LexBHUPENDRA SINGH BHATIA versus STATE OF M.P. AND ORS
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.. BHUPENDRA SINGH BHATIA A v. STATE OF M.P. AND ORS DECEMBER 6, 2006 [S.B. SINHA AND MARKANDEY KA TJU, JJ.] B Contract Act, 1872/Sale of Goods Act, 1930 : Sale/purchase of foreign liquor-Fixation and payment of price-Held: Seller and purchaser both should know sale/purchase price at the time or C before the sale-Jn a sale of a commodity if seller agrees to f rxlinform the purchase price after the sale, it would be open to purchaser to reduce the price but to a negligible amount and vice-versa-State Government/Purchase Committee fixing lower rate of commodity than the rate as fixed earlier under an ad hoc purchase agreement-Payment made-Demand of differential amount D from Seller-Such an action by the State Government is arbitra1y and unreasonable-Hence, the rates fixed by the State Purchase Committee earlier would be applicable for entire financial year 1996-1997-Directions issued- Constitution of India, 1950-Article 14. In terms of a new Excise Policy introduced by the State of Madhya E Pradesh, it was decided that sale of foreign liquor in tribal sub-plan area would be exclusively done by the State Government through retail outlets. In connection thereof, a purchase committee was constituted for purchasing foreign liquor. The Purch~se Committee was to dec.ide about the purchase price of the foreign liquor on the basis of the lowest quotations, and as it was F likely to take time, a stop-gap arrangement was made and the Purchase Committees were constituted at the District Level headed by the Collector to purchase the foreign liquor from the whole-sellers as an ad hoc arrangement till the rate was finally decided by the State Level Committee. This arrangement was allowed to continue till the matter was decided by State Level Committee. The Quotations of the appellant-supplier were accepted by the G Purchase Committee for supply of foreign liquor to Government liquor shops and the payments were made to the appellant for supply of foreign liquor at the approved rates. However, the rates were ultimately decided in December, 1996 by the State Level Committee and the excess amount paid to the appellant 277 H 278 SUPREME COURT REPORTS (2006] SUPP. IO S.C.R. A for supply of foreign liquor was sought to be recovered from him. Aggrieved, the seller filed the petition before the High Court, which was dismissed by the High Court. Hence the present appeal. Appellant-seller contended that the rate fixed by the Purchase Committee in April-May, 1996 was applicable for the entire financial year of B 1996-97 and the same cannot be changed before the expiry of the financial year and it cannot be made effective retrospectively from 1.4.1996; and that no reasons have been assigned for the said change and the common rate fixed now for the entire region is not justified, as the transportation charges would be different in different areas. c Allowing the appeal, the Court HELD: When a sale of any commodity is made, the seller and the purchaser both have to know the sale/purchase price at the time of or before the sale. A sale/purchase price to be fixed subsequent to the sale is unknown D in the world. If a sale of a commodity is made today and if the purchaser informs the seller that he will inform the purchase price subsequently, then it can always be open to the purchaser to .reduce the purchase price subsequently to a negligible amount. Similarly, if the sale price can be fixed subsequent to the sale at the option of the seller it can be increased by the seller at his option, and the seller can later on while demanding the sale price E increase it to an exorbitant amount. Such a view is not clearly contemplated by any sensible person or by any stretch of imagination. In fact, such an action by the State Government has to be treated as arbitrary and unreasonable, and it is well settled in Maneka Gandhi v. Union of India and another that any State action which is arbitrary and unreasonable is violative of Article 14 of F the Constitution. Hence, the rates fixed by the Purchase Committee in April/ May, 1996 are applicable for the entire financial year 1996-1997. [281-F-G-H; 282-A-BJ G H Maneka Gandhi v. Union of India and another AIR (1978) SC 597, relