G.B. Pattnaik, J.
1. The petitioner who was the highest bidder in a public auction for sale of five Ganja and Bhang shops at Balasore for the year 1986-87 and whose bid was accepted by the Collector and whose case was recommended by the Collector to the State Government for grant of the exclusive privilege, has impugned in this writ petition the order of the Collector for re-auction of the said five shops as per Annexure-8 as well as the order of the State Government directing re-auction as per Annexure-9.
2. Petitioner's case is that pursuant to the notice issued by opposite party No. 1 on 12-2-1986 to hold auction sale of excise shops of Balasore District for the year 1986-87, the petitioner bade at the auction that was held on 28-2-1986. The upset price fixed was Rs 17,900/- per month. Petitioner's bid at Rs. 23,950/- per month was provisionally accepted. In accordance with the terms contained in the notice dated 12-2-1986, petitioner deposited two months' consideration money on the same date and was required to deposit the balance four month's consideration money on or before, 3rd March, 1986. On 3-3-1986, the petitioner could not deposit the balance consideration money, but filed an application on 4-3-1986 for extension of some time for depositing the said balance consideration money and,, in fact, deposited one months' consideration money on that date. On 10-3-1986, the petitioner deposited the remaining consideration money amounting to R-s. 71,850/- and thus by 10-3-1986, the entire consideration money representing the advance for six months had been paid by the petitioner. On 15-3-1986, the Collector recommended the petitioner's case to the Government for acceptance and grant of the privilege in question. Opposite party No, 2 who was the second highest bidder filed an appeal before the Excise Commissioner challenging the recommendation of the Collector dated 15-3-1986. Petitioner was not made a party to the said appeal. The Commissioner passed the final order on the appeal without noticing the petitioner on 15-4-1986 wherein the Commissioner held that the Collector had no jurisdiction to recommend the case of the petitioner, since the petitioner did not deposit the entire consideration money within the stipulated period. The Collector issued an order (Annexure-8) purporting it to be an implementation of the Government order for re-auction and later on, the State Government itself issued the order in Annexure-9 directing re-auction of the excise shops on 30-5-1986.
When the petitioner approached this Court on 29-5-1986 this Court had directed that there should be no re-auction on 30-5-1986 and because of this direction there has been no re-auction as yet.
3. The stand of the State Government in the return filed by opposite parties 1, 3 and 4 is that the State Government is the final authority to grant the exclusive privilege in question and as the State Government found procedural irregularities on the part of the Collector when he held the auction, the State Govt. directed the re-auction-in question. The two irregularities which the State Government found are (i) the Collector should not have allowed the bidder to deposit the consideration money beyond the date of auction and (ii) the deposit of balance consideration money was made under doubtful circumstances. It was categorically stated in the affidavit of the State that the State Government has not taken the decision of the Commissioner into consideration and the Government-took the decision independently on the materials forwarded by the Collector.
4. Opposite party No. 2 has also filed an affidavit wherein the main stand is that no right accrues in favour of the petitioner unless and until the bid is finally accepted by the State Government and the State being the owner of the privilege is free to take such decision as is found proper. Since the petitioner did not make the deposit in time, the State Government was fully justified in directing re-auction.
