T. C. Raghavan, Ag. C.J.
1. Three objections are raised in this writ petition viz., that the petitioner did not stand surety for M. T. Devasia so that the petitioner is not liable for the dues of Devasia; that there is no agreement between the petitioner and the Government as contemplated by Article 299 of the Constitution; and that at any rate, no proceeding should be taken against the Petitioner under the Revenue Recovery Act. On these grounds the petitioner seeks to quash Exs. P1 and P2 in the case.
2. On 6th February 1962 there was an auction of toddy shops in which M. T. Devasia took part and bid one shop for Rs. 26,150/-. In the Sale List the petitioner signed in a column headed 'Certificate of Solvency' against Devasia's name. Devasia failed to deposit 10 per cent of the bid amount as contemplated by Clause 10 of the Conditions of Sale of Abkari Shops; and the officer who conducted the auction had to re-auction the shop. At the re-auction the bid was lower; and the Authorities started proceedings under the Revenue Recovery Act to collect the difference from the petitioner. The petitioner filed an objection before the Tahsildar, the first respondent; but the Tahsildar proceeded to attach the petitioner's land without disposing of the objection. The petitioner then approached this Court in O. P. No. 545 of 1965; and this Court directed the Tahsildar to dispose of the objection of the petitioner before his land was attached and sold. Thereafter, the order evidenced by Ex. P1 was passed on 15th April 1968 rejecting the objection of the petitioner; and subsequent thereto, the sale notice evidenced by Ex. P2 was issued on 20th May 1968. As stated already, the writ petition is to quash Exs. P1 and P2.
3. At the fore-front of his arguments. Mr. K. C. John, the counsel of the petitioner, placed before us the recent decision of the Supreme Court in Union of India v. Bhim Sen Walawati Ram. 1971-1 SCWR 111 = (AIR 1971 NSC 172). According to Mr. John, this decision applied directly to the present case: and that Devasia was consequently not liable to pay the difference as he was entitled to withdraw his offer before the Revenue Board accepted it absolutely as contemplated by Clause 13 of the Conditions of Sale. On the other hand, the Government Pleader contended that the decision of the Supreme Court might not apply to the case before us since the present case was one coming under Clause 10 of the Conditions of Sale and not under Clause 15 as was the case before the Supreme Court.
4. During the discussion at the bar, it has been suggested that the provision contained in Clause 10 might constitute a collateral contract collateral to the sale as contemplated by Clause 15. It has also been suggested that the petitioner is debarred from disclaiming his liability under Clause 10 by the principle of estoppel, he having taken part in the bid accepting the terms of Clause 10.
5. At this age, we may refer to the relevant provisions of the General Conditions Applicable to Sale of Abkari Shops (the Conditions of Sale already referred to) published in the Gazette in pursuance to which the auction took place. Under Clause 4 it is provided, inter alia that, if in the opinion of the officer conducting the sale a bidder is of doubtful solvency and is unwilling to deposit such sum as is ordered by the officer, the officer shall be at liberty to exclude the bidder from the auction. Clause 8 speaks of the Sale List which shall be signed and dated at the place of sale by the officer conducting the sale and by the persons declared to be the auction purchasers. Clause 10, the controversial provision, may be extracted in full;
'No person declared to be the auction purchaser by the officer conducting the sale shall withdraw from the offer and he shall at once or in any case before the close of the day, make a deposit in cash equivalent to 10 per cent of the amount of his bid or 20 per cent in the case of the bidder, who in the opinion of the officer conducting the sale is a person of doubtful solvency and shall also if demanded furnish personal surety. Should he fail to do so, the earnest money Paid by him under condition (1) will be forfeited and the right of vend again put to auction by the officer conducting the sale either immediately or on a future date to be notified or otherwise disposed of at the discretion of the Board of Revenue. The defaulter will be debarred from bidding again for the same or any other abkari privilege during the year and the shop shall be resold at the defaulter's risk.'
The next provision to be noted is Clause 13, which provides that no sale shall be deemed final as against the Government unless confirmed by the Board of Revenue, who shall be at liberty to accept or reject any bid without assigning any reason, and in a case in which the Board of Revenue accepts the bid and such acceptance is conveyed to the auction purchaser, the Board of Revenue may without assigning any reason revoke the auction before the installation of the auction purchaser in the business of the shop-Clause 14 provides that every confirmation of the sale shall be communicated to the concerned auction purchaser in writing. Then comes Clause 15 which again is important in this case. Clause 15 provides that the auction purchaser shall deposit within 10 days from the date of communication of the confirmation of sale or before 31st March whichever is earlier such further sum as with the deposit already made, will make up not less than 30 per cent of the annual rent and execute the necessary agreement and taked out the necessary license. In addition to this security, such personal surety as may be required of him has also to be furnished to the satisfaction of the Assistant. Excise Commissioner. In case the auction purchaser fails to make such de-posit or take out such licence or execute such agreement or furnish such personal surety, the deposit already made by him will be forfeited and the shop resold. The other portions of Clause 15 are not relevant. And finally comes Clause 16, which provides that a resale or other disposal of the shop effected under Clauses 10 and 15 will be at the risk of the original auction purchaser. There is also provision in this clause that in the event of loss in the resale, the original auction purchaser will be liable to make good the deficiency and his forfeited deposit will be deducted from the loss arising from the resale and the remainder, if any with interest will be recoverable from the defaulter in the same manner as if it were an arrear of land revenue. The further provisions in this clause are also not relevant.
6. In the case before the Supreme Court, there was a provision (Clause 21) which was considered in paragraph 33 of the judgment. It contained two parts. The first part was that a person to whom a shop had been sold should pay one-sixth of the annual fee within seven days of the auction; and the second part of Clause 21 was that, if any person whose bid had been accepted by the officer presiding at the auction failed to deposit one-sixth of the annual fee or if he refused to accept the licence, the Collector might resell the licence, either by public auction or by private contract, and any deficiency in price and expenses of such resale or attempted resale should be recoverable from the defaulting bidder. The case before the Supreme Court was one coming within the first part as is clear from the closing portion of paragraph 3 of the judgment. The Supreme Court has pointed out that the expression 'a person to whom a shop has been sold' in the first part of Clause 21 meant a purchaser at the auction -- a person who had a concluded sale in his favour.
In such a case Clause 33, similar to our Clause 13, applied, which provided that the Chief Commissioner might reject any bid without assigning any reason: and in such a case, since the acceptance was conditional, the offer could be withdrawn before the absolute acceptance. In the second part of Clause 21 the expression used was 'any person whose bid has been accepted by the officer presiding at the auction'; and the Supreme Court has pointed out that such a person is different from 'a person to whom a shop has been sold'. In fact, the attempt made by the appellant, the Union of India, before the Supreme Court was to make out that the case came within the second part of Clause 21. And the Supreme Court has repelled that contention and has held that the case came within the first part viz. 'a person to whom a shop has been sold'.
7. In the light of this line of reasoning in the judgment of the Supreme Court if we look at the provisions of the relevant clauses of the conditions of sale viz.. Clauses 10 and 15, what emerges is that Clause 15 is similar to the first part of Clause 21 before the Supreme Court and Clause 10 similar to the second part. The case before us is admitted by both parties to be one coming under Clause 10. Therefore, it may be possible to argue that the decision of the Supreme Court will not apply to a case falling under Clause 10 of the General Conditions of Sale before us and will apply only to a case coming under Clause 15.
8. At any rate, we need not decide this question finally in this case, because, even if the decision of the Supreme Court does not apply, the petitioner has to succeed as there is no evidence to show that the petitioner stood surety for Devasia. The allegation of the petitioner in the affidavit in support of the petition is that the petitioner signed the Sale List only to identify Devasia. This is met in the counter-affidavit of the State by saving that there was no need for identifying the bidders, nor was there any such practice. However, the Sale List signed by the petitioner has not been produced by the State. And the State has produced a form of the Sale List; and that contains several columns like the Number of the Shop, the Name of the Shop, the Amount of the Bid, the Name and Address of the Bidder, his Signature, etc. One of the columns in the form has the heading 'Certificate of Solvency'; and the admitted case of the State is that the petitioner signed this column. (There is no case for the State that this column contained any other writing excepting the signature of the petitioner.) From this the State contends that the petitioner signed the form as a surety for Devasia. The actual averment in the counter-affidavit of the State is:
'The petitioner signed the Sale List thereby undertaking that Shri M. T. Devasia is solvent In other words, the petitioner's action is that in case the bidder is found to be insolvent, the petitioner will be a surety to the extent the bidder will be liable for compensation.'
We find it difficult to accept all this. The fact that the petitioner signed in this column can only show that the petitioner certified that Devasia was a solvent person. It cannot mean any more than that: it cannot mean that the petitioner stood surety for Devasia undertaking to pay Devasia's liability in case the latter failed to discharge it. Thus, with the evidence before us, we are not in a position to hold that the petitioner was a surety for Devasia.
9. In view of this finding, none of the other questions arise in the case: and in accordance with this finding, we allow the writ petition and quash Exs. P1 and P2. We make no order regarding costs.