Excise auction liability on resale shortfall can survive without a formal Article 299 contract where auction terms bind the bidder.

Excise auction conditions can create an enforceable liability against a defaulting highest bidder to make good the deficiency on resale, even if no formal contract executed under Article 299 exists. Where the bidder was bound to deposit one-sixth of the bid immediately and the scheme authorised resale at the defaulter's risk and loss, recovery of the shortfall from the bidder remained maintainable. The acceptance of the bid subject to higher approval did not negate liability for default under the auction terms and statutory scheme. The Revenue was therefore entitled to recover the deficiency, and the concurring view likewise treated the auction conditions as creating an obligation independent of a formally executed Article 299 contract.

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Issues: Whether the respondent was liable to make good the shortfall on resale of the excise shops despite the absence of a formally executed contract under Article 299 of the Constitution and in the context of the excise auction conditions and statutory scheme.

Analysis: Under the excise auction conditions, the highest bidder was bound to deposit one-sixth of the bid amount immediately, and on default the shops could be resold and the deficiency recovered from the defaulter. The statutory scheme governing excise revenue also contemplated recovery of amounts due to the Government and authorised resale at the risk and loss of the defaulter. The bid was accepted by the auction officer subject to higher approval, which was treated as a condition capable of operating without preventing liability where the bidder had already defaulted in performing the immediate obligation imposed by the auction terms. The absence of a formal contract compliant with Article 299 did not defeat recovery where the liability arose from the statutory and auction conditions governing the sale.

Conclusion: The respondent was liable for the deficiency and the claim was maintainable in favour of the Revenue.

Concurring Opinion: Venkataramiah, J. held that the auction conditions created an enforceable obligation independent of a formally executed Article 299 contract, and that the defaulting highest bidder could be made liable for the loss suffered on resale. On that reasoning, the decree for recovery should have been restored.

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