1996 (9) TMI 598 - SC - Indian Laws

Supreme Court overturns High Court order on liquor vend auction in Punjab

The Supreme Court set aside the High Court's order for re-auction of liquor vends in Khanna Circle, Punjab, for the year 1996-97. The Court held that the ... Did the first respondent make bids at the auction of ₹ 50 and ₹ 45 lacs respectively over the successful bids for Group nos. 108 and 111?? Held that:- This is a question of fact. It was rightly referred to the Financial Commissioner under the statutory provision by the Division Bench in its order on the earlier writ petition. On the order passed by the Financial Commissioner the High Court could interfere in a writ position under Article 226 only if it found it to be perverse, that is to say if it found its conclusions such as could not reasonable have been arrived at upon the record. The division Bench in the order under appeal had not so held, specifically or impliedly. The judgement of the Division Bench that the auction with respect to Group nos. 108 and 111 was neither fair nor proper is based upon conjectures and inferences more tenuous than those it found the Financial Commissioner guilty of. Such conjectures and inferences are impermissible in a judgment upon a writ petition under Article 226 where the fact-finding authority had arrived at a conclusion which is not perverse or so unreasonable that, upon the record, it could not have been reached. The Division Bench was, in the circumstances, in error in reaching the conclusion that the auction was not fairly and properly held with the result that the State exchequer had ben subjected to a huge loss. At the same time, the finality of auctions must also be recognised to be in the interests of the exchequer. If auctions are set aside and re-auctions ordered in less than satisfactory material, the loss of the exchequer would be far greater. Appeal allowed Issues Involved:1. Legality and fairness of the auction process for liquor vends.2. Allegations of higher bids being ignored.3. Evaluation of the Financial Commissioner's findings.4. High Court's assessment and decision.5. Validity of the High Court's order for re-auction.Issue-wise Detailed Analysis:1. Legality and Fairness of the Auction Process for Liquor Vends:The primary issue in the appeals is the legality and fairness of the auction process for liquor vends in Khanna Circle, Punjab, for the year 1996-97. The first respondent challenged the auction, claiming that their higher bids were ignored, resulting in a loss to the public exchequer.2. Allegations of Higher Bids Being Ignored:The first respondent alleged that they had offered higher bids of Rs. 4.21 crores for Group No. 108 and Rs. 3.50 crores for Group No. 111, which were not recorded or accepted. The Financial Commissioner, upon review, found no evidence to support these claims. He noted that the first respondent did not have a recorded bid in the bid sheet and questioned the plausibility of obtaining the required bank drafts on the morning of the auction.3. Evaluation of the Financial Commissioner's Findings:The Financial Commissioner concluded that the first respondent had not made the alleged higher bids. He reasoned that the pattern of bidding did not support a sudden jump of Rs. 50 lacs and Rs. 45 lacs, respectively. He also found it unlikely that the first respondent could have obtained the necessary bank drafts in the short time frame available. The Commissioner noted the absence of any immediate protest or formal complaint from the first respondent at the time of the auction, as well as the lack of mention of higher bids in the observers' reports.4. High Court's Assessment and Decision:The High Court, however, found the Financial Commissioner's conclusions to be based on conjectures. The Division Bench accepted the first respondent's claim of possessing bank drafts and their intention to participate in the auction. The High Court criticized the omission of pre-determined license fees in the auction process and inferred bias from the transfer of the Deputy Excise and Taxation Commissioner, S.K. Ralhan, immediately after the auction. The High Court concluded that the auction was not conducted fairly and ordered a re-auction.5. Validity of the High Court's Order for Re-auction:The Supreme Court found the High Court's judgment to be based on conjectures and inferences that were not supported by the record. The Supreme Court held that the Financial Commissioner's findings were reasonable and not perverse. The Supreme Court emphasized the importance of finality in auctions to protect the interests of the exchequer and found the High Court's order for re-auction to be unworkable. The Supreme Court set aside the High Court's judgment and dismissed the writ petition filed by the first respondent.Conclusion:The Supreme Court allowed the appeals, setting aside the High Court's judgment and order. The writ petition filed by the first respondent was dismissed, and costs of Rs. 25,000 were awarded to the appellants in each of the three appeals. The Supreme Court emphasized the need for finality in auction processes and the importance of substantial evidence to challenge the fairness of such auctions.