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"1. The officer conducting the sales is not bound to accept the highest or any bid.
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2. The final acceptance of any bid is subject to the section of the Excise Commissioner."

A reading of the two clauses referred to above shows that the officer holding the sale was empowered to accept the bid and that his acceptance was only subject to the sanction of the Excise Commissioner. They meant that the power which had been reserved to the Excise Commissioner only enabled him to set aside the acceptance already made by the officer conducting the sale. If it was not so set aside by him, the acceptance of the officer conducting the sale would be effective. As mentioned earlier, in this case, the Excise Commissioner had not refused to sanction the acceptance of the highest bids offered by the respondent. The liability of the highest bidder to deposit a sum equivalent to l/6th of the bid offered by him arises as a consequence of his offering the highest bid with the knowledge of the conditions referred to above immediately on the conclusion of the sale for the day in his favour and if he does not make such deposit, the officer holding the sale is entitled to put up the excise privilege for resale either immediately or on a subsequent day with liberty to recover from the defaulter any loss that may be occasioned to the Government on such resale. In a case like this, no question of waiting till the contract either being completed on a formal document coming into existence in accordance with Article 299 of the Constitution can arise. The completion of the contract or the execution of a contract in accordance with Article 299 of the Constitution arises only after the highest bidder has deposited l/6th of the bid offered by him on the conclusion of the sale which is a condition precedent for the completion of the contract or for execution of a formal document in accordance with Article 29 of the Constitution. It is not, therefore, correct to determine the liability of a defaulting bidder on the basis of a completed contract or a formal document to be executed under Article

299. If the contention urged on behalf of the respondent is accepted, it will make every public auction held by a Government a mockery. A man without a pie in his pocket may offer the highest bid at an auction thus scaring away other bona fide bidders who have assembled at the auction to offer their bids and then claim that he is not liable to pay any damages only because a completed contract or an agreement in writing in accordance with Article 299 of the Constitution has not come into existence. We should remember that, in the interest of public revenue excise privileges, privileges of cutting and removing timber from Government forests, occupancy rights over Government lands and building sites etc. are disposed of in public auction by the Central Government, State Governments, statutory boards and local authorities and in almost every such auction, there is invariably a condition that the acceptance of the highest bid at the auction is subject to the sanction of some superior officer or a statutory authority or the appropriate Government. If the contention urged on behalf of the respondent is accepted then a person who offers the highest bid in any such auction can always absolve himself of all his liability flowing from his act of offering the highest bid by writing a letter immediately after the conclusion of sale to the concerned authority expressing his intention to withdraw from the bid or by resiling from it in any other manner. The result will be that on the one hand the other bona fide bidders who have come to offer the bids would not be entitled to claim the privilege or property that is put up for sale and on the other the defaulting bidder would also be not liable to carry out his obligation flowing from his act or offering the highest bid. If the liability of such a bidder is to be founded only on the basis of a completed contract then in the case of auctions held by or on behalf of the Central or State Governments, no liability can arise even if such sanction is accorded, unless it is followed up by a formal document executed under Article 299 of the Constitution-which alone amounts to a completed contract where Government is a party. Judged from the foregoing, I am of the view that the acceptance of the conclusion reached by my learned brother would lead to enormous public prejudice and instead of advancing the cause of justice would hamper it. This case is an illustration of what prejudice is likely to be caused to the public revenue when default is committed by the highest bidder. The documents produced before the Court in the present case show that the second highest bid in the case of chowk group shops offered by some other bidder was Rs. 72,500 and in the case of Rakabganj group shops was Rs. 47,000. If the respondent had not offered his bids Government could have realised Rs. 1,19,50 from both the groups i.e. Only Rs. 1,500 less than what the respondent offered. By the intervention of the respondent's bids and the default committed by him, the. Government could realise on resale only Rs. 1,00,900 thus resulting in a loss of Rs. 20,100. Can it be said that in such a case where legal injury is sustained, there is no remedy available to the State Government ?

In a somewhat similar but not identical situation, this Court in A. Damodaran & Anr. v. State of Kerala Ors was called upon to decide whether the highest bidder at an excise auction was liable to be proceeded with for recovery of excise dues in the absence of an agreement executed in . accordance with Article 299. In that case, the appellants offered the highest bid at the auction sales held in respect of some toddy shops. The conditions of the sales, notified in pursu-

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ance of the statutory provisions were: (1) that it was incumbent upon the bidder to pay immediately 10% of the amount due, (.2) that the successful bidder had to deposit 30% of the amount payable on demand by the Assistant Commissioner and to execute agreements before getting the necessary licences and (3) that if The contract could not be executed, the whole amount was to be forfeited and the shop itself was to be resold. The appellants deposited the necessary amount on demand and were allowed to start business even before agreements were executed or licences were issued. But the appellants failed to pay the balance due to the State. The amounts were sought to be recovered under section 28 of the Kerala Abkari Act (Act No. l of 1967) which was more or less similar to section 39 of the Act. The High Court of Kerala held that the amounts were recoverable from the appellants. In the appeal before this Court, the appellants contended that as no agreement was executed between the appellants and the Government in the manner prescribed by Article 299 of the Constitution, they had not become the 'grantees' of any privilege and hence were not liable to pay the amounts sought to be recovered. Dismissing The appeal, the Court held that the absence of an agreement executed in accordance with the provisions of Article 299 of the Constitution could not be a bar for recovering the excise dues in view of section 28 of the Kerala Act. The Court held that the liability was one which arose under the statute and therefore was enforceable. In taking that view, this Court observed at pages 782-783 thus:

Chandrashekhar, J. (as he then was) has also taken more or less the same view in-State of Mysore v. Dasappa Naidu. In that case, the plaintiff who was a licensee for sale of ganja had executed a counterpart agreement as required by section 25 of the Mysore Excise Act but no formal deed was executed by both the plaintiff and the State Government as required by Article 299 of the Constitution. When the period of contract expired, rental for four months was in arrears. When the Government sought to bring the licensee's properties to sale for recovery of the arrears, the plaintiff executed a mortgage in favour of the State to secure payment of the arrears undertaking to pay the arrears in monthly instalments. As he defaulted in payment of the instalments, the Assistant Commissioner issued a sale proclamation for sale of the mortgaged properties. In the suit he questioned the said sale proceeding on the ground that the counterpart of the agreement and the mortgage deed executed by him were void for nonfulfillment of the requirements of Article',- 299 of the Constitution. The learned Judge held that the absence of a document conforming to Article 299 was not a bar in view of the statutory provisions contained in the Mysore Excise Act.