5. At the outset, the petitioner contends that an appeal to the Excise Commissioner against the recommendation of the Collector was not maintainable and the learned Additional Government Advocate fairly conceded to the aforesaid position. The grant of exclusive privilege is regulated by the provisions of the Bihar and Orissa Excise Act (hereinafter referred to as the 'Act') as well as the Orissa Excise (Exclusive Privilege) Rules, 1970 (hereinafter referred to as the 'Privilege Rules'). A bare perusal of the relevant provisions would show that they do not provide for any appeal to 'he Excise Commissioner against an order of recommendation by the Collector to accept a bid. We are, therefore, of the opinion that the appeal to the Commissioner at the instance of opposite party No. 2 was not maintainable and consequently, the order of the Excise Commissioner annexed as Annexure-5, is without jurisdiction. it has been necessary to say so in this case even though the State Government has taken the stand that it has not taken that document into consideration because of an earlier observation by this Court made in O. J. C. No. 1230 of 1986 (Md. Abbas Khan v. Govt. of Orissa and others). That writ petition was filed by opposite party No, 2 with a prayer that the State Government should be directed to take into consideration the order of the Excise Commissioner. When the said writ petition came up for admission, this Court passed an order on 18-4-1986 to which I was also a party, observing that the apprehension of the petitioner in the said writ petition that Commissioner's order will not be taken into account may not be well-founded since the State Government has already received the order of the Commissioner. At that stage, the maintainability of the appeal to the Commissioner had not been examined nor that decision was on merits, The observation made by this Court, therefore, will not clothe any legality on the order of the Commissioner which has bean found by us to be not maintainable on examination of relevant provisions of the Act and the Rules made thereunder,
6. Mr, Patnaik, the learned counsel for the petitioner, contends that no doubt under the provisions of the Act and the Rules, the State Government is the final authority in the matter of grant of exclusive privilege, but the decision of the State Government must be in accordance with law. If the decision of the Government refusing to accept a bid which has been recommended by the Collector is taken with an oblique motive or for extraneous purpose or upon extraneous cosideration, then such a decision is liable to be struck down by the Court, According to Mr. Patnaik, the learned counsel for the petitioner, the two grounds indicated by the State Government in the counter affidavit, as the reasons for not accepting the recommendation, are extraneous considerations and not germane to the issue and therefore, the direction of the State Government for re-auction cannot be sustained in law Mr. R.K. Patra, the learned Additional Government Advocate, however, reiterates the stand taken in the counter affidavit and contends that since the State Government found the irregularities, as stated in the counter affidavit, it was open for the State Government not to accept the recommendation of the Collector and direct re-auction in the matter. The learned counsel affirmed that the order of re-auction was not with any oblique motive. Mr. Das, the learned counsel appearing for opposite party No. 2, strenuously urges that the State Government's power to sell the exclusive privilege as set out in Section 22 of the Act is paramount and, therefore, no fetter can be put on the said power when the owner decides to re-auction the privilege, particularly when the Collector acted beyond his competence in allowing the deposit beyond time and further in not enforcing the deposit of advance for six months on the date of the auction itself. The rival submissions require a careful examination of the different provisions of the Act, the Privilege Rules as well as some authorities cited at the Bar.
7. Section 2(13) (i) of the Act defines the 'intoxicating drug' which includes Bhang, Siddhi or Ganja. Section 22 of the Act provides:
'(1) The State Government may grant to any person on such conditions and for such period as it may think fit, the exclusive privilege :
(a) of manufacturing, or supplying wholesale, or
(b) of manufacturing and supiving wholesale; or
(c) of selling, wholesale or retail, or
(d) of manufacturing or supplying wholesale and selling retail, or
(e) of manufacturing and supplying wholesale and selling retail,
and country liquor or intoxicating drug within any specified local area. ...........'
Therefore, manufacture or supply of wholesale or selling in wholesale or retail of an intoxicating drug is an exclusive privilege which can be granted only by the State Government. Section 29 of the Act authorises the State Government to accept payment of a sum of consideration for the grant of any exclusive privilege Under Section 22, in addition to any duty leviable under the Act. Section 89(1) of the Act authorises the State Government to make Rules to carry out the objects of the Act and other law for the time being in force relating to the excise revenue. In exercise of the aforesaid rule-making power of the State Government, the State Government has framed a set of Rules called the Orissa Excise (Exclusive Privilege) Rules, 1970, which has been referred to as the 'Privilege Rules' laying down the procedure for the grant of exclusive privilege'
Rule 6 of the Privilege Rules provides the mode of payment of the consideration money. The said rule is quoted hereinbelow in extenso:
'6. Payment of consideration money-
The consideration money determined in respect of exclusive privileges for:
(i) manufacture and retail sale of country liquor;
(ii) retail sale of country liquor ;
(iii) retail sale of any intoxicating drug ; whether by auction, or tender, or otherwise, shall be paid in the manner specified below__
