AI Drafter 
TaxTMI 
TaxTMI 
2002 (2) TMI 1352
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....er this bid was confirmed. 3. Pursuant to the confirmation of the bid on 12th May, 1999, a temporary licence was given to the respondent on 28th June, 1999 and the licence was extended upto 15th August, 1999. According to the Karnataka Excise (Lease of Right of Retail Vend of Liquors) Rules, 1969 (hereinafter referred to as "Rules"), when the bid is made it is provisionally accepted and thereafter the confirmation takes place. On the provisional acceptance of bid certain money is required to be deposited and thereafter under Rule 17 security has to be furnished and a lease deed executed. In the instant case, the respondent admittedly failed to furnish the security amount under Rule 17 and also did not execute the lease deed. As a consequ....
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.... 11 of the said Rules. The said Rule contemplates that the intending bidders in respect of each shop or group of shops are to be short-listed and, if they are not otherwise disqualified, they can take part in the auction. Each bid which is given is to be signed and the bid is not allowed to be withdrawn. Under Sub-rule (7) of Rule 11 the Deputy Commissioner or the Divisional Commissioner after recording the bids is to provisionally accept the highest bid and make the said announcement. 8. It is not in dispute that in the instant case the highest bid of the respondent was provisionally accepted under Sub-rule (7) of Rule 11. 9. Rule 13 which requires deposit to be made reads as follows: "13. Deposits to be made:- (1) ....
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.... the bid of the respondent was so confirmed. 11. According to Rule 16, a person whose bid is accepted and confirmed is required to enter into an agreement of lease with the State Government within 15 days of the confirmation order. Rule 17 which deals with the application for licence and contemplates furnishing of security, reads as follows: "17. Application for licence and conditions to be fulfilled:- (1) The person in whose favour the disposal of the right of retail vend of liquors is confirmed shall- (a) within fifteen days from the date of communication of the order of confirmation make an application together with a list of sites with its boundaries selected for locating the shop or shops, or the area or a....
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....the State Government and the right of retail vend of liquors shall be disposed of afresh in such manner as the State Government may direct. Provided that till such disposal is made and fresh licences are granted, the Deputy Commissioner may continue the licence of the previous licensee in respect of the same shop or shops. (2) The disposal under Sub-rule (1) shall be at the risk of the defaulter, who shall, however, be not entitled to any excess amount realised from such disposal but shall be liable for the losses sustained by the State Government. The Excise Commissioner shall be entitled to assess such loss and recover it as if to assess such loss and recover it as if it were an arrear of land revenue." 13. It is not ....
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....ent under Rule 18 has a discretion whether to cancel the bid or not. But once it is cancelled, Rule 18(1) provides that "the deposit made by such person shall be liable to be forfeited to the State Government." 16. In the instant case, within 15 days of the confirmation, the respondent was under an obligation to make the deposit under Rule 17(1)(b) and also execute the lease deed under Rule 16. When the respondent failed to do so, the Government under the first part of Rule 18(1) exercised the jurisdiction in not cancelling the bid but extended the temporary licence. When there was further default and non-compliance with Rules 16 and 17, it is only thereafter that the Government exercised its discretion in cancelling the bid by its order....
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....andatory, though the said Section 11 had used an expression "shall be confiscated". As pointed out by this Court in Abani Maity's case (supra), what appears to have influenced the decision in Azad Bharat Finance Co.'s case was the fact that the owner of the truck was not even aware that the same was being used for transporting opium. It is also to be seen that the attention of the Court in Azad Bharat Finance Co.'s case was apparently not drawn to the binding decision of the Constitution Bench in Indo-China's case which was followed as a precedent in the subsequent decisions - Abani Maity and Chern Taong Shang & Ors. (supra). 19. It can, therefore, be said to be settled law that where the expression used is "shall be liab....