(1) This Writ Petition is a sequel to an akbari auction held on 26-8-1963 in respect of the privilege to sell 'sendhi' in the cities of Hyderabad and Secunderabad for the year 1963-64. The petitioners are abkari contractors who have been doing business in partnership in Hyderabad and Secunderabad for over ten years, but they were prevented from taking part in the said auction on the ground that they were defaulters and large abkari arrears were due from them to the Government. The 1st respondent in this Writ Petition is the Deputy Commissioner of Excise, who was the auctioning authority; the 2nd respondent is the Commissioner of Excise (Member, Board of Revenue); the 3rd respondent is the Government of Andhra Pradesh; and respondents 4 to 30 were the successful bidders at that auction, in whose favour the bids were knocked down and leases have been granted.
(2) The sum and substance of the case of the petitioners is that they had been prevented from bidding at that auction by the unjust, arbitrary and illegal action of the auctioning authority and in consequence their fundamental right to carry on trade or business, as guaranteed by Art. 19(1)(g) of the Constitution, has been infringed. they further challenge the legality and constitutionality of Circular No. 24648/- Ex. 63-E4 dated 17-8-1963, issued by the Commissioner of Excise to the Deputy Excise Commissioner, Hyderabad Division, and of Rule 7 (i) (b) and (ii) of the Rules framed by the Government under the Hyderabad Abkari Act ( No. 1 of 1316 F).
(3) It is common ground that at the auction held on 26-8-1963 the petitioners were not issued hall tickets, with the result that they were effectively prevented from entering the auction-hall and bidding at the auction. The stand taken by the Excise Department is that the petitioners who had taken 'sendhi' shops on lease in previous years, had systematically defaulted in paying the abkari dues and their arrears had mounted to several lakhs ; and the only effective way of preventing the accumulation of further arrears, was to stop defaulters like the petitioners from bidding at abkari auctions. This was done in the interests of public revenue and in the 'bona fide' exercise of the powers vested in the authorities by the Abkari Act and the Rules framed thereunder. It is the further case of the department that as the arrears of excise revenue in the Hyderabad District were of the staggering order of 48 lakhs of rupees by July, 1963, and they remained uncollected in spite of the best efforts of the departmental officials, the Deputy Commissioner of Excise, Hyderabad, sought specific instructions from the Commissioner of Excise as to what was to be done at this year's auction and in reply thereto, the Commissioner sent the impugned Circular. The Circular reads thus :
'Copy of the Board's Circular No. 24648/ Ex. 63-E4 dated 17-8-1963 addressed to the Deputy Excise Commissioner, Hyderabad Division :
Sub : Auctions - Admitting Persons who are in arrears to attend sales - Certain orders requested -
Ref : D. O. Letter from Deputy Commissioner Hyderabad, on Circular No. 9847/ 63/ E2, dated 14-8-1963.
The attention of the Deputy Commissioner of Excise, Hyderabad, is invited to the reference cited and he is informed that it is not desirable to allow defaulters of recent years to bid. Others need not be excluded since it was not done in the past. Any person whose arrears relate to 1960-61 or later may be excluded from this year's auction in Hyderabad District unless he pays off the arrears. This need not apply to other Districts. The Collectors may exercise their own discretion there.
..................................................... Assistant Secretary.'
It was in pursuance of the instructions contained in this Circular that the Deputy Commissioner had in the instant case refused to issue hall tickets to the petitioners. In the Annexure to the additional counter-affidavit filed by the Deputy Commissioner of Excise, the arrears recoverable from the three writ petitioners are shown. They amount to Rs. 4,88,331-70 nP., out of which the figure for the year 1961-62 is Rs. 1,56,816-26 nP.
(4) I may straightaway say that for purposes of this writ petition, I see no sufficient reason to doubt the correctness of the above statement viz., that the petitioners are defaulters to the tune of several lakhs of rupees. Indeed, in the petition presented by the writ petitioners to the Commissioner of Excise under Rule 9 of the Rules, complaining against the action taken by the auctioning authority and requesting the Commissioner to cancel the auction, the petitioners made a candid admission. The relevant portions of their representation may be extracted :
'The Deputy Commissioner of Excise conducted the excise auctions of Hyderabad and Secunderabad Cities on 26th instant for the year 1963-64. It is necessary to obtain hall tickets before one enters the auction hall for bidding. As usual, we approached the hall ticket issuing authority for tickets. To our great surprise, he refused to issue tickets to us saying that we belonged to Katamraju Company group. We were taken aback by this surprise action of the authorities. We were confused and confounded and so we could not make arrangements for bidding in the auctions through any one of our friends . .. . . . .. .. .. . . . . . . ... . . . . . ... . . . . .. . .. . . .. . . .. .. . .. . . . .. . .. . . . . . . .. . . .. . .. . . . . . . . .. . . . . .. . . . . . . . . . . . . . ... .. . . . . .. . . .. . . . . .. . . . .. . . . . .. . . .. .. .. . ............................ .. .. .. . .. .. . .. . .. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .. . . . . . . .. . . . . .
