State discretion in excise privilege disposal upheld: highest bid could be rejected and private negotiation used to secure revenue

The Bihar and Orissa Excise Act, 1915 conferred on the State Government broad discretion to dispose of excise privileges by auction, tender or otherwise, and to secure an adequate return for revenue-yielding rights. A bidder acquired no vested or contractual right before governmental acceptance, so rejection of the highest bid without reasons was not arbitrary or unconstitutional under Articles 14 and 19(1)(g). The Act also permitted the Government, after an unsuccessful auction or tender process, to adopt another authorised method, including private negotiation, to obtain the best price. The statutory power was therefore upheld as wide and flexible in the interest of revenue.

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Issues: (i) whether the State Government's power to reject the highest bid for grant of excise privilege without assigning reasons was arbitrary or violative of Articles 14 and 19(1)(g) of the Constitution of India; (ii) whether, after declining to accept the auction and tender results, the State Government could lawfully resort to tenders and private negotiation for disposal of the exclusive privilege under the Bihar and Orissa Excise Act, 1915.

Issue (i): whether the State Government's power to reject the highest bid for grant of excise privilege without assigning reasons was arbitrary or violative of Articles 14 and 19(1)(g) of the Constitution of India.

Analysis: The power to grant exclusive privilege and to determine the consideration for it was conferred by Sections 22 and 29 of the Bihar and Orissa Excise Act, 1915. The statutory scheme permitted the State Government to dispose of the privilege by auction, tender, or otherwise, and the Government was entitled to ensure that the State obtained an adequate price for its revenue-yielding rights. The rejection of the highest bid did not affect any concluded contract, because no contractual or vested right arose until acceptance by the Government. In such a context, the reserved power to accept or reject a bid without reasons was not an unguided or unconstitutional power.

Conclusion: The challenge based on Articles 14 and 19(1)(g) failed, and the rejection of the highest bid was upheld as valid.

Issue (ii): whether, after declining to accept the auction and tender results, the State Government could lawfully resort to tenders and private negotiation for disposal of the exclusive privilege under the Bihar and Orissa Excise Act, 1915.

Analysis: Section 29(2)(a) authorized the State Government to determine the consideration by auction, tender, or otherwise, and the power was not confined to a single method once the earlier method had failed. When the auction and later tenders did not result in acceptance, the Government remained free to adopt another permissible mode, including private negotiation, to secure the best price. No separate order requiring the Government to direct itself to negotiate was necessary, because the statutory direction contemplated was one to subordinate officials administering the sale process.

Conclusion: The resort to tenders and private negotiation was held lawful.

Final Conclusion: The judgment recognized the State's wide statutory discretion to dispose of excise privileges in the manner most beneficial to revenue, and the writ petitions were not sustainable.

Ratio Decidendi: Where a statute confers on the State the exclusive power to dispose of excise privileges for revenue, no bidder acquires a vested right until acceptance, and the State may reject the highest bid and adopt any other authorized mode to secure an adequate return.

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