowered to accept the bid and that his acceptance was only\nsubject to  the sanction  of the  Excise Commissioner.\tThey\nmean that  the power  which had\t been reserved to the Excise\nCommissioner, only  enabled him\t to set aside the acceptance\nalready made  by the  officer conducting the sale. If it was\nnot  set  aside\t by  him,  the\tacceptance  of\tthe  officer\nconducting the sale would be effective. [737 B]\n     In the  instant case  the Excise  Commissioner had\t not\nrefused to  sanction the  acceptance  of  the  highest\tbids\noffered by  the respondent.  The liability  of\tthe  highest\nbidder to  deposit a  sum equivalent  to 1\/6th\tof  the\t bid\noffered by  him arises\tas a consequence of his offering the\nhighest bed  with the  knowledge of  the conditions  of\t the\nauction, immediately  on the  conclusion of the sale for the\nday in\this favour and if he does not make such deposit, the\nofficer holding\t the same  is entitled\tto  put\t the  excise\nprivilege for  re-sale either immediately of on a subsequent\nday with liberty to recover from the defaulter any loss that\nmay be occasioned to the Government by such re-sale. [737 C-\nD]\n     8. The completion of the contract or the execution of a\ncontract in  accordance with Article 299 of the Constitution\narises only  after the highest bidder has deposited 1\/6th of\nthe bid\t offered by  him on the conclusion of the sale which\nis a  condition precedent for the completion of the contract\nor for\texecution of  a formal\tdocument in  accordance with\nArticle 299  of the  Constitution.  It\tis  not,  therefore,\ncorrect to determine the liability of a defaulting bidder on\nthe basis  of a\t completed contract  or a formal document to\nbe executed under Article 299. [737 E-F]\n     9.\t In   the  interest   of  public   revenuer,  excise\nprivileges, privileges\tof cutting  and removing timber from\nGovernment forests,  occupancy right  over Government  lands\nand building sites etc. are disposed of in public auction by\nthe Central  Government, State Governments, statutory boards\nand local  authorities and  in almost  every  such  auction,\nthere is  invariably boards  a condition that the acceptance\nof the highest bid at the auction is subject to the sanction\nof some\t superior officer  or statutory\t or the\t appropriate\nGovernment. If\tthe liability  of such\ta bidder  is  to  be\nfunded only  on the  basis of  a completed  contract them in\nthen in\t the case  of auctions\theld by\t or on behalf of the\nCentral or State Governments, no liability can arise even it\nsuch sanction  is accorded,  unless it\tis followed  up by a\nformal\tdocument   executed  under   Article  299   of\t the\nConstitution which  alone amounts  to a\t completed  contract\nwhere Government is a party. [737 H-738 A, 738 D]\n727\n     In the  instant case  the respondent by his own conduct\nin not depositing 1\/6th A of the bids offered by him made it\nimpossible  for\t the  excise  authorities  to  conclude\t the\ncontract. 'the\tquestion may  have  been  different  if\t the\nrespondent had\tdone  all  that\t he  had  to  do  under\t the\ncondition of  the auction but the excise authorities had not\nintimated him that he could exploit the excise privileges in\naccordance with law. [744 E]\n     10. The  liability of  the respondent  arises under the\nstatute and it also arises as the result of a civil wrong or\na tort\tcommitted by  him, in  offering the highest bid with\nopen eyes  and in  not fulfilling  the\tobligations  arising\ntherefrom. The\tlatter source  of liability may appear to be\nnovel but if justice requires, the Court should not hesitate\nto impose  it on  the person  who has committed the wrong to\nsecure justice for the innocent injured party. [745 <a href=\"\/doc\/91737\/\">Cl\n     A. Damodaran  &amp; Anr. v. State of Kerala &amp; ors.<\/a> [1976] 3\nS.C.R. 780;  Candlar v.\t Crane Christmas &amp; Co. [1951] 2 K.B.\n164 at p. 178 referred to.\n     <a href=\"\/doc\/1890075\/\">K. P.  Chowdhary v.  Stare of  Madhya  Pradesh  &amp;\tOrs.<\/a>\n[1966] 3 S.C.R. 919 distinguished.\n\n\n\nJUDGMENT:\n<\/pre>\n<p>     CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 173 of<br \/>\n1969.\n<\/p>\n<p>     From the  Judgment and  order  dated  2-4-1968  of\t the<br \/>\nAllahabad High Court in First Appeal No. 5\/62.\n<\/p>\n<p>     G. N. Dikshit and O. P. Rana for the Appellant.<br \/>\n     H. K.  Puri and  Miss Madhu Mulchandani and V. K. Bahal<br \/>\nfor the Respondent.\n<\/p>\n<p>     The Judgment  of A. C. Gupta and V. D. Tulzapurkar, JJ.<br \/>\nwas delivered  by Gupta,  J. E.\t S. Venkataramish, J. gave a<br \/>\ndissenting opinion.\n<\/p>\n<p>     GUPTA, J.-This appeal by certificate is from a judgment<br \/>\nof the\tAllahabad High\tCourt, Lucknow Bench, dismissing the<br \/>\nsuit instituted\t by the\t appellant, State  of Uttar Pradesh,<br \/>\nfor recovery of a sum of Rs. 20,100 from the respondent. The<br \/>\nfacts stated  in the  plaint on which the claim is based are<br \/>\nthese. The annual &#8216;excise auctions&#8217; for the year ]951-52 for<br \/>\nFaizabad district were held at Faizabad on February 22, 1951<br \/>\n&#8220;under the Excise Rules.&#8221; The respondent offered the highest<br \/>\nbid of\tRs. 73,000  and Rs.  48,000 respectively as fees for<br \/>\ntwo groups of country liquor shops but as he did not deposit<br \/>\nl\/6th of  the aforesaid\t sum on\t conclusion of\tthe sales as<br \/>\nrequired under the Excise Rules, the two groups of shops had<br \/>\nto be  sold again  on March  30, 1951.\tThe  resale  fetched<br \/>\nrespectively Rs.  65,700 and Rs. 35,200 for there two groups<br \/>\nof country  liquor shops.  According to\t the State  of Uttar<br \/>\nPradesh it  suffered-a total loss of Rs. 20,100 which is the<br \/>\ndifference between  what the  respondent had offered and the<br \/>\nsum for\t which the shops were later sold, and the respondent<br \/>\nwas liable to compensate 9-91SCI\/80<br \/>\n<span class=\"hidden_text\">728<\/span><br \/>\nthe loss. The suit was decreed by the trial court. On appeal<br \/>\nthe High Court dismissed the suit on the view that there was<br \/>\nno valid  contract which  could be enforced by the plaintiff<br \/>\nas the\trequirements of\t Article 299(1)\t of the Constitution<br \/>\nhad not been complied with. We are also of the view that the<br \/>\nsuit must  be dismissed but for a slightly different reason;<br \/>\nin our\topinion there  was no concluded contract between the<br \/>\nparties,  nor\twas  there  any\t statutory  rule  permitting<br \/>\nrecovery the deficiency on re-sale from, the respondent.\n<\/p>\n<p>     The sale  proclamation which  is said to have contained<br \/>\nthe conditions\tof sale\t was  not  produced.  The  Assistant<br \/>\nExcise Commissioner  (P.W. 1)  in his  testimony referred to<br \/>\nrule 357 of the Excise Manual. The relevant part of the rule<br \/>\nis as follows:\n<\/p>\n<blockquote><p>     &#8220;The following  conditions shall  apply  to  all  sales<br \/>\n     under the\tauction system,\t and will be inserted at the<br \/>\n     foot of  the sale\tproclamation if such proclamation is<br \/>\n     issued by the Excise Commissioner:\n<\/p><\/blockquote>\n<blockquote><p>\t  (1)  The officer conducting the sales is not bound<br \/>\n\t       to accept the highest or any bid. In any case<br \/>\n\t       when the\t highest or  any bid is not proposed<br \/>\n\t       to be  accepted, the  next highest bid should<br \/>\n\t       also be reported to the Excise Commissioner.<br \/>\n\t  (2)  The final acceptance of any bid is subject to<br \/>\n\t       the sanction of the Excise Commissioner.<br \/>\n\t  (3)  Veery person bidding will be held to his bid,<br \/>\n\t       whether i it be the highest or not.\n<\/p><\/blockquote>\n<blockquote><p>\t  (4)  &#8230;. &#8230; &#8230; &#8230;<\/p><\/blockquote>\n<p>\t  (5)\tA sum  equal to one-sixth of the annual fees<br \/>\n\t       shall   be   payable   immediately   on\t the<br \/>\n\t       conclusion of  the sales for the day, and the<br \/>\n\t       balance by  such instalments as are specified<br \/>\n\t       in the  licence to  be granted. If default be<br \/>\n\t       made  in\t  the\tpayment\t  of   the   advance<br \/>\n\t       instalment, the\tshop on farm will be resold,<br \/>\n\t       and if  the price  finally bid at the re-sale<br \/>\n\t       be less\tthan that bid at the first sale, the<br \/>\n\t       difference  will\t  be  recovered\t  from\t the<br \/>\n\t       defaulter.