In spite of our being long standing excise contractors, we were prevented from securing sendhi shops for the years 1963-64 in the auctions conducted on 26th instant. Hence we feel that it was a pre-arranged plan to prevent us from participating in these open auctions.
It is a fact that some of the partners of that Katamraju Company are due to the Government, certain disputed and controversial tree tax since long. Though it was decided once by the concerned Minister, the question was again taken up to him by the so-called defaulters and thus this has been under correspondence. It is but fair that such contractors whose arrears question is in correspondence should be permitted to take part in public auctions, while some chronic defaulters are given the chance to bid in public auctions all over our State.
For the sin of a few so-called defaulters of Katamraju Company, is there any fair play or justice for all the partners of this company to be debarred from bidding in open auctions If these so-called defaulters had been infromed beforehand that they would not be allowed into the auction hall, they would have taken the permission from the higher authorities to bid or deposited the tree tax in question under protest with the Government and entered the hall for securing the shops. The information that all the partners of Katamraju Company would not be permitted into the sale hall was given to them just when they approached the authority to issue the hall tickets, that is about half an hour before the commencement of the auctions.'
This petition was signed by the three writ petitioners and another person as partners of Katamraju Company.
(5) It is also necessary to mention at this stage that the petitioner filed the above petition before the Excise Commissioner on 22-8-1963 but did not wait for full one month from the date of the auction, within which, under Rule 9 of the Rules, the Excise Commissioner had plenary power to cancel the auction and order a re-auction, but chose to prefer the present writ petition to the High Court on 20-9-1963 and a rule nisi was issued on 24-9-1963.
(6) Now the crucial question for consideration in this writ petition is whether, despite the fact that the petitioners were defaulters and owed large sums of abkari arrears to the Government, they had a legal right to take part in the auction held on 26-8-1963 for the privilege to sell 'sendhi' during the year 1963-64, and whether the abkari authorities were under a legal duty to permit the petitioners to attend the auction and offer their bids.
(7) It was contended by Mr. Bhujanga Rao on behalf of the petitioners that arrears or no arrears, the petitioners had an indefeasible right to participate in the auction because it was a public auction, and the aforesaid Circular issued by the Board of Revenue, and Rule 7 (i) (b) and (ii) of the Rules upon which the action of the auctioning authority was apparently founded, are illegal and unconstitutional. On the other hand, the learned Advocate General appearing for respondents 1 to 3, supported the action taken by the auctioning authority as fully warranted by the Akbari Act and the Rules and argued that the instructions contained in the impugned Circular were intended to protect the public revenue and were within the competence of the Commissioner of Excise by virtue of the powers vested in him under Sec. 3 (i) (a) of the Abkari Act ; and that sub-rules (i) (b) and (ii) of R. 7 are not open to challenge as violative of any of the constitutional rights of the petitioner/s.
(8) The impugned Circular has been extracted supra and it would be convenient here to set out the relevant Rules pertaining to Abkari auctions .
'Government of Andhra Pradesh.
Excise - Conditions governing abkari auctions and other General and Special Conditions relating to sale of intoxicants in Urdu - Correct English transactions - re-issued.
Revenue (T) Department.G. O. Ms. No. 1423 Dated the 15th July 1959. READ : -
G. O. Ms. No. 1469, Revenue dated 5-8-1957. Read again : -
(1) Govt. Memo No. 13764/ TO BE 57-7, dated 13-3-1959.
(2) From the Board of Revenue (Excise) C. R. No. 238/ Ex/ 59- E 1, dated 2-6-1959.
(3) Board's C. R. No. 238/ Ex/ 59, dated 30-6-1959.
The following Notifications will be published in the Andhra Pradesh Gazette.
In exercise of the powers conferred by Sections 3 and 15 of the Abkari Act (Hyderabad Act 1 to 1316-F) and in supersession of the previous rules and orders on the subject, the Government of Andhra Pradesh hereby makes the following rules.