ORDER
Balakrishna, J.
1. Since both the cases involve common questions of fact and law, after hearing the arguments of the learned Counsel for the parties, they are disposed of by this common order.
2. In Writ Petition No. 1286 of 1987, the petitioner has sought the quashing of Annexure-A which is an auction notification In respect of Toddy vending in Mysore District and for a Mandamus to permit the petitioner to withdraw the offer made by him and for refund of the earnest money deposit besides a Mandamus to the respondents not to confirm the bids in respect of the two taluks offered by the petitioner.
3. In Writ Petition No. 1058 of 1987, the petitioner who is also an Excise Contractor has sought for a Writ of Certiorari to quash Annexure-A which is a Gazette notification in regard to vending of Toddy in Mysore District in district wise basis and for a Mandamus to permit the petitioner to withdraw the offer and to refund the earnest money deposit besides a Mandamus directing the respondents not to confirm the bids in regard to the three taluks offered by the petitioner.
4. The point for consideration is whether, on the facts and in the circumstances of these cases, the petitioners are entitled to a refund of the deposits made by them also known as the earnest money deposits together with interest.
5. The case of the petitioners is that no order of confirmation as contemplated under Rule 15(2) of the Karnataka Excise (Lease of the Right of RetailVend of Liquors) Rules, 1969 (hereinafter referred to as 'the Rules') confirming the disposal of the right of the petitioners to retail vend of liquor was either passed or communicated to the petitioners. It is contended that in the absence of such a confirmation which is a condition precedent, the respondents are bound to refund the deposits made under the Rules by the petitioners. It is also contended that since there is neither forfeiture nor adjustment of the deposits, the respondents were not justified in not refunding the amounts due to the petitioners.
6. However, it was submitted by the learned Government Advocate appearing on behalf of the respondents that had there not been a Court order interdicting the process of confirmation and communication of the order of confirmation, the requirement of law as contemplated under Rule 15 of the Rules should be deemed to have been complied with and that no sooner the impediment placed by the order of the Court was removed, than the petitioners are legally bound to execute the lease in accordance with the requirements of Rule 16 of the Rules which, according to the learned Government Advocate, has not been done in the instant case by either of the petitioners and, therefore, the petitioners are not entitled to the refund of deposits.
7. Undisputedly, deposits of earnest money have been made by the petitioners. Equally undisputed is the fact that there is neither an order of forfeiture nor an order of adjustment in relation to the amounts deposited by the petitioners. Though disputed, there is no material on record to reach the conclusion that there was any order of confirmation as required under Rule 15 of the Rules whether before an order was passed by the Court coming in the way of further proceedings under the Act and the Rules or after the order of Interdiction was removed by the Court itself. When the field was wide open without any hindrance to the respondents to continue the process of taking a decision to confirm and to communicate the same to the petitioners, strangely enough, no further action was taken by the respondents who chose to rely upon dubious grounds with the fond hope of making out a case to legitimise the questionable conduct of declining to act in accordance with law instead of gracefully refunding the earnest money deposits to the petitioners. Inspite of the strenuous efforts of the learned Government Advocate appearing for the respondents, there could be no improvement on the realities of the situation that the respondents did not comply with the requirements of Rule 15 of the Rules and the respondents were, therefore, not justified in taking the stand that the petitioners have failed to execute a lease as contemplated under Rule 16 of the Rules. In the circumstances of the case, the expectations of the respondents appear to be wholly unreasonable. There can be no question of leapfrogging in so far as compliance with the statutory Rules are concerned. On the one hand, the respondents have not complied with the requirements of Rule 15; but, on the other hand, are asserting that the petitioners have not conformed to the requirements of Rule 16. A cursory glance of the Rules is convincing enough to hold that satisfaction of the requirements of Rule 15 is a condition precedent to the execution of a lease as contemplated under Rule 16.
8. The learned Government Advocate placed strong reliance on the proviso to Rule 16 which lays down that where on account of the order of any Court, such agreement of lease could not be entered into within the period or before the date specified in this Rule, shall be entered into within seven days from the date of vacation of such order or the date of communication of the confirmation order, whichever is later. Cut asunder from the main provision in Rule 16, the proviso as interpreted by the learned Government Advocate may appear to be rational, but the proviso cannot be divorced from the main Rule and read together, it has to be construed that the proviso comes into operation only where an order of confirmation has been passed and communicated to the petitioners. Once again itmay be said that the proviso is qualified by the main Rule. The enforcement of the proviso presupposes the existence of the requirements of the Rule. In the instant case, in the absence of such a confirmation and communication, it is not possible to accept the contention of the learned Government Advocate.