&#8221; I<br \/>\nSection 77 of the U.P. Excise Act, 1910 states:\n<\/p>\n<blockquote><p>\t  &#8220;All rules made and notifications issued under the<br \/>\n     Act shall\tbe published  in the  official\tgazette\t and<br \/>\n     shall have\t effect as  if enacted\tin this Act from the<br \/>\n     date of such publication or from such other date as may<br \/>\n     be specified in that behalf.&#8221;\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">729<\/span><\/p>\n<p>The High  Court found  that the conditions mentioned in rule<br \/>\n357 had A never been published as required and they did not,<br \/>\ntherefore, have\t the force  of law. The High Court held that<br \/>\nPart II\t of  the  Excise  Manual  which\t includes  rule\t 357<br \/>\ncontained provisions  which where  &#8220;commonly referred  to as<br \/>\nrules&#8221; but  were not  really statutory rules and that it was<br \/>\n&#8220;a sort\t of book  of guidance&#8221;.\t Before us it was claimed on<br \/>\nbehalf\tof   the  appellant  that  some\t of  the  conditions<br \/>\ncontained in  rule 357\thad been  published in\tthe official<br \/>\ngazette, but the learned counsel for the appellant, State of<br \/>\nUttar Pradesh,\twas not\t in a  position to  dispute that  at<br \/>\nleast the  last part  of the 5th condition providing that in<br \/>\ncase of\t default, if  the price\t fetched at  the re-sale was<br \/>\nless than  the bid at the first sale the difference would be<br \/>\nrecovered from\tthe defaulter,\thad not been published. That<br \/>\nbeing so  it must  be held that there was no law under which<br \/>\nthe respondent\tcould  be  asked  to  make  amends  for\t the<br \/>\nshortfall.\n<\/p>\n<p>     The question  that remains\t to be\tanswered is, even if<br \/>\nthere was  no  statutory  provision,  whether  there  was  a<br \/>\nconcluded contract  between the appellant and the respondent<br \/>\nunder which  the respondent  was liable\t to pay\t Rs.  20,100<br \/>\nwhich represents  the difference  between the highest bid at<br \/>\nthe first  sale and  the price\tfetched at  the re-sale. The<br \/>\nsale proclamation  containing the conditions of sale has not<br \/>\nbeen produced.\tAssuming that  the different clauses of rule<br \/>\n357 barring  the last  part of\tthe 5th\t clause\t embody\t the<br \/>\nconditions of  sale, it is clear from the 2nd clause that in<br \/>\nthe  absence   of  the\t final\tsanction   of\tthe   Excise<br \/>\nCommissioner, the  bid cannot  be said\tto have been finally<br \/>\naccepted. lt  is not  claimed by  the appellant that the bid<br \/>\noffered by  the respondent  was\t sanctioned  by\t the  Excise<br \/>\nCommissioner. There  was thus  no concluded contract between<br \/>\nthe parties  to make  the respondent  liable for the alleged<br \/>\nloss. The  point appears  to have been decided by this Court<br \/>\nin Union  of India  and\t another  v.  M\/s.  Bhimsen  Walaiti<br \/>\nRam(1). This  was a  case of  an auction  for  the  sale  of<br \/>\nlicence for  a country\tliquor shop  in Delhi  for the\tyear<br \/>\n1949-50. Clause\t 33 of the conditions of sale provided inter<br \/>\nalia  :\t &#8220;All  final  bids  will  be  made  subject  to\t the<br \/>\nconfirmation by\t the Chief  Commissioning who may reject any<br \/>\nbid  without  assigning\t any  reasons&#8221;.\t This  condition  is<br \/>\nsimilar to  clause 2  of  rule\t357  in\t the  instant  case.<br \/>\nRamaswami J.  speaking\tfor  the  court\t in  Bhimsen&#8217;s\tcase<br \/>\nobserved:\n<\/p>\n<blockquote><p>\t  &#8220;It is, therefore, clear that the contract of sale<br \/>\n     was not  complete till  the bid  was confirmed  by\t the<br \/>\n     Chief  Commissioner  and  till  such  confirmation\t the<br \/>\n     person whose  bid has  been provisionally\taccepted  is<br \/>\n     entitled to withdraw his bid.\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">730<\/span><\/p>\n<blockquote><p>     When the bid is so withdrawn before the confirmation of<br \/>\n     the Chief\tCommissioner the  bidder will  not be liable<br \/>\n     for damages  on accurate  of any  breach of contract or<br \/>\n     for the  shortfall on  the resale.\t An acceptance of an<br \/>\n     offer may\tbe either  absolute or\tconditional. If\t the<br \/>\n     acceptance is  conditional the,  offer can be withdrawn<br \/>\n     at any  moment  until  absolute  acceptance  has  taken<br \/>\n     place.&#8221;<\/p><\/blockquote>\n<p>     The appeal is dismissed but in the circumstances of the<br \/>\ncase we make no order as to costs.\n<\/p>\n<p>     VENKATARAMIAH, J.\tI have had the advantage of perusing<br \/>\nthe judgment  prepared by  my learned  brother, Gupta,\tJ. I<br \/>\nregret my  inability to agree with the conclusion reached by<br \/>\nhim.\n<\/p>\n<p>     Since some\t of the\t facts which  are necessary  for the<br \/>\npurpose of  this case  have not been set out in the judgment<br \/>\nof my learned brother, I have to mention them at this stage.<br \/>\nThe excise  auctions for  the  year  1951-52  were  held  on<br \/>\nFebruary 22,  1951 under  the provisions  of the U.P. Excise<br \/>\nAct, 1910  (hereinafter\t referred  to  as  &#8216;the\t Act&#8217;).\t The<br \/>\nrespondent offered  the highest\t bid of\t Rs. 73,000  for the<br \/>\nchowk group  shops and\tof Rs.\t48,000 for  Rakabganj  group<br \/>\nshops. At  that auction,  the shops in question were knocked<br \/>\ndown for  the  above-mentioned\tamounts\t in  favour  of\t the<br \/>\nrespondent who\taffixed his signatures to the respective bid<br \/>\nsheets in  token of  his acceptance and also in the register<br \/>\nof Settlement  Record.\tThe  respondent,  however,  did\t not<br \/>\ndeposit\t 1\/6th\t of  the  above\t mentioned  amounts  on\t the<br \/>\naforesaid date\tbut took  time for  its deposit later on. In<br \/>\nspite of  repeated reminders, the respondent did not pay the<br \/>\nadvance deposits  in both  the cases. The excise authorities<br \/>\nresold the excise privileges in question and on such resale,<br \/>\nthe chowk  group shops\tfetched Rs. 65,700 and the Rakabganj<br \/>\ngroup shops  fetched Rs.  35,200.  Consequently,  the  State<br \/>\nGovernment the\tappellant herein  suffered  a  loss  of\t Rs.<br \/>\n20,100. As the respondent did not pay the said amount of Rs.<br \/>\n20,100, a  suit was  instituted by the appellant against him<br \/>\nfor recovery  thereof before  the Civil\t Judge, Faizabad. In<br \/>\nthe course of his written statement, the respondent, after a<br \/>\ngeneral denial\tof the\tallegations in\tthe  plaint,  raised<br \/>\namong others the following additional pleas:-\n<\/p>\n<blockquote><p>\t  &#8220;1.\tThere was  no completed contract between the<br \/>\n\t       plaintiff and  defendant. Consequently  there<br \/>\n\t       had been no breach and no cause of action for<br \/>\n\t       the suit.\n<\/p><\/blockquote>\n<blockquote><p>\t  2.\tThe  entire auction  proceedings having been<br \/>\n\t       against the  rules and  instructions  of\t the<br \/>\n\t       Government    were    illegal,\t void\t and<br \/>\n\t       ineffective.\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">731<\/span><\/p>\n<blockquote><p>\t  3.\tThe  plaintiff himself\thaving accepted\t the<br \/>\n\t       prayer of  the  defendant to be relieved from<br \/>\n\t       the bid\tmade by\t him  and  subsequently\t re-<br \/>\n\t       auctioning the  shops or\t the groups of shops<br \/>\n\t       to others  was now  estopped from  fixing any<br \/>\n\t       civil liability on the defendant.&#8221;<\/p><\/blockquote>\n<p>     Four contentions were urged on behalf of the respondent<br \/>\nin the\t1 trial\t court viz.  (1) since\tthe  offers  of\t the<br \/>\nrespondent had\tnot been  accepted, no\tvalid contracts\t had<br \/>\ncome into existence; (2) as the respondent had withdrawn the<br \/>\noffers\tbefore\t their\tacceptance,   there  could   be\t  no<br \/>\nenforceable contracts  in existence;  (3) the  contracts, if<br \/>\nany,  were   unenforceable  as\tthen  did  not\tsatisfy\t the<br \/>\nconditions mentioned  in Article 299 of the Constitution and<br \/>\n(4) that even though the respondent had committed the breach<br \/>\nof the\tagreements he  was not\tliable to pay any damages as<br \/>\nthe excise  authorities had  not taken any steps to mitigate<br \/>\nthe loss  by granting the excise licences in question to the<br \/>\nsecond highest\tbidder in  each case.  The trial court after<br \/>\nrejecting the  contentions of  the respondent  made a decree<br \/>\nfor Rs.\t 20,100 with  costs. Aggrieved\tby the decree of the<br \/>\ntrial court,  the respondent filed an appeal before the High<br \/>\nCourt of  Allahabad. In\t the course  of the appeal, the High<br \/>\nCourt formulated four points for its consideration as can be<br \/>\nseen from the following extract from its judgment:-\n<\/p>\n<blockquote><p>\t  &#8220;The points  now requiring  consideration are\t (1)<br \/>\n     whether there  came  into\texistence  a  contract,\t (2)<br \/>\n     whether by\t reason of  non-deposit of  one-sixth of the<br \/>\n     bid money\tthere was  a breach  of the  contract on the<br \/>\n     part of the appellant; (3) whether this breach entitled<br \/>\n     the respondent  to re-auction  the shops and to recover<br \/>\n     the loss  on re-auction  from the\tappellant;  and\t (4)<br \/>\n     whether the  deficit of Rs. 20,100 represents the legal<br \/>\n     loss recoverable from the appellant.&#8221;<\/p><\/blockquote>\n<p>     Before the\t High Court in so far as the first point was<br \/>\nconcerned, the\trespondent&#8217;s contention\t was three  fold-(i)<br \/>\nsince the  bids were  not accompanied  by l\/6th\t of the\t bid<br \/>\namount, there  were no\tcompleted proposals  and, therefore,<br \/>\nthere could  be no  acceptance thereof\tso as  to bring into<br \/>\nexistence a  contract; (ii)  as the  Excise Commissioner had<br \/>\nnot accorded  his approval,  there was\tno acceptance of the<br \/>\nproposal and  (iii) as\tno agreements  in writing  had\tbeen<br \/>\nexecuted by  the person competent to do so under Article 299<br \/>\nof the\tConstitution, no  contracts had come into existence.<br \/>\nThe High Court rejected the first two contentions by holding<br \/>\nthat the  failure to deposit l\/6th of the bid amount did not<br \/>\nmake the  proposals incomplete\tand that  the absence of the<br \/>\napproval or  the Excise Commissioner which was in the nature<br \/>\nof<br \/>\n<span class=\"hidden_text\">732<\/span><br \/>\npower vested  in him  to reverse  the acceptance of a bid by<br \/>\nthe officer holding the auction did not in any way exonerate<br \/>\nthe respondent\tfrom  the  liability  if  he  was  otherwise<br \/>\nliable. It,  however, held  that since\tthe requirements  of<br \/>\nArticle 299  of the Constitution had not been fulfilled, the<br \/>\nrespondent was\tnot liable  to pay any damages on the ground<br \/>\nthat he had committed a breach of contract.\n<\/p>\n<p>     On the  second point  which was  formulated by the High<br \/>\nCourt for its consideration, it observed as follows:-\n<\/p>\n<blockquote><p>\t  &#8220;Coming to  the second  point of  controversy,  to<br \/>\n     wit, whether  by reasons of non-deposit of one-sixth of<br \/>\n     the bid money there was a breach of the contract on the<br \/>\n     part of  the appellant,  the  answer  must\t be  in\t the<br \/>\n     affirmative for  the simple  reason that the deposit of<br \/>\n     the money\twas one\t of the\t conditions of the contract.<br \/>\n     This condition,  as has  been shown above, follows both<br \/>\n     from the  statutory provision  and the admission of the<br \/>\n     appellant himself\tthat there  was this  deposit to  be<br \/>\n     made.&#8221;<\/p><\/blockquote>\n<p>     On the third point viz. whether the breach committed by<br \/>\nthe respondent\tin each\t of the two cases entitled the State<br \/>\nGovernment to  re-auction the  shops and to recover the loss<br \/>\non such\t re-auction from  him the  High Court  held that the<br \/>\nright to  re-auction had  not been  proved to  be founded on<br \/>\neither any  statutory rule  or on  any express\tterms of the<br \/>\ncontract but  the said right was the &#8216;natural outcome of the<br \/>\nbreach of an accepted term of contract&#8217;, when the respondent<br \/>\nfailed to  deposit the amounts in terms of the agreement. It<br \/>\nfurther held  that when the respondent had failed to deposit<br \/>\nthe amounts in terms of the agreement on which the bids were<br \/>\ngiven  and  accepted  the  State  Government  was  under  an<br \/>\nobligation for\tminimising the\tloss arising from the breach<br \/>\nof the\tcontract to  re-auction the shops and in case of any<br \/>\nloss  arising  therefrom,  to  recover\tthe  same  from\t the<br \/>\nrespondent.\n<\/p>\n<p>     On the  last point\t of controversy\t viz. the quantum of<br \/>\ndamages, the  High  Court  held\t that  the  extent  of\tloss<br \/>\nsuffered by the State Government on account of breach on the<br \/>\npart of\t the respondent\t was in the order of Rs. 20,100. The<br \/>\nHigh Court,  however, allowed  the appeal  and set aside the<br \/>\ndecree of  the trial  court on the ground that there were no<br \/>\nvalid contracts\t which satisfied the requirements of Article<br \/>\n299 of\tthe Constitution.  Dissatisfied with the judgment of<br \/>\nthe High  Court, the  State Government has come up in appeal<br \/>\nto this Court.\n<\/p>\n<p>     In the instant case, the only question which arises for<br \/>\nconsideration is whether the respondent is not liable to pay<br \/>\nthe damage even though<br \/>\n<span class=\"hidden_text\">733<\/span><br \/>\nno contract  in writing had been executed in accordance with<br \/>\nArticle A  299 of  the Constitution.  It was not the case of<br \/>\nthe respondent\tthat the  excise authorities had no right to<br \/>\nre-sell the  excise licences. after he had committed default<br \/>\nin depositing  l\/6th of the bid amounts. His principal pleas<br \/>\nwere (i)  that there were no completed contracts between the<br \/>\nState Government and himself and consequently there could be<br \/>\nno  breach   of\t contract;  (ii)  that\tthe  entire  auction<br \/>\nproceedings, having  been against the rules and instructions<br \/>\nof the\tGovernment were\t illegal and void and (iii) that the<br \/>\nState Government,  having accepted his prayer to be relieved<br \/>\nfrom the bids made by him and subsequently re-auctioning the<br \/>\ngroups of shops to others was estopped from fixing any civil<br \/>\nliability on  him. It is seen from what is stated above that<br \/>\nno attempt was made; by the respondent to make good his plea<br \/>\nregarding the  legality of  the auction\t proceedings and the<br \/>\nplea of\t estoppel. The\tonly  plea  raised  in\tthe  written<br \/>\nstatement which\t ultimately appealed  to the  High Court was<br \/>\nthat the  respondent was  not liable  to pay  any damages as<br \/>\nthere  were  no\t completed  contracts  which  satisfied\t the<br \/>\nrequirements of\t Article 299  of the Constitution. The other<br \/>\nplea that  the offers  made by\tthe respondent\thad not been<br \/>\napproved be the Excise Commissioner was rejected by the High<br \/>\nCourt by observing that the power of the Excise Commissioner<br \/>\nto accord  his approval\t was only  a power  which  had\tbeen<br \/>\nvested in  him to set aside the acceptance of the bid by the<br \/>\nofficer holding\t the auction. Having regard to the pleadings<br \/>\nand the evidence in this case, it has to be assumed that the<br \/>\nrespondent knew\t that he  was under an obligation to deposit<br \/>\nwith the  officer holding  the\tauction\t l\/6th\tof  the\t bid<br \/>\namounts and  that if  he committed  any default in doing so,<br \/>\nthe excise  licences in\t question were to be resold and that<br \/>\nhe would  be liable  to pay  any loss  suffered by the State<br \/>\nGovernment on  such  resale.  