1. In accordance with the provisions of the Karnataka Excise Act of 1965 (Karnataka Act No. 21 of 1966) (hereinafter referred to as 'the 1966 Act') and the Karnataka Excise (Lease of the Right of Retail Vend of Liquors) Rules, 1969 (hereinafter referred to as 'the 1969 Rules'), the Excise Commissioner in Karnataka, Bangalore, by his Notification dated 30th March, 1978 (Exhibit A), (published in the Karnataka Gazette Extraordinary dated 12th April, 1978) among others, notified that the lease of the right of retail vend of toddy in the 11 Taluks of Bijapur District for the excise year 1978-79 i.e. from 1-7-1978 to 30-6-1979 (both days inclusive) will be disposed of in public auction by the Deputy Commissioner, Bijapur District, on 28-4-1978. In the public auction held on 28-4-1978, the petitioner qualified to bid offered the highest bid in respect of all the 11 Taluks in all aggregating to Rs. 1,18,000/- per month as against the previous bid amount of Rs. 1,10,000/- per month for the said Taluks for the current excise year viz., from 1-7-1977 to 30-6-1978. On an examination of the relevant factors, the rules and the terms and conditions of the sale Notification, the Deputy Commissioner, Bijapur, exercising the powers conferred on him by sub-r. (1) of R. 15 of the 1969 Rules provisionally accepted the highest bid offered by the petitioner and called upon him to deposit one month's rent amounting to Rupees 1,18,000/- on the same day which was also complied by him. As the petitioner complied with the requirements of the rules and the terms and conditions of the sale notification dated 30-3-1978 and as the sale price was higher than the sale price of the current year, the Deputy Commissioner while provisionally accepting the highest bid of the petitioner, recommended to the Government through the Excise Commissioner for its confirmation under sub-r. (2) of R. 15 of the 1969 Rules. On an examination of the sale records, the Excise Commissioner being of the opinion that there was no loss of revenue as such but the confirmation of the bids would lead to smuggling of toddy from Bijapur District to Gulbarga District, recommended to the Government not to confirm the sales and re-auction the right of retail vend of toddy in the 11 Taluks of Bijapur District. It is desirable to notice the recommendation of the Excise Commissioner to Government in his own words and the same reads thus:-
'In respect of toddy, the bids offered in all the taluks are comparatively higher than the current year's rentals. There is an increase of Rs. 8,100/- per month over the current years' rentals. He has provisionally accepted all the bids offered in respect of eleven taluks of Bijapur District and recommended the bids for confirmation. Viewed only from the yardstick of rental of Bijapur District, the bids appear reasonable. However, in neighboring District of Gulbarga, the rentals from toddy shop leases are much higher. The rentals from toddy have increased from Rs. 5,00,600/- P.M. in 1977-78 to Rs. 7,98,100/- P.M. as bid for 1978-79. In contrast, for Bijapur District the rentals have increased only from Rupees 13,20,000/- per annum to Rs. 14,17,200/-. The increase of Rs. 97,200/- per annum percentage wise and in absolute terms is far less in Bijapur District than the similar figures for Gulbarga District. If therefore the bids for Bijapur District in respect of toddy are accepted, the danger is that Bijapur District will become a toddy spring Board for smuggling of toddy into Gulbarga District. This will affect the Administration severely. In the light of the auctions in Gulbarga District it becomes necessary to re-examine whether higher rentals can be secured by re-auction of toddy shop leases in Bijapur Dist. Therefore, I recommend re-auction of toddy shop leases in Bijapur District and consequently the recommendations of the Deputy Commissioner, Bijapur, seeking confirmation of the highest bids, have to be turned down.'
Accepting the above recommendation of the Excise Commissioner, the Government by its order dated 15-5-1978 (Exhibit 'B') has refused to confirm the highest bid offered by the petitioner for the purchase of the right of retail vend of toddy of 11 taluks of Bijapur District on the ground that the same was in the interest of the revenue. The order of the Government reads thus:--
'GOVERNMENT OF KARNATAKA
Dated 15th May, 1978
No. HD 84 EDC 78