9. It is also necessary to notice in this regard the provisions of Rule 17 of the Rules which deal with application for licence and conditions to be fulfilled. This provision throws light on the effect of confirmation and incidentally on the effect of non-confirmation also. Confirmation is not an abstract proposition, but entails legal consequences under the statutory Rules. The effect of a confirmation is that the person in whose favour an order of confirmation is passed shall within 15 days from the date of communication of the order of confirmation make an application together with a list of sites with its boundaries selected for locating the shop or shops for a licence in respect of each shop or group of shops to the concerned authority. When the petitioners did not have a rosy picture of the future prospects for want of confirmation, it would be neither fair nor reasonable for the respondents to insist that they are not entitled to a refund of the earnest money deposits for the reason that they have not executed the lease envisaged under Rule 16. The misconceived notion of the respondents in this context amounts to misdirection resulting in jurisdictional error which is amenable to the writ jurisdiction of this Court under Article 226 of the Constitution of India. A jurisdictional error resulting from a totally wrong assumption of a question of fact is as much susceptible to the exercise of power under Article 226 of the Constitution just as an error of law apparent on the face of the record. On an over all assessment of these two cases, I find that, both on facts and law, the petitioners are entitled to succeed.
10. The learned Counsel for the petitioners drew my attention to a decision of this Court in UNION OF INDIA v. I.T.C. LTD. 1985(21) ELT 655 (Karnataka). The observation relevant for the purpose of these cases is to be found in para 13 of the Judgment wherein it was held that the true scope and ambit empowers a High Court to entertain petitions even to exclusive claims for refund of taxes paid to the State and, therefore, a petition under Article 226 of the Constitution to enforce a refund of excise duty paid is maintainable. It may also be added that even on the basis of the principles of quasi contract, these respondents cannot claim the benefit of unjust enrichment.
11. The only point that remains for consideration is regarding the award of interest and the rate of Interest. The petitioners have deposited Rs. 3,90,000/-and Rs. 6,23,000/- respectively on 15-7-1986. Demand was made by the petitioners on 15-1-1987 and 8-11-1986 respectively for refund of the earnest money deposit. The Writ Petitions came to be filed in the month of January, 1987. Ordinarily, a trader or a businessman investing money into such contracts would borrow funds from the Banks and necessarily pay the Bank rate of interest at the least. But when the moneys are locked up in transactions of the instant kind and withheld from the petitioners without lawful justification, the petitioners would be exposed to the situation of paying unnecessary interest on the moneys so locked up. However, In these Writ Petitions, though there is no specific averment that the petitioners have lost money unnecessarily on account of the intransigent attitude of the respondents by having to pay interest to the Bank, the situation calls for a reasonable and fair approach. Even assuming that the funds belonged to the petitioners themselves and not borrowed from the Bank, the moneys were not available to the petitioners on account of non-refund by the respondents and, therefore, there is a deemed liability to pay interest on the money unlawfully withheld from the petitioners. However, in all fairness, it was submitted by the learned Counsel for the petitioners that they would be satisfied if the ordinary rate of Bank interest at the rate of 18% per annum is awarded with effect from the date of institution of these Writ Petitions till the date of refund. I consider it just and reasonable to award interest as submitted by the learned Counsel for the petitioners.
12. In the result, for the foregoing reasons, in both the Writ Petitions Rule is issued and made absolute. The Writ Petitions are allowed. The respondents are directed to refund as Rs. 3,90,000/- to the petitioner in Writ Petition No. 1286 of 1987 and Rs. 6,23,000/- to the petitioner in Writ Petition No. 1058 of 1987 with interest payable at the rate of 18% per annum commencing from the date of institution of the Writ Petitions until the date of actual refund of the amounts to the petitioners. The respondents are further directed to refund the said amounts to the petitioners within a time limit of sixty days from the date of receipt of a copy of this order. If any sum of money is due and has become payable by the petitioners to the respondents in any other excise transaction, liberty is given to the respondents to make necessary adjustment out of the money payable to the petitioners in these Writ Petitions.
13. It is not necessary to deal with the rest of the reliefs sought in these Writ Petitions since the petitioners themselves are not pressing the same for the reason that the period of the contracts concerned have since expired.
14. In the circumstances of these cases, there will be no order as to costs.