A. DAMODARAN & ANR. versus STATE OF KERALA & ORS.

Citation: [1976] 3 S.C.R. 780 · Decided: 23-03-1976 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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780 
A. DAMODARAN & ANR. 
v. 
STATE OF KERALA & ORS. 
March 23, 1976 
[A. N. RAY, C.J., M. H. BEG AND JASWANT SINGH, JJ.] 
Kerala Abkari Act (1 of 1967), Ss. 18A and 28-'Grantee', who is-Right 
of Government to recover dues from persons who were permitted to carry on 
business of selling liquor even though no agreements were executed or licences 
granted. 
Section 18A(l) of the Kerala Abkari Act, 1967, shows that the exclusive 
or other privilege of selling liquor by retail may be granted on payment of 
rental in consideration of the grant. The amount af. rental may be settled by 
auction, ne2otiation or by any other method. Section 28 provides that all 
amounts due to the Government, by any grantee of a privilege may be recovered 
from the person primarily liable to pay as if they were arrears of land 
revenue. 
The appellants bid at auction sales of some toddy shops. The conditions 
of the sales, notified in pursuance, of the statutory provisions, were : (a) It was 
incumbent upon the bidder to pay imm-ediately 10% of the amount due; (b) 
The successful bidder had to deposit 30% of the amount payable, on demand 
by the Assistant Commissioner, and to execute agreeme!lts before getting the 
necessary licences; and (c) If the contract could not be executed, the whole 
amount was to be forfeited and the shop itself was to be resold. The appellants 
deposited the necessary amounts on demand and were allowed to start business 
even before agreements were executed or licences were issued. But the appel-
lants failed to pay the balance due to the State. The amounts were sought to 
be recovered under s. 28, and the proceedings were challenged, but the High 
Court held against the appellants. 
In appeal to this Court, the appellants contended that as no agreement 
was executed between the appellants and the Government in the manner pres-
cribed by Art. 299 of the Constitution, the appellants had not become the 
'grantees' of any privilege and hence were not liable to pay the amounts sought 
to be recovered. 
Dismissing the appeal, 
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HELD : The Government had to perform its duty of granting licences as 
soon as the appellants fulfilled the conditions by paying up the remainder of 
the amounts due. In the present case, Government had performed its part by 
allowing the appellants to start selling liquor even before execution of the 
agreements and the grant of licences. The appellants, therefore, became liable 
and bound to perform their corresponding obligations. 
This reciprocity of 
obligations, quite apart from its basis in agreement, had 
thu~ acquired an 
operative force resting on statutory sanction and equity. [784G-785Bl 
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( 1) It is not a condition precedent to recovery of an amount due and 
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recoverable under the Act that it should be due under a formally drawn up and 
executed contract. Under the notification. in the event of the non-execution 
of a contract, even if due to the unwillingness or inability of a bidder_ to pay, 
the whole amount due could be forfeited. [782C; 783E-F] 
2(a) The acquisition of the status of a grantee for the purpose of s. 18A, 
does not depend on the actual receipt of a licence. Section 18A(2) lays 
down that no grantee of any privilege under sub-s. (1) shall exercise it until 
he has received a licence. This provision contemplates the statutory status of a 
'grantee' even before the successful bidder becomes entitled, as of right, to 
exercise the privileges of a grantee on receipt of a licence Even before he 
receives his licence he is described as a grantee. [783F-G, H-784AJ 
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A. DAMODARAN v. KERALA (Beg, J.) 
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(b) The word 'grantee' used ins. 28 carries this wider connotation of persons 
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who have been permitted by the excise authorities, in recognition of their 
rights to receive and in anticipation of the receipt of licences, to exercise the 
privileges of grantees, and not necessarily only those who have executed the 
written contracts nd received licences. f784A-C1 
Madhavan v. Assistant Excise Conunissioner, Palghat l.L.R. [1969] 2 Kerala 
71, approved. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1464 of 1971. 
From the Judgment and Order dated 18-3-71 of the Kerala High 
Court in Writ Appeal No. 126 of 1971. 
K. K. Sudhakaran . and N. Sudhakaran and P. K. Pillai for the 
Appellants. 
K. T. Harindranath and K. M. K. Nair for Respondent. 
The Judgment of the Court was delivered by 
BEG, J.-The appellants before us, by 

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