Dismisses petitions against Excise Comm order
Mohinder Verma
JAMMU, June 5: In a landmark judgment, which answered several important questions of law relating to excise matters, High Court of Jammu & Kashmir and Ladakh has dismissed bunch of writ petitions challenging the order of the Excise Commissioner whereby auction of liquor vends was cancelled because of poor response and less competition and held that no vested right is accrued to a bidder simply by virtue of the fact that he/she has been declared as highest bidder provisionally and subject to fulfillment of certain conditions in a given auction.
Moreover, High Court has mentioned that owing to the exclusive privilege of the State in the sale and manufacture of liquor, constitutional court should be slow in interfering with the executive decisions taken by the State as they are essentially a matter of economic policy in which the Government must be afforded a greater latitude and fair play in the joints.
Further, it has been held that Government and other public authorities have the freedom of contract and in the absence of manifest unreasonableness, patent arbitrariness or clear mala fides, the court should show due deference to the decision of the public authority and consequently the scope of interference by the court in matters like these is exceptionally minimal.
The judgment has been delivered by Justice Wasim Sadiq Nargal after hearing battery of lawyers for the writ petitions, which raised common questions of law, and Advocate General assisted by Government Advocates in length.
The petitioners, who were the highest bidders in the auction of liquor vends, were aggrieved of the subsequent cancellation of auction by the Excise Commissioner on the grounds of poor response and less competition. They contended that once they were declared as the highest bidder by virtue of the Government entering into correspondence with them, a right was accrued to them, which cannot be taken away without adopting due process of law.
Referring several judgments of the Supreme Court regarding scope of judicial review in matters of tenders/auctions, Justice Wasim Sadiq Nargal said, “it is clear that the scope of judicial review in tender/auction process is extremely limited. Admittedly, the court cannot adjudge the soundness of a decision and it must concern itself only with the manner in which the decision was made. The Government and other public authorities have the freedom of contract and in the absence of manifest unreasonableness, patent arbitrariness or clear mala fides, the court should show due deference to the decision of the public authority”.
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Regarding whether a vested right has been accrued to the petitioners by virtue of being notified as highest bidders, High Court said, “acceptance of the highest bid or highest bidder is always subject to conditions of holding public auction and the right of the highest bidder is always provisional to be examined in the context of different conditions in which the auction has been held”, adding “consequently, even the highest bidder has no vested right to have the auction concluded in his/her favour and owing to the circumstance of a limited scope of judicial review under Article 226, unless a decision is totally arbitrary or unreasonable, there is no occasion for the court to interfere in the action of calling for re-auction”.
“There is nothing in the communication of the Excise Department to the successful bidders to suggest that a binding obligation has come into existence in favour of a bidder by virtue of being declared as the successful bidder. The communication is ex-facie of a provisional nature as it only declares that the bid in question is highest for the auction and subsequently lays down the procedure and conditions to be followed for the grant of temporary/regular license in terms of Rule 30 (8) of the J&K Liquor License and Sale Rules, 1984”, High Court said.
Justice Nargal further said, “Supreme Court has effectively settled the law that owing to the exclusive privilege of the State in the sale and manufacture of liquor, a greater degree of latitude must be afforded to it in administrative decisions concerning the same”, adding “the court, in its power of judicial review must be conscious of the complexity of economic matters of which, of course, it is not an expert. The validity of such decisions cannot and must not be tested on any straitjacket formula. The scope of judicial review, therefore, is not that the court should strike down a policy decision taken by the State merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical”.
About whether the guarantee of a minimum revenue per vend/minimum reserve bid price render the decision to cancel the auction on the basis of poor response and less competition as arbitrary, High Court said, “in its limited power of judicial review, it is not for this court to examine what object the Government is achieving by re-auctioning, once, the minimum guaranteed revenue/minimum reserve bid is already fixed as it would tantamount to encroaching upon the latitude and fair play in the joints accorded to the Government, especially in matters affecting economic policy”.
After examining the original record, which led to the passing of the order impugned, High Court said, “the decision to re-auction was not loathed with any mala fide consideration or arbitrariness, rather, the same was taken with a view to have maximum and healthy competition in lieu of the poor response to the bids in question”.
The High Court concluded that in view of the exclusive privilege of the Government in sale/manufacture of liquor, the scope of judicial review in administrative decisions concerning same is extremely limited and no vested right has been accrued to a bidder simply by virtue of the fact that he/she has been declared as the highest bidder provisionally and subject to fulfillment of certain conditions in a given auction.
“Bearing in mind the nature of the liquor trade, this court, being a constitutional court, should be slow in interfering with the executive decisions taken by the State as they are essentially a matter of economic policy in which the Government must be afforded a greater latitude and fair play in the joints”, High Court said, adding “the mere existence of a provision for Minimum Guaranteed Revenue or Minimum Reserve Bid Price in the Excise Policy 2024- 25 does not disentitle the Government from cancelling the auction/re-auctioning on germane considerations”.
Stating that the decision to cancel the auction and the subsequent order for re-auctioning cannot be termed as arbitrary, discriminatory, or mala fide so as to warrant judicial interference, High Court said, “the cause projected by the petitioners does not subserve an overwhelming public interest, which must be borne in mind to decide whether judicial intervention is called for or not”, adding “the petitioners, being fully aware of the auction conditions participated in the same without any demur and after having participated in the auction, cannot turn around and challenge or impugn an auction condition unless there is a foundation of manifest arbitrariness or mala fide, which is conspicuously absent in the instant case”.
Accordingly, High Court dismissed the petitions along with connected applications. “As a necessary corollary, the interim orders passed by this court stand vacated in all these petitions. Accordingly, the Government is at liberty to proceed with the re-auction of various liquor vends, which are subject matter of the instant petitions pertaining to different ranges, in accordance with law”, read the judgment.
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