Statutory liquor auction liabilities are enforceable; Article 299(1) does not defeat recovery of defaulted instalments or resale deficiency.

Liabilities arising from a liquor vend auction conducted under statutory authority were enforceable as statutory obligations and statutory contract terms. The State could recover the deficiency and resale expenses after re-auction where the bidder failed to deposit security as required, and the bidder's objections did not excuse non-compliance. It could also enforce payment of defaulted licence-fee instalments because the rules fixed the time and mode of payment, making timely instalment payment essential. Article 299(1) did not invalidate enforcement, since the arrangement was created under the excise statute and rules rather than an executive contract. Writ proceedings could not be used to avoid these auction obligations.

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Issues: (i) whether the State could recover from the defaulting bidder the deficiency arising on re-auction of the liquor vend and the expenses of resale; (ii) whether the State could recover the defaulted instalments of licence fee after acceptance of the bid and grant of the licence; and (iii) whether Article 299(1) of the Constitution applied so as to invalidate enforcement of the liability arising under the excise auction process.

Issue (i): whether the State could recover from the defaulting bidder the deficiency arising on re-auction of the liquor vend and the expenses of resale.

Analysis: The auction conditions required the successful bidder to deposit security within the stipulated time, failing which the licence could be re-sold and the deficiency recovered under the excise statute. The bid had been accepted after the auction, the bidder was notified of the re-auction, and wide publicity was given. The bidder's attempt to avoid liability by alleging breach on account of another liquor shop across the border did not excuse non-compliance with the security-deposit condition. The Court treated the liability as one arising under the statutory auction framework and not as an unenforceable exaction.

Conclusion: The State was entitled to recover the deficiency and expenses of re-auction from the defaulting bidder, in favour of Revenue.

Issue (ii): whether the State could recover the defaulted instalments of licence fee after acceptance of the bid and grant of the licence.

Analysis: The rules prescribed payment of the annual licence fee in fixed instalments and made failure to pay by the due date a ground for cancellation of the licence. In a commercial arrangement of this kind, where the mode and dates of payment are fixed by the statutory rules, time was of the essence. The respondents enjoyed the privilege of vend throughout the period without paying the licence fee, and the demand notice merely sought enforcement of the statutory and contractual obligation already incurred.

Conclusion: The State could lawfully enforce payment of the defaulted instalments, in favour of Revenue.

Issue (iii): whether Article 299(1) of the Constitution applied so as to invalidate enforcement of the liability arising under the excise auction process.

Analysis: The licensing arrangement was held to be a statutory contract arising under the Punjab Excise Act and the rules made thereunder, entered into through the statutorily authorised auction process. The Court distinguished contracts made in exercise of executive power from contracts created under statutory authority. Since the liability flowed from a statutory contract, the formal requirements of Article 299(1) governing executive contracts did not apply.

Conclusion: Article 299(1) did not bar enforcement of the liabilities created by the statutory auction contract, against the respondents.

Final Conclusion: The statutory excise auction liabilities were enforceable, the demand notices were valid, and the writ petitions were not maintainable to defeat obligations voluntarily undertaken under the liquor vend auction.

Ratio Decidendi: Liabilities arising from a liquor vend auction conducted under statutory authority are enforceable as statutory obligations or statutory contracts, and Article 299(1) does not apply to such contracts; a bidder who accepts the auction terms cannot use writ proceedings to avoid payment of the security-linked deficiency or the instalments fixed by the rules.

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