The  contention  that  in\t the<br \/>\nabsence of the approval of the Excise Commissioner, he would<br \/>\nnot be\tliable to make good the loss has Loss to be rejected<br \/>\nin view\t of condition No. 5 which according to the testimony<br \/>\nof the\tAssistant Excise Commissioner (P.W. 1), which cannot<br \/>\nbe rejected,  had been\tmentioned in  the sale proclamation,<br \/>\nwhich read thus:\n<\/p>\n<blockquote><p>\t  &#8220;5. A\t sum equal  to one-sixth  of the annual fees<br \/>\n     shall be  payable immediately  on the conclusion of the<br \/>\n     sale for  the day,\t and the balance by such instalments<br \/>\n     as are  specified in  the licence\tto  be\tgranted.  If<br \/>\n     default  be   made\t in   the  payment  of\tthe  advance<br \/>\n     instalment, the shop on farm will he resold, and if the<br \/>\n     price finally  bid at  the resale be less than that bid<br \/>\n     at the  first sale,  the difference  will be  recovered<br \/>\n     from the defaulter.&#8221;\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">734<\/span><\/p>\n<blockquote><p>     It is  no doubt  true that\t in Union of India &amp; ors. v.\n<\/p><\/blockquote>\n<p>M\/s. Bhimsen  Walaiti  Ram,(&#8216;)\tthis  Court  held  that\t the<br \/>\ncontract of sale was not complete till the bid was confirmed<br \/>\nby the\tChief Commissioner  and till  such confirmation\t the<br \/>\nperson whose  bid  had\tbeen  provisionally  accept  ed\t was<br \/>\nentitled to  withdraw his  bid and  that when the bid was so<br \/>\nwithdrawn before the confirmation of the Chief Commissioner,<br \/>\nthe bidder  was not  liable for\t damages on  account of\t any<br \/>\nbreach of contract or for the shortfall on the resale. Those<br \/>\nobservations were  made by  this Court\tin that\t case in the<br \/>\ncontext\t of   the  disapproval\tof  the\t bid  by  the  Chief<br \/>\nCommissioner  and   this  is  borne  out  by  the  following<br \/>\nobservations of this Court at page 598:-\n<\/p>\n<blockquote><p>\t  &#8220;It is  not disputed\tthat the  Chief Commissioner<br \/>\n     had disapproved  the bid  offered by the respondent. If<br \/>\n     the Chief\tCommissioner had  granted sanction under cl.<br \/>\n     33 of  Ex. D-23  the auction  sale\t in  favour  of\t the<br \/>\n     respondent would  have been a completed transaction and<br \/>\n     he would  have been  liable for  any shortfall  on\t the<br \/>\n     resale. As\t the essential pre-requisites of a completed<br \/>\n     sale are  missing in  this case  there is\tno liability<br \/>\n     imposed on the respondent for payment of the deficiency<br \/>\n     in the price.&#8221;<\/p><\/blockquote>\n<p>     In the  case before  us there was no disapproval of the<br \/>\nExcise Com  missioner of the bids offered by the respondent.<br \/>\nOn the\tother hand,  the excise\t authorities  requested\t the<br \/>\nrespondent to  perform his  part of the obligation under the<br \/>\nsale proclamation.  It is  also further been that this Court<br \/>\nin the case of M\/s. Bhimsen Walaiti Ram (supra) proceeded on<br \/>\nthe basis  that the liability of the bidder could arise only<br \/>\nas a  consequence of  the breach of a completed contract. No<br \/>\nattention appears  to have  been given\tin that\t case to the<br \/>\nquestion whether  the act of the offering of the highest bid<br \/>\nwhich was  accepted by\tthe officer  holding the auction and<br \/>\nwhich resulted in the closure of the auction could by itself<br \/>\nbecome a  source of liability when the highest bidder failed<br \/>\nto  comply  with  the  conditions  stipulated  in  the\tsale<br \/>\nproclamation.\n<\/p>\n<p>     It is  necessary  to  refer  briefly  to  some  of\t the<br \/>\nrelevant provisions  of law  governing the  disposal of\t the<br \/>\nexcise licence\tby auction system which were in force during<br \/>\nthe relevant  time. Section  21 of the Act prohibits sale of<br \/>\nany intoxicant\twithout a  licence by  the concerned  excise<br \/>\nauthority. Section  24 of  the Act  authorities the grant of<br \/>\nexclusive privilege of selling by wholesale or by retail any<br \/>\nintoxicant within  any specified  local area.  The right  to<br \/>\nsell any  excisable article  under a  licence issued  by the<br \/>\nexcise authority can be acquired only by paying<br \/>\n<span class=\"hidden_text\">735<\/span><br \/>\n     such fees\tor amount  which may  be equivalent  to\t the<br \/>\nhighest bid  offered at\t an auction when an auction is held.<br \/>\nSection 39  of the  Act which  deals with  the\trecovery  of<br \/>\nexcise revenue reads as follows:-\n<\/p>\n<blockquote><p>\t  &#8220;39.\tRecovery   of  excise\trevenue-All   excise<br \/>\n     revenue, including all amounts due to the Government by<br \/>\n     any person\t on account  of any contract relating to the<br \/>\n     excise  revenue,  may  be\trecovered  from\t the  person<br \/>\n     primarily liable  to pay  the same,  or from his surety<br \/>\n     (if any) as an arrears of land revenue or in the manner<br \/>\n     provided for  the recovery of public demands by any law<br \/>\n     for the time being in force. In case of default made by<br \/>\n     a holder  of a licence the Collector may take the grant<br \/>\n     for which\tthe licence  has been given under management<br \/>\n     at the  risk of the defaulter, or may declare the grant<br \/>\n     forfeited and  resell it  at the  risk and\t loss of the<br \/>\n     defaulter. When  a grant is under management under this<br \/>\n     section, the  Collector may  recover as  excise revenue<br \/>\n     any moneys\t due to\t the  defaulter\t by  any  lessee  or<br \/>\n     assignee:\n<\/p><\/blockquote>\n<blockquote><p>\t  Provided  that   no  licence\t for  an   exclusive<br \/>\n     privilege granted\tunder section  24 shall be forfeited<br \/>\n     or\t re-sold  without  the\tsanction  of  the  authority<br \/>\n     granting the licence.&#8221;<\/p><\/blockquote>\n<p>     In the  above section,  the words\t&#8220;all excise revenue,<br \/>\nincluding all amounts due to the Government by any person on<br \/>\naccount of  any contract relating to the excise revenue, may<br \/>\nbe recovered  from the\tperson primarily  liable to  pay the<br \/>\nsame&#8221; show that the Government is entitled to recover from a<br \/>\nperson any  amount due\tby him\ton account  of any  contract<br \/>\nrelating to the excise revenue. The words &#8220;on account of any<br \/>\ncontract relating  to the  excise  revenue&#8221;  include  within<br \/>\ntheir scope  not merely\t any compensation which a person may<br \/>\nbe liable  to pay  on account  of the  breach of  a contract<br \/>\ncommitted by  him after\t the contract  is completed but also<br \/>\nany other  amount that\tmay become  flue  on  account  of  a<br \/>\ncontract which\twould come into existence if all formalities<br \/>\nare completed  having regard  to the  scheme and  manner  in<br \/>\nwhich the  excise privilege  is disposed  of by\t the  excise<br \/>\nauthorities. The  relevant rules  governing the\t conduct  of<br \/>\nexcise sales  are found\t in a notification bearing No. B. O.<br \/>\nNo. 423\/V-284-B\t dated September 26, 1910. The rules require<br \/>\nthe publication\t of a sale proclamation announcing the dates<br \/>\nof sale\t and the  place where  it will\tbe held.  Before the<br \/>\nsales for the day commence, the general conditions governing<br \/>\nthe sale  which are  set out  in paragraph  373 of  the U.P.<br \/>\nExcise Manual  (Vol. I)\t shall be  read out and explained to<br \/>\nall present  so that  the competitors may clearly understand<br \/>\nthe conditions\ton which  they bid.  The general  conditions<br \/>\ngoverning retail vend and the special<br \/>\n<span class=\"hidden_text\">736<\/span><br \/>\nconditions governing  each class  of licence  shall also  be<br \/>\nread out  in public  before the\t sales to  which they apply.<br \/>\nInformation should  be freely given on all matters affecting<br \/>\nthe  value   of\t licence  about\t to  be\t sold.