Consideration money for two months or for a longer period not exceeding six months as may be specified in each case by the Collector shall be paid in advance and one month's consideration money shall be paid on the date on which the currency of the licence begins and one month's consideration money on the 1st day of every succeeding month until the total consideration money due for the exclusive privilege has been realised,'
The aforesaid provision unequivocally indicates that the consideration money for two months or for any period longer than the same but not exceeding six months shall be paid in advance, as may be specified in each case by the Collector. In the present case, the Collector had specified that two months' consideration money shall be paid on the date of auction and balance four months' shall be paid by 3rd of March, 1986 The said specification by the Collector is entirely in accordance with the provision of Rule 6 of the Privilege Rules and there was no irregularity or illegality on the part of the Collector in prescribing the mode of pay in the aforesaid manner. If we examine the two grounds for non-acceptance of the Collector's recommendation and for directing re-auction, as indicated in the counter affidavit of opposite parties 1, 3 and 4, we have no doubt in our mind that the first ground, namely, the Collector should not have allowed the bidder to deposit the consideration money beyond the date of auction, is entirely misconceived and cannot be sustained in law. Neither the provisions of the Act nor the provisions of the Privilege Rules cast any obligation on the bidder to deposit the advance consideration money on the date of the auction. On the other hand, it confers a power on the Collector to decide as to in what manner the advance money shall be paid by the highest bidder. Consequently, it must be held that there was no procedural irregularity on the part of the Collector when he directed the petitioner to pay two months' advance consideration money on the date of auction and balance four months' consideration money by 3rd of March, 1986 and, in fact, it was well Within the powers of the Collector and is in accordance with Rule 6 of the Privilege Rules.
8. See far as the second ground disclosed to by the . State for directing re-auction is concerned, namely, 'deposit of balance consideration money was made under doubtful circumstances', we also do not find any basis in the aforesaid conclusion. The Collector though had directed that the balance four months' consideration money shall be paid by 3rd of March, 1986, the petitioner made an application on 4th of March, 1986, for extension of time to make the deposit and in fact deposited one month's consideration money on that date. Thereafter, the consideration money for balance three months' had been deposited on 10th of March, 1986 and only on receiving the entire advance consideration for six months, the Collector recommended the petitioner's case for grant of exclusive privilege to the State Government on 15-3-1986. Reading the provisions of the Act as well as the Privilege Rules, we do not find any fetter on the power of the Collector to accept the advance money beyond 3rd of March, 1986, which he had fixed earlier, nor do we find any doubtful circumstance under which the consideration money was paid, as stated to by the State Government. In our opinion, there was no material for the State Government to come to the aforesaid conclusion and if a conclusion is based on no materials, the Court should unhesitatingly strike down the same.
9. it is no doubt true, as has been contended by the learned Additional Government Advocate as well as Mr. Das appearing for opp. party No. 2, that the State is the owner of the exclusive privilege and no right accrues in favour of the petitioner until and unless the State grants the same. Mr. Patnaik appearing for the petitioner also does not challenge the aforesaid proposition of law But at the same time, if the grounds disclosed by the State Government for not accepting the recommendation of the Collector are not germane to the issue or are extraneous, then that order of the State Government cannot be sustained; It would be relevant at this stage to not the decision of the Supreme Court on which Mr. Das, appearing for opp. party No. 2 places reliance, i.e., the decision in the case of The State Orissa and Ors. v. Harinarayan Jaiswal and Other AIR 1972 S.C. 1816. The Supreme Court in that case was considering the vaidity of Sections 22 and 29 of the Orissa Excise Act and if at all or how far the said provisions contravene Art. 19(1)(g) of the Constitution. While upholding the validity of the said provisions, it was observed by Their Lordships :
'...The Government's power to sell the exclusive privileges set out in Section 22 was not denied. It was also not disputed that those privileges could be sold by public auction. Public auctions are held to get the best possible price. Once these aspects are recognised, there appears to be no basis for contending that the owner of the privileges in question who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered is inadequate. There is no concluded contract til! the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids-[See Union of India v. Bhimsen Walaiti Ram (1970) 2 SCR 594 (AIR 1971 SC 2295) ] By merely giving bids, the bidders had not acquired any vested rights. The fact that the Government was the seller does not change the legal position once its exclusive right to deal with those privileges is conceded. If the Government is the exclusive owner of those privileges, reliance on Art. 19(1)(g) or Art. 14 becomes irrelevant Citizens cannot have any fundamental right to trade or carry on business in the proporties or rights belonging to the Government nor can there be any infringement of Art 14, if the Government tries to get the best available price for its valuable rights. The High Court was wholly wrong in thinking that purpose of Sections 22 and 29 of the Act was not to raise revenue...'
