Case Note & Summary
The dispute arose from a writ petition filed under Article 226 of the Constitution before the High Court of Orissa challenging the State Government's refusal to confirm the highest bids for the exclusive privilege of selling country liquor in eight shops in Cuttack District for the period April 1, 1971 to March 31, 1972. The first respondent, a businessman carrying on country liquor trade, was the highest bidder at a public auction held on February 15, 1971. The Collector provisionally accepted the bids subject to confirmation by the Government. The Government rejected the bids on the ground that inadequate prices had been offered as a result of collusion among bidders. It then called for tenders, accepted one tender, and sold the remaining seven shops by private negotiation for substantially higher prices. The respondent sought a direction to the Government to confirm his bids and cause necessary licences to be issued. The High Court held that the power to reject without reasons was unguided and violative of Articles 14 and 19(1)(g) of the Constitution, and that monetary considerations were irrelevant. The State appealed to the Supreme Court by certificate. The Supreme Court examined Sections 22 and 29 of the Bihar and Orissa Excise Act, 1915. Section 22 empowers the State Government to grant exclusive privilege of manufacturing and selling country liquor on such conditions and for such period as it thinks fit. Section 29 empowers the Government to accept payment for the grant, determined by calling tenders or by auction or otherwise as the State Government may by general or special order direct. The Government order dated January 6, 1971 directed auction but reserved liberty to accept or reject bids without assigning any reason. The Court held that the reservation was nothing more than what the Legislature conferred; since the validity of the sections was not challenged, the order could not be challenged. It further held that public auctions are held to get the best possible price; there is no completed contract until the bid is accepted. The Government as seller could decline the highest bid if the price offered was inadequate. No citizen has a fundamental right to trade in properties or rights belonging to the Government, and there is no inherent right to sell intoxicating liquor by retail. The adequacy of price is for the Government to decide; its conclusion is not open to judicial review absent collateral purpose. The Government was not precluded from resorting to tenders or private negotiation after rejecting auction bids. The Supreme Court allowed the appeals, set aside the High Court judgment, and upheld the Government's actions.
Headnote
A) Excise Law - Exclusive Privilege Grant - Government's absolute power - Bihar and Orissa Excise Act, 1915 Sections 22, 29 - The State Government may grant exclusive privilege to manufacture and sell country liquor on such conditions and for such period as it thinks fit; section 29 empowers determining payment by auction, tender, or otherwise; clause (vi) of the order only restates statutory power and is not unguided; Held that the order cannot be challenged when sections are not challenged. B) Constitutional Law - Fundamental Rights - Applicability to Government property - Constitution of India Articles 14, 19(1)(g) - Citizens have no fundamental right to trade in properties or rights belonging to Government; no inherent right to sell liquor by retail; rejection of highest bid does not infringe Article 14 or 19(1)(g); Held that Government as exclusive owner may decline the highest bid if price inadequate. C) Contract Law - Auction Bids - No completed contract until acceptance - Public auctions are held to get the best possible price; no completed contract until bid is accepted; Government as seller may decline the highest bid if price offered is inadequate; Held that the owner of privileges may refuse to accept highest bid. D) Administrative Law - Judicial Review - Executive decision on bid adequacy - Bihar and Orissa Excise Act, 1915 Section 29 - Power to accept or reject highest bid given to highest authority, the Government, expected to safeguard finances of State; not a delegated power but conferred by Legislature; conclusion on adequacy of price not open to judicial review absent collateral purpose; Held that High Court erred in thinking Government bound to prove collusion. E) Excise Law - Method of Sale - Private negotiation after auction/tender - Bihar and Orissa Excise Act, 1915 Section 29(2)(a) - Government not precluded from other methods after rejecting highest bid or tender; power to sell 'otherwise' includes private negotiation; no need to first make an order directing negotiation; Held that Government free to resort to negotiation.
Issue of Consideration
Whether the State Government's power under clause (vi) of the order issued under Section 29(2) of the Bihar and Orissa Excise Act, 1915 to accept or reject the highest bid without assigning reasons is unguided and violative of Articles 14 and 19(1)(g) of the Constitution; whether monetary inadequacy is a valid ground for rejection; whether Government can resort to private negotiation after rejecting auction bids/tenders
Final Decision
Appeals allowed; High Court judgment set aside; State Government's rejection of highest bid and subsequent sale by private negotiation upheld; Government not required to confirm bids or issue licenses.
Law Points
- Government has absolute power under Sections 22 and 29 of Bihar and Orissa Excise Act
- 1915 to grant exclusive privilege and determine payment
- rejection of highest bid without assigning reason not arbitrary
- no fundamental right to trade in government property
- no completed contract until bid accepted
- Government can sell by private negotiation
- executive decision not reviewable absent collateral purpose