\tThe  officer<br \/>\nconducting the\tsales shall  record the\t name of each person<br \/>\nmaking a bid and the amount of bid. Signature of the highest<br \/>\nbidder and the next two lower bidders shall also be taken on<br \/>\nthe bid\t sheet, whether\t such persons  have been accepted as<br \/>\nauction-purchasers or  not. At\tthe time  of  the  sale\t the<br \/>\nperson accepted\t as the\t auction purchaser shall be required<br \/>\nto sign\t his name  or affix  his mark  against the  relevant<br \/>\nentry of  the licence in the Record G-14, it being explained<br \/>\nat the\ttime that  the\tdeposit\t paid  in  advance  will  be<br \/>\nreturned in  the event\tof the\tlicence\t being\tsubsequently<br \/>\nrefused. The final bid accepted shall invariably be recorded<br \/>\nwith his  own hand  by-the officer conducting the sales. The<br \/>\ntreasurer  of\tthe  district,\tor  one\t of  his  recognised<br \/>\nassistants, shall be required to attend the sales to receive<br \/>\nthe advance fees paid by bidders provisionally accepted. The<br \/>\namount that  has to  be paid  as advance  deposit is  a\t sum<br \/>\nequivalent to  l\/6th of\t the  annual  fees  which  shall  be<br \/>\npayable immediately  on the conclusion of the sales. for the<br \/>\nday, and the balance by such instalments as are specified in<br \/>\nthe licence to be granted. If default be made in the payment<br \/>\nof the advance instalments, the shop or farm will be resold.<br \/>\nIf the price finally offered at the resale be less than that<br \/>\nat the first sale, the difference will be recovered from the<br \/>\ndefaulter through  a civil  suit If any person whose bid has<br \/>\nbeen accepted  at auction  fails to make the advance deposit<br \/>\nor if  he withdraws  from his  bid, the excise authority may<br \/>\nsell the  contract immediately\tor on  any  subsequent\tdate<br \/>\nfixed by him.\n<\/p>\n<p>     It is  not the  case of  the respondent  in the instant<br \/>\ncase that  he was  not aware  of the above conditions, which<br \/>\nhad been  set out  in the  sale proclamation  and also which<br \/>\nmust have  been read out at the commencement of the sale, as<br \/>\nrequired by  the rules\tfor the information of the intending<br \/>\npurchasers. The question for consideration is whether having<br \/>\noffered the  highest bid,  it was  open to the respondent to<br \/>\navoid the  liability arising  from his\tact of\toffering the<br \/>\nhighest bid  merely because  the Excise Commissioner who had<br \/>\nthe power  to refuse to sanction the sale had not sanctioned<br \/>\nit. It\tis no  doubt true  that one of the conditions of the<br \/>\nauction was  that the  acceptance of  any bid by the officer<br \/>\nconducting the\tsale was  subject to  the  sanction  of\t the<br \/>\nExcise Commissioner.  It, however,  did not  mean  that\t the<br \/>\nacceptance of  the bid\twould be  complete  only  after\t the<br \/>\nsanction was  accorded by the Excise Commissioner because of<br \/>\nthe other conditions which read as under:-\n<\/p>\n<blockquote><p>\t  &#8220;1. The  officer conducting the sales is not bound<br \/>\n     to accept the highest or any bid.\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">737<\/span><\/p>\n<blockquote><p>\t  2. The  final acceptance  of any bid is subject to<br \/>\n     the section of the Excise Commissioner.&#8221;<\/p><\/blockquote>\n<p>     A reading\tof the\ttwo clauses  referred to above shows<br \/>\nthat the  officer holding  the sale  was empowered to accept<br \/>\nthe bid\t and that  his acceptance  was only  subject to\t the<br \/>\nsanction of  the Excise\t Commissioner. They  meant that\t the<br \/>\npower which  had been  reserved to  the Excise\tCommissioner<br \/>\nonly enabled him to set aside the acceptance already made by<br \/>\nthe officer  conducting the sale. If it was not so set aside<br \/>\nby him,\t the acceptance\t of the\t officer conducting the sale<br \/>\nwould be  effective. As mentioned earlier, in this case, the<br \/>\nExcise\tCommissioner   had  not\t  refused  to  sanction\t the<br \/>\nacceptance of  the highest  bids offered  by the respondent.<br \/>\nThe liability  of  the\thighest\t bidder\t to  deposit  a\t sum<br \/>\nequivalent to  l\/6th of\t the bid  offered by him arises as a<br \/>\nconsequence  of\t his  offering\tthe  highest  bid  with\t the<br \/>\nknowledge of the conditions referred to above immediately on<br \/>\nthe conclusion\tof the sale for the day in his favour and if<br \/>\nhe does\t not make such deposit, the officer holding the sale<br \/>\nis entitled to put up the excise privilege for resale either<br \/>\nimmediately or\ton a  subsequent day with liberty to recover<br \/>\nfrom the  defaulter any\t loss that  may be occasioned to the<br \/>\nGovernment on  such resale. In a case like this, no question<br \/>\nof waiting  till the  contract either  being completed\ton a<br \/>\nformal document\t coming into  existence in  accordance\twith<br \/>\nArticle 299 of the Constitution can arise. The completion of<br \/>\nthe contract  or the  execution of  a contract in accordance<br \/>\nwith Article  299 of  the Constitution arises only after the<br \/>\nhighest bidder has deposited l\/6th of the bid offered by him<br \/>\non the conclusion of the sale which is a condition precedent<br \/>\nfor the\t completion of\tthe contract  or for  execution of a<br \/>\nformal\tdocument  in  accordance  with\tArticle\t 29  of\t the<br \/>\nConstitution. It is not, therefore, correct to determine the<br \/>\nliability of a defaulting bidder on the basis of a completed<br \/>\ncontract or  a formal  document to be executed under Article\n<\/p>\n<p>299. If\t the contention urged on behalf of the respondent is<br \/>\naccepted, it  will make\t every\tpublic\tauction\t held  by  a<br \/>\nGovernment a  mockery. A man without a pie in his pocket may<br \/>\noffer the  highest bid at an auction thus scaring away other<br \/>\nbona fide bidders who have assembled at the auction to offer<br \/>\ntheir bids  and then  claim that he is not liable to pay any<br \/>\ndamages only because a completed contract or an agreement in<br \/>\nwriting in  accordance with  Article 299 of the Constitution<br \/>\nhas not come into existence. We should remember that, in the<br \/>\ninterest of  public revenue excise privileges, privileges of<br \/>\ncutting\t and   removing\t timber\t  from\tGovernment  forests,<br \/>\noccupancy rights  over Government  lands and  building sites<br \/>\netc. are  disposed of  in  public  auction  by\tthe  Central<br \/>\nGovernment, State  Governments, statutory  boards and  local<br \/>\nauthorities and\t in almost  every  such\t auction,  there  is<br \/>\ninvariably a condition that the acceptance<br \/>\n<span class=\"hidden_text\">738<\/span><br \/>\nof the highest bid at the auction is subject to the sanction<br \/>\nof some\t superior officer  or a\t statutory authority  or the<br \/>\nappropriate Government. If the contention urged on behalf of<br \/>\nthe respondent\tis accepted  then a  person who\t offers\t the<br \/>\nhighest bid  in any  such auction can always absolve himself<br \/>\nof all\this liability  flowing from  his act of offering the<br \/>\nhighest bid  by\t writing  a  letter  immediately  after\t the<br \/>\nconclusion of sale to the concerned authority expressing his<br \/>\nintention to withdraw from the bid or by resiling from it in<br \/>\nany other  manner. The\tresult will  be that on the one hand<br \/>\nthe other  bona fide bidders who have come to offer the bids<br \/>\nwould not  be entitled\tto claim  the privilege\t or property<br \/>\nthat is\t put up\t for sale  and on  the other  the defaulting<br \/>\nbidder would  also be not liable to carry out his obligation<br \/>\nflowing from  his act  or offering  the highest\t bid. If the<br \/>\nliability of  such a  bidder is\t to be\tfounded only  on the<br \/>\nbasis of  a completed  contract then in the case of auctions<br \/>\nheld by or on behalf of the Central or State Governments, no<br \/>\nliability can  arise even  if  such  sanction  is  accorded,<br \/>\nunless it is followed up by a formal document executed under<br \/>\nArticle 299  of the  Constitution-which alone  amounts to  a<br \/>\ncompleted contract  where Government is a party. Judged from<br \/>\nthe foregoing,\tI am  of the view that the acceptance of the<br \/>\nconclusion reached  by my  learned  brother  would  lead  to<br \/>\nenormous public prejudice and instead of advancing the cause<br \/>\nof justice  would hamper it. This case is an illustration of<br \/>\nwhat prejudice\tis likely to be caused to the public revenue<br \/>\nwhen  default  is  committed  by  the  highest\tbidder.