In our opinion, the aforesaid observations do not in any manner come in conflict with our conclusions arrived at earlier. In the very case, the Supreme Court has categorically held that the conclusion of the State Government that the price offered by the bidder is inadequate is a valid ground not to accept the bid, since the object underlined in Section 29 of the Act is to augment the excise revenue. Nowhere the Supreme Court in the aforesaid case has laid down that even if the State Government is the owner of the privilege and takes a decision on extraneous consideration or on grounds not in accordance with the provisions of the Act or the Rules, yet such a decision is not amenable to the jurisdiction of a judicial review. The ratio of the aforesaid Supreme Court case, therefore, does not in any way support the extreme contention urged on behalf of opp. party No, 2.
10. It would be profitable at this stage to note the decision of the Supreme Court in the case of M/s. Chingleput Bottlers v. M/s. Majestic Bottling Co., AIR 1984 S. C. 1030. The Supreme Court in the aforesaid case quoted a passage from De Smith's Judicial Review of Administrative Action (4th Edn. at P. 341 and 544) which is extracted hereunder :
'...the role of the Courts is limited to ensuring that discretion has been exercised according to law. If, therefore, a party aggrieved by the exercise of discretionary power seeks an order of mandamus to compel the authority to determine the matter on the basis of legally relevant considerations, the proper form of the mandamus will be one to hear and determine according to law; though by holding inadmissible the considerations on which the original decision was based the Court may indirectly indicate the particular manner in which the discretion ought to be exercised...
The duty to observe these basic principles of legality in exercising a discretion is, unlike the 'duty' to apply the law correctly to findings of fact, prima facie enforceable by mandamu. Hence, where an authority has misconceived or misapplied its discretionary powers by exercising them for an improper purpose, or capriciously, or on the basis of irrelevant considerations or without regard to relevant considerations, it will be deemed to have failed to exercise its discretion or jurisdiction at all or to have failed to hear and determine according to law, and mandamus may issue to compel it to act in accordance with the law.'
(Underlining is ours)
In the case of M/s. Hotchtief Gammon v. State of Orissa and othars, AIR 1975 S. C. 2226, where the Supreme Court was considering the Court's power to scrutinise an administrative order of the Government it was held :
'The executive have to reach their decisions by taking into account relevant considerations. They should' not refuse to consider relevant matter nor should take into account wholly irrelevant or extraneous consideration. They should not misdirect themselves on a point of law. Only such a decision will be lawful. The Courts have power to see that the Executive acts lawfully. It is no answer to the exercise of that power to say that the Executive acted bona fide nor that they have bestowed painstaking consideration. They cannot avoid scrutiny by Courts by failing to give reasons. If they give reasons and they are not good reasons, the Court can direct them to reconsider the matter in the light of relevant matters, though the propriety, adequacy or satisfactory character of those reasons may not be open to judicial scrutiny....'
(Underlining is ours)
While laying down the law in the aforesaid manner, Their Lordships quoted with approval the observations of the House of Lords in the case of Padfield v. Minister of Agriculture, Fisheries and Food, 1968 Appeal Cases 997. This being the position of law with regard to the judicial review of an administrative order and in view of our conclusion that the grounds stated by the State Government to be the grounds for not accepting the recommendation of the Collector, and directing re-auction, are not germane to the issue and have been based on non-existing materials as well as on irrelevant considerations, there is no other option than to set aside the said order of the State Government.
11. In the result, therefore, we would quash Annexures-8 and 9 and direct the State Government to reconsider there commendation of the Collector dated 15-3-1986 and dispose of the question of grant of the exclusive privilege in accordance with law bearing in mind the observations made by us earlier in this judgment. Since the privilege in question was for the period from 1-4-1986 to 31-3.1987 and by now, six months have elapsed, we would direct the 'State Government to take the final decision within three weeks from the date of receipt of our order. This writ application is accordingly allowed with costs. Hearing fee is assessed at rupees three hundred, half of which would be borne by opp. party No. 2 and the other half by opp. parties 1 and 4.
L. Rath, J.
12. I agree.