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Issues: Whether, on failure to comply with Rules 16 and 17 of the Karnataka Excise (Lease of Right of Retail Vend of Liquors) Rules, 1969, the Government's cancellation of the confirmed bid under Rule 18 necessarily entailed forfeiture of the deposit and whether a separate opportunity of hearing was required before such forfeiture.
Analysis: Rule 13(2) provides automatic cancellation and forfeiture only where the initial deposit required at the stage of provisional acceptance is not made. Where that deposit has already been made and the bidder thereafter defaults in complying with Rules 16 and 17, Rule 18 applies. Under Rule 18, the Government has discretion only to decide whether to cancel the confirmed disposal for non-compliance; once cancellation is effected, forfeiture of the deposit follows as the statutory consequence of that cancellation. The forfeiture is therefore not an independent discretionary step, and the bidder having already been heard before cancellation, no further hearing is required before giving effect to the consequential forfeiture.
Conclusion: The forfeiture was mandatory upon cancellation under Rule 18 and the challenge to it failed; the decision was against the assessee and in favour of the Revenue.
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