\t The<br \/>\ndocuments produced before the Court in the present case show<br \/>\nthat the second highest bid in the case of chowk group shops<br \/>\noffered by  some other bidder was Rs. 72,500 and in the case<br \/>\nof Rakabganj  group shops  was Rs. 47,000. If the respondent<br \/>\nhad not\t offered his bids Government could have realised Rs.<br \/>\n1,19,50 from  both the\tgroups i.e. Only Rs. 1,500 less than<br \/>\nwhat the  respondent offered.  By the  intervention  of\t the<br \/>\nrespondent&#8217;s bids  and the  default committed  by him,\tthe.<br \/>\nGovernment could  realise on  resale only  Rs. 1,00,900 thus<br \/>\nresulting in  a loss  of Rs.  20,100. Can it be said that in<br \/>\nsuch a\tcase where  legal injury  is sustained,\t there is no<br \/>\nremedy available to the State Government ?\n<\/p>\n<p>     In a somewhat similar but not identical situation, this<br \/>\nCourt in  <a href=\"\/doc\/91737\/\">A. Damodaran\t&amp; Anr.\tv. State  of Kerala  Ors<\/a> was<br \/>\ncalled upon  to decide\twhether the  highest  bidder  at  an<br \/>\nexcise auction\twas liable to be proceeded with for recovery<br \/>\nof excise  dues in the absence of an agreement executed in .<br \/>\naccordance with\t Article 299.  In that\tcase, the appellants<br \/>\noffered the highest bid at the auction sales held in respect<br \/>\nof some\t toddy shops.  The conditions of the sales, notified<br \/>\nin pursu-\n<\/p>\n<p><span class=\"hidden_text\">739<\/span><\/p>\n<p>ance of\t the statutory\tprovisions were:  (1)  that  it\t was<br \/>\nincumbent upon\tthe bidder  to pay  immediately 10%  of\t the<br \/>\namount due,  (.2) that\tthe successful bidder had to deposit<br \/>\n30% of\tthe  amount  payable  on  demand  by  the  Assistant<br \/>\nCommissioner and  to execute  agreements before\t getting the<br \/>\nnecessary licences and (3) that if The contract could not be<br \/>\nexecuted, the  whole amount was to be forfeited and the shop<br \/>\nitself was  to\tbe  resold.  The  appellants  deposited\t the<br \/>\nnecessary  amount  on  demand  and  were  allowed  to  start<br \/>\nbusiness even  before agreements  were executed\t or licences<br \/>\nwere issued.  But the  appellants failed  to pay the balance<br \/>\ndue to\tthe State.  The amounts\t were sought to be recovered<br \/>\nunder section  28 of  the Kerala  Abkari Act  (Act No.\tl of<br \/>\n1967) which  was more  or less\tsimilar to section 39 of the<br \/>\nAct. The  High Court  of Kerala\t held that  the amounts were<br \/>\nrecoverable from  the appellants.  In the appeal before this<br \/>\nCourt, the  appellants contended  that as  no agreement\t was<br \/>\nexecuted between  the appellants  and the  Government in the<br \/>\nmanner prescribed  by Article  299 of the Constitution, they<br \/>\nhad not\t become the  &#8216;grantees&#8217; of  any privilege  and hence<br \/>\nwere not  liable to  pay the amounts sought to be recovered.<br \/>\nDismissing The appeal, the Court held that the absence of an<br \/>\nagreement executed  in accordance  with\t the  provisions  of<br \/>\nArticle 299  of the  Constitution could\t not be\t a  bar\t for<br \/>\nrecovering the\texcise dues  in view  of section  28 of\t the<br \/>\nKerala Act.  The Court held that the liability was one which<br \/>\narose under  the statute  and therefore\t was enforceable. In<br \/>\ntaking that view, this Court observed at pages 782-783 thus:\n<\/p>\n<blockquote><p>\t  &#8220;The appellants  submit that\tthey had  not become<br \/>\n     &#8220;grantee&#8221; of any privilege without the execution of con<br \/>\n     tracts complying  with the\t requirements of Article 299<br \/>\n     of the  Constitution. The\tlearned Judge  of the Kerala<br \/>\n     High Court\t relied\t on  Madhavan  v.  Assistant  Excise<br \/>\n     Commissioner, Palghat  (I.L.R.  (1969)  2\tKerala\t71),<br \/>\n     affirmed by  a Division  Bench in Damodaran v. State of<br \/>\n     Kerala (1969)  Kerala Law\tTimes 587.  It appears that,<br \/>\n     although  the  Division  Bench  did  &#8216;not\tspecifically<br \/>\n     consider whether  a bidder\t at an\tauction of  the kind<br \/>\n     before us\twas the\t &#8220;grantee&#8221; of a privilege within the<br \/>\n     meaning of section 26 of the Act, yet, it held that the<br \/>\n     liability to  satisfy the dues arising out of a bid was<br \/>\n     enforce able  under section  28 of\t the Act quite apart<br \/>\n     from any  contractual  liability.\tReference  was\talso<br \/>\n     made, in this connection, to the decision of this Court<br \/>\n     in <a href=\"\/doc\/1961694\/\">Union  of India v. A. L. Ralia Ram (A.I.R.<\/a> 1963 S.C.<br \/>\n     1685),  for  contending  that  the\t absence  of  formal<br \/>\n     contract is  not fatal  in all  cases so as to make the<br \/>\n     whole transaction null and void ab initio.\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">740<\/span><\/p>\n<blockquote><p>     Statutory duties  and liabilities\tmay be\tenforced  in<br \/>\n     accordance\t  with\t statutory   provisions.   Equitable<br \/>\n     obligation may also arise and been forced by decrees of<br \/>\n     Courts quite apart from the requirements of article 299<br \/>\n     of the  <a href=\"\/doc\/948679\/\">Constitution. Mulamchand  v.  State  of  Madhya<br \/>\n     Pradesh<\/a> (1968)  2 S.C.R.  214 affords an instance where<br \/>\n     on\t a  claim  for\tcompensation  or  restitution  under<br \/>\n     section 70\t of the Contract Act, this Court relied upon<br \/>\n     the principle stated in Nelson v. Harbolt (1948) 1 K.B.<br \/>\n     30 as follows at p. 222:-\n<\/p><\/blockquote>\n<blockquote><p>\t  &#8220;It is no longer appropriate to draw a distinction<br \/>\n     between law  and equity.  Principles  have\t not  to  be<br \/>\n     stated in the light of their combined effect. Nor is it<br \/>\n     necessary to canvass the.- niceties 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;<br \/>\n\t  In the  case before  us, we are concerned with the<br \/>\n     legality of  proceedings under  section 28 quoted above<br \/>\n     of the Act. It is evident that these proceedings can be<br \/>\n     taken in  respect of &#8220;all amounts due to the Government<br \/>\n     by any  grantee of\t a privilege  or by any farmer under<br \/>\n     this Act  or by  any person  an account of any contract<br \/>\n     relating to  the Abkari  Revenue._&#8221;. It  is clear\tthat<br \/>\n     dues may  also be\t&#8220;recovered from the person primarily<br \/>\n     liable to\tpay the\t same or from his surety (if any) &#8220;.<br \/>\n     It is  not a  condition precedent\tto  recovery  of  an<br \/>\n     amount due\t and recoverable that it should be due under<br \/>\n     a formally drawn up and executed contract.&#8221;<\/p><\/blockquote>\n<p>     In reaching  the above  conclusion, this Court approved<br \/>\nthe observation\t made by Mathew, J. in Madhavan v. Assistant<br \/>\nExcise Commissioner, Palghat which ran as follows:-\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<br \/>\n<span class=\"hidden_text\">741<\/span><br \/>\n     with the provisions of Article 299 of the Constitution,<br \/>\n     the   petitioners in  the case where no agreements have<br \/>\n     been executed,  would not\tbe liable to pay rental. The<br \/>\n     argument was  that the  liability to  pay rental arises<br \/>\n     only  out\t of  the  agreement,  and  if  there  is  no<br \/>\n     agreement, then there is no liability to be enforced As<br \/>\n     I have  indicated the liability to pay the renal arises<br \/>\n     not only  by virtue  of the  agreement but\t also by the<br \/>\n     provisions of  section 28\tof the\tAct. The decision of<br \/>\n     the Supreme  Court in  H. P.  Chowdhry v. State of M.P.<br \/>\n     would make it clear that if there are provisions in the<br \/>\n     Act, the liability to pay the rental can be enforced. I<br \/>\n     think that\t even if  no agreement\thas  been  executed,<br \/>\n     there was\tthe liability  under section  28 of the Act,<br \/>\n     and that  the liability  would be\tenforced  under\t the<br \/>\n     provisions of the Revenue Recovery Act. (See Sections 6<br \/>\n     and 62 of the T.C. Act) &#8220;.<\/p><\/blockquote>\n<p>     Chandrashekhar, J. (as he then was) has also taken more<br \/>\nor less\t the same  view in-State of Mysore v. Dasappa Naidu.<br \/>\nIn that\t case, the  plaintiff who was a licensee for sale of<br \/>\nganja had  executed a  counterpart agreement  as required by<br \/>\nsection 25  of the  Mysore Excise Act but no formal deed was<br \/>\nexecuted by  both the  plaintiff and the State Government as<br \/>\nrequired by Article 299 of the Constitution. When the period<br \/>\nof contract  expired, rental for four months was in arrears.<br \/>\nWhen  the   Government\tsought\t to  bring   the  licensee&#8217;s<br \/>\nproperties  to\t sale  for  recovery  of  the  arrears,\t the<br \/>\nplaintiff executed  a mortgage\tin favour  of the  State  to<br \/>\nsecure payment of the arrears undertaking to pay the arrears<br \/>\nin monthly  instalments. As  he defaulted  in payment of the<br \/>\ninstalments,  the   Assistant  Commissioner  issued  a\tsale<br \/>\nproclamation for  sale of  the mortgaged  properties. In the<br \/>\nsuit he\t questioned the\t said sale  proceeding on the ground<br \/>\nthat the  counterpart of the agreement and the mortgage deed<br \/>\nexecuted  by   him  were  void\tfor  nonfulfillment  of\t the<br \/>\nrequirements of\t Article&#8217;,- 299\t of  the  Constitution.\t The<br \/>\nlearned Judge held that the absence of a document conforming<br \/>\nto Article  299 was  not a  bar in  view  of  the  statutory<br \/>\nprovisions contained in the Mysore Excise Act.\n<\/p>\n<p>     The Rajanagaram  Village Co-operative  Society  by\t its<br \/>\nSecretary, . Parthasarathi Pillai v. P. Veerasami Mudaly was<br \/>\na reverse  case and the facts involved in it were these: The<br \/>\ndefendant Co-operative\tSociety put  up a property belonging<br \/>\nto it for sale at a public auction. H<br \/>\n<span class=\"hidden_text\">742<\/span><br \/>\n     The auction  was held  by a  sale officer.\t One of\t the<br \/>\nconditions of  the auction  sale was  that the sale would be<br \/>\nknocked down  in favour of the highest bidder subject to the<br \/>\napproval of  the defendant  Co\toperative  Society  and\t the<br \/>\nChittoor District Bank. The plaintiff was the highest bidder<br \/>\nat the\tauction and  the sale was knocked down in his favour<br \/>\nby the\tsale officer.  He-deposited on\tthe date of the sale<br \/>\nwith the  sale officer\tthe amount  which he  had to deposit<br \/>\nunder the  conditions of  the sale  and also  deposited\t the<br \/>\nbalance with  t the  defendant within the stipulated period.<br \/>\nThe  Chittoor\tDistrict  Bank\t took  up   the\t matter\t for<br \/>\nconsideration at  its meeting  held on\ta date subsequent to<br \/>\nthe date  of the sale and approved the sale. This resolution<br \/>\nwas, however,  not communicated to the plaintiff and no sale<br \/>\ndeed was  executed in  favour of  him. The  plaintiff by his<br \/>\nnotice called  upon the defendant to execute a conveyance in<br \/>\nhis favour.  There upon\t the  Bank  cancelled  its  previous<br \/>\nresolution and\tdirected a  re-sale  of\t the  property.\t The<br \/>\nplaintiff thereafter  instituted a  suit for  enforcing\t the<br \/>\nsale on the basis that there was a concluded contract in his<br \/>\nfavour which  was denied  by the  defendant in\tthe  written<br \/>\nstatement. The\tmain  contention  urged\t on  behalf  of\t the<br \/>\ndefendant was  that the\t contract did  not become  final and<br \/>\ncomplete as  the approval  of the Chittoor District Bank was<br \/>\nnot communicated  to the  plaintiff. Under  section 4 of the<br \/>\nContract Act,  it was claimed, that even the approval should<br \/>\nhave been  communicated like  acceptance as according to the<br \/>\ncontention  of\t the  defendant\t that  constituted  a  final<br \/>\nacceptance of  the contract.  The trial\t court accepted\t the<br \/>\ncontention of  the defendant  and dismissed  the  suit.\t The<br \/>\nfirst appellate\t court reversed\t the decision  of the  trial<br \/>\ncourt and  granted a  decree for specific performance of the<br \/>\ncontract in  favour of\tthe plaintiff.\tWhile affirming\t the<br \/>\nJudgment of  the  first\t appellate  court,  the\t High  Court<br \/>\nobserved in the above decision as follows:-\n<\/p>\n<blockquote><p>\t  &#8220;The defendant appointed a sale officer who, under<br \/>\n     the terms\tof E.  D. I  was authorised to knock down in<br \/>\n     favour &#8216;  of the highest bidder the property subject of<br \/>\n     course to\tthe approval  of Mahasabha  and the Chittoor<br \/>\n     District Central  Bank. No\t point\twas  raised  in\t the<br \/>\n     courts below,  and indeed it could not be raised before<br \/>\n     me, that  this sale  officer had no authority to accept<br \/>\n     any bid  on behalf\t of the defendant. Further there was<br \/>\n     also no  plea any\twhere that  there was no approval of<br \/>\n     the sale  by the  Mahasabha, that is the defendant. The<br \/>\n     defendant should  have  known  if\tthere  was  no\tsuch<br \/>\n     approval  and  should  have  put  that  matter  in\t the<br \/>\n     forefront of  the case if really there is any substance<br \/>\n     in that contention<br \/>\n<span class=\"hidden_text\">743<\/span><br \/>\n     in\t the  second  appeal.  The  matter,  therefore,\t for<br \/>\n     consideration is  whether the sale officer, in knocking<br \/>\n     down the  bid subject  to the approval of the Bank, had<br \/>\n     or had  not accepted the offer of the plaintiff subject<br \/>\n     to the condition of approval. Ever since the well-known<br \/>\n     decision of  payne v. Cave, (1789) 3 T.R. 148: 100 E.R.<br \/>\n     502, it  has been\testablished that  the position of an<br \/>\n     auctioneer is  that of  an agent of the vendor and that<br \/>\n     until the\tbid is\tknocked down,  there is no concluded<br \/>\n     contract in  favour of the bidder and the bidder was at<br \/>\n     liberty to\t withdraw his  offer before it was accepted.<br \/>\n     To a similar effect is also the decision Cook v. oxley,<br \/>\n     (1790) 3  T.R. 653:  100 E.R.  785. If  there. is\t. no<br \/>\n     further  condition\t of  an\t approval  or  confirmation,<br \/>\n     ordinarily if  the bid  is knocked down, the acceptance<br \/>\n     is communicated  by the  acceptance of  the bid  in the<br \/>\n     presence of  the bidder  and no  further  communication<br \/>\n     would be  necessary. If,  however, the  acceptance\t was<br \/>\n     conditional, the  condition being that it is subject to<br \/>\n     the approval or confirmation by some other person, what<br \/>\n     is the position ? The acceptance in such circumstances,<br \/>\n     in my  opinion, is\t conditional acceptance and that has<br \/>\n     to be  communicated. Nobody  suggests that\t in order to<br \/>\n     make the  contract enforceable,  it is not necessary to<br \/>\n     have the  approval\t of  the  person  indicated  in\t the<br \/>\n     conditions of the auction sale. The question is whether<br \/>\n     the approval  also in  such  circumstances,  should  be<br \/>\n     communicated to  the bidder  in order  to conclude\t the<br \/>\n     contract. In  my opinion,\tthe acceptance\tcontemplated<br \/>\n     may be  absolute or  may be  conditional and  when once<br \/>\n     that conditional  acceptance is  communicated, there is<br \/>\n     no need or necessity for a further communication of the<br \/>\n     fulfillment of  the condition  when the acceptance is a<br \/>\n     conditional  acceptance.\tThe  communication   of\t the<br \/>\n     acceptance twice is not needed&#8221;.\n<\/p><\/blockquote>\n<blockquote><p>     The correctness  of this decision is doubted elsewhere.\n<\/p><\/blockquote>\n<p>It is  not necessary in this case to decide whether the view<br \/>\nexpressed by  the High\tCourt of Madras in the above case is<br \/>\ncorrect or  not for  the situation  in the  instant case  is<br \/>\nanterior to  the situation  which obtained in the said case.<br \/>\nThe officer  who held  the same\t in the present case had the<br \/>\npower to  accept the  bids though it was subject to sanction<br \/>\nby the\tExcise Commissioner.  The respondent who offered the<br \/>\nbids after conclusion of the sale failed to make the initial<br \/>\ndeposit and thereby drove the Department to hold the resale.<br \/>\nIt was\thigh conduct  which ultimately\tresulted in the loss<br \/>\nsuffered by the Department. 10-91SCI\/80<br \/>\n<span class=\"hidden_text\">744<\/span><br \/>\n     The decision  of this Court in <a href=\"\/doc\/1890075\/\">K. P. Chowdhary v. State<br \/>\nof Madhya  Pradesh &amp;  Ors<\/a> is  not of  much assistance to the<br \/>\nrespondent in  this case, since in that case the officer who<br \/>\nheld the  sale was  not competent  to accept the bids of the<br \/>\nappellant therein  as the bids offered were higher than what<br \/>\nhe could  accept. The  appellant therein  resiled  from\t the<br \/>\noffer made  by him by raising a dispute as to the marking of<br \/>\nthe trees  even before\tthe Chief Conservator of Forests who<br \/>\nwas competent  to accept  the bids  could accept  them. This<br \/>\nCourt no  doubt upheld\tthe plea of the appellant therein as<br \/>\nthere was no acceptance of the bid by the competent officer.<br \/>\nThis case  is one falling in the category of cases where the<br \/>\nsale officer  has no  power to\taccept the  bid and  not one<br \/>\nfalling under  the category of cases involving a conditional<br \/>\nacceptance as  observed\t in  the  case\tof  the\t Rajanagaram<br \/>\nVillage Co-operative  Society by its Secretary, Parthasarati<br \/>\nPillai (supra). It is not the case of the respondent in this<br \/>\nappeal that  the officer who held the excise auction was not<br \/>\ncompetent to  accept the  bids. It  is further seen that the<br \/>\nquestion whether  the appellant in the above case was liable<br \/>\nin  any\t other\tmanner\talso  was  not\tconsidered  in\tthat<br \/>\ndecision. Hence\t no reliance  can be  placed  on  the  above<br \/>\ndecision.\n<\/p>\n<p>     The respondent by his own conduct in not depositing the<br \/>\n1\/6th of the bids offered by him made it impassible, for the<br \/>\nexcise authorities  to conclude\t the contract.\tThe question<br \/>\nmay have  been different if the respondent had done all that<br \/>\nhe had\tto do  under the  conditions of\t the auction but the<br \/>\nexcise authorities  had not  intimated\thim  that  he  could<br \/>\nexploit the  excise privileges\tin accordance  with law. The<br \/>\ndocuments produced  before the\tCourt show  that on February<br \/>\n24, 1951,  the Deputy  Commissioner, Faizabad wrote a letter<br \/>\n(Exh. S) 11&#8242; calling upon the respondent to make the initial<br \/>\ndeposit which  he had  to make at the conclusion of the sale<br \/>\nat the\tfall of\t the hammer  on the  date of the sale within<br \/>\nthree days of the receipt of that letter and intimating that<br \/>\nin the absence of compliance with the said demand, the shops<br \/>\nwould be re-auctioned and the amount of deficiency resulting<br \/>\non such\t re-auction would be recovered from him. That letter<br \/>\nwas received  by the  respondent on  March 8,  1951. As\t the<br \/>\nrespondent did\tnot  comply  with  the\tdemand,\t the  excise<br \/>\nauthority concerned  decided to\t conduct  a  resale  of\t the<br \/>\nexcise privileges  on March  21, 1951, and also to prosecute<br \/>\nthe respondent\tfor an\toffence punishable under section 185<br \/>\nof the\tIndian Penal  Code. Thereafter the respondent gave a<br \/>\nrepresentation (Exh. 7) on March 30, 1951 stating that I any<br \/>\naction other than prosecuting him may be taken. He stated in<br \/>\nthat representation  that his  sole object  in offering\t the<br \/>\nbids was to<br \/>\n<span class=\"hidden_text\">745<\/span><br \/>\nhelp  the  Government  and  to\thelp  himself  but  when  he<br \/>\ncalculated whether  he would make any profit he felt that he<br \/>\nwould not  do so. According to the said representation, that<br \/>\nwas the reason for not depositing 1\/6th of the bid amount at<br \/>\nthe fall  of the  hammer. He,  however, did not question the<br \/>\nauthority of  the excise  authorities to  put up  the excise<br \/>\nprivileges for\tresale and  to claim  the loss occasioned by<br \/>\nsuch resale  from him.\tIn these  circumstances I  am of the<br \/>\nview that it is not possible to hold that the respondent was<br \/>\nnot in law liable for the claim made by the State Government<br \/>\neven though  no contracts were formally entered into between<br \/>\nthe respondent\tand the\t State Government.  The liability of<br \/>\nthe respondent\tin the instant case arises under the statute<br \/>\nand it\talso arises as the result of a civil wrong or a tort<br \/>\ncommitted by him, in offering the highest bid with open eyes<br \/>\nand in not fulfilling the obligations arising therefrom. The<br \/>\nlatter source  of liability  in this  case may\tappear to be<br \/>\nnovel but if justice requires, the Court should not hesitate<br \/>\nto impose  it on  the person who has committed the wrong and<br \/>\nsecure justice for the innocent injured party. The following<br \/>\nobservation of\tDenning L.J.  (as he then was) in Candler v.<br \/>\nCrane, Chrismas\t &amp; Co.(1)  at page  178, though in minority,<br \/>\nare apposite:-\n<\/p>\n<blockquote><p>\t  &#8220;This argument  about the  novelty of\t the  action<br \/>\n     does not  appeal to  me in\t the least.  It has been put<br \/>\n     forward  in   all\tthe  great  cases  which  have\tbeen<br \/>\n     milestones of  progress in\t our law, and it has always,<br \/>\n     or nearly\talways, been rejected. If you read the great<br \/>\n     cases of  Ashby v. White (1703) 2 Ld. Raym, 938, Pasley<br \/>\n     v. Freeman\t (1789) 3  Term\t Rep.  51  and\tDonoghue  v.<br \/>\n     Stevenson (1932)  A.C. 562,  you will find that in each<br \/>\n     of them  the judges were divided in opinion. On the one<br \/>\n     side there\t were the timorous souls who were fearful of<br \/>\n     allowing a\t new cause  of action.\tOn the\tother  side,<br \/>\n     there were\t the bold spirits who were ready to allow it<br \/>\n     if justice so required. It was fortunate for the common<br \/>\n     law that the progressive view prevailed.&#8221;<\/p><\/blockquote>\n<p>     Considering the  facts and circumstances of the instant<br \/>\ncase, I\t am of\tthe view  that the respondent should be made<br \/>\nliable for  the sum  claimed in the suit and the decree made<br \/>\nby the trial court should be restored.\n<\/p>\n<p>\t\t\t   ORDER<br \/>\n     In\t view  of  the\tmajority  judgment,  the  appeal  is<br \/>\ndismissed with no order as to costs.\n<\/p>\n<p>N.V.K.\n<\/p>\n<p><span class=\"hidden_text\">746<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India State Of Uttar Pradesh vs Klshori Lal Minocha on 21 December, 1979 Equivalent citations: 1980 AIR 680, 1980 SCR (2) 724 Author: A Gupta Bench: Gupta, A.C. PETITIONER: STATE OF UTTAR PRADESH Vs. RESPONDENT: KlSHORI LAL MINOCHA DATE OF JUDGMENT21\/12\/1979 BENCH: GUPTA, A.C. BENCH: GUPTA, A.C. TULZAPURKAR, V.D. VENKATARAMIAH, E.S. (J) [&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-69712","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>State Of Uttar Pradesh vs Klshori Lal Minocha on 21 December, 1979 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/state-of-uttar-pradesh-vs-klshori-lal-minocha-on-21-december-1979\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"State Of Uttar Pradesh vs Klshori Lal Minocha on 21 December, 1979 - Free Judgements of Supreme Court &amp; 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