Case Note & Summary
Background: The dispute arose from a tender process for supply of country made liquor in various districts of Uttar Pradesh for the year 1996-97. The Commissioner of Excise invited tenders, and both the appellant distillery and the third respondent cooperative distillery participated. The third respondent was initially allotted the districts of Saharanpur and Haridwar by order dated February 27, 1996, but this was subsequently revoked by order dated March 27, 1996, and Haridwar district was re-allotted to the appellant. The third respondent challenged the cancellation and re-allotment by filing a writ petition before the High Court. The High Court allowed the writ petition, quashed the orders dated March 26, 1996 and March 27, 1996 insofar as they pertained to Haridwar, and issued a mandamus directing the State authorities to restore the position as on February 27, 1996, thereby restoring the allotment to the third respondent. The appellant then approached the Supreme Court. Facts: The tender conditions contained Clause 18(c), which provided that if all conditions were fulfilled, the distillery situated in the district would be given preference for supplies. If there were two distilleries in the same district with no material difference in rates, the distillery which was granted the district earlier would be preferred. It was an admitted position that before bifurcation of Saharanpur and Haridwar districts, Haridwar was part of Saharanpur, and on an earlier occasion, the third respondent was granted licence for Saharanpur and Haridwar. However, it was also admitted that the third respondent's factory was not situated in Haridwar district, and the third respondent had not executed the agreement for issuance of licence, so no licence had been issued as of the date of the Supreme Court order. Legal Issues: The core legal issue before the Supreme Court was whether the High Court's direction to restore the earlier allotment to the third respondent was correct in law, particularly in light of the admitted factual position that the Government had not issued any notice to the third respondent before the order dated February 27, 1996, and the third respondent had no opportunity to be heard. Arguments: The judgment records that learned counsel for both sides were heard, but it does not detail their specific submissions. The Court noted the admitted positions regarding factory location, absence of executed agreement, and lack of notice. Court's Analysis: The Supreme Court observed that it did not need to express any opinion on the merits of the allotment because the Government had admittedly not issued any notice to the third respondent before the February 27, 1996 order, and the third respondent had no opportunity to have its say. This procedural violation undermined the High Court's direction. Consequently, the Supreme Court set aside the High Court's direction and directed the Government to issue notice to both the third respondent and the appellant, consider their objections, and pass an appropriate speaking order for grant or refusal of licence in respect of Haridwar district in accordance with the Rules. Decision: The appeal was allowed. The Government was directed to issue notice and complete the exercise within six weeks from receipt of the order. Till then, status quo as on the date of the order was to continue.
Headnote
A) Administrative Law - Natural Justice - Notice and Opportunity Before Adverse Order - No specific Act cited - Commissioner cancelled earlier allotment and re-allotted district to appellant without giving notice to third respondent before the order dated February 27, 1996, depriving it of opportunity to be heard; Supreme Court set aside High Court's mandamus restoring the earlier allotment because the High Court's direction ignored this procedural infirmity; directed Government to issue notice to both parties, consider objections, and pass a speaking order in accordance with Rules within six weeks - Held that violation of natural justice vitiated the High Court's direction and necessitated fresh consideration (Paras Not mentioned). B) Tender Conditions - Preference Clause - Interpretation of Clause 18(c) - Not applicable - Clause 18(c) provided preference to a distillery situated in the district, and if two distilleries in same district, earlier licensee preferred; admitted facts showed third respondent's factory not in Haridwar and no agreement or licence executed; however, Supreme Court declined to express opinion on correctness of allotment to third respondent, leaving the matter for the Government to decide after hearing both parties - Held that the merits were not decided due to procedural violation (Paras Not mentioned).
Issue of Consideration
Whether the High Court was justified in quashing the re-allotment of Haridwar district to the appellant and restoring the earlier allotment to the third respondent, given that the Government had not issued notice to the third respondent before the order dated February 27, 1996, thereby violating principles of natural justice.
Final Decision
Appeal allowed; High Court direction set aside; Government directed to issue notice to the third respondent and the appellant, consider their objections, and pass an appropriate speaking order for grant or refusal of licence in respect of Haridwar district in accordance with the Rules within six weeks from receipt of the order; status quo as on today to continue till then.
Law Points
- Principles of natural justice require notice and opportunity of hearing before passing adverse administrative orders
- High Court cannot issue mandamus to restore an allotment when the original order was passed without notice
- tender condition 18(c) gives preference to distillery situated in the district
- and earlier licensee if two distilleries in same district with no material difference in rates
- no licence can be issued without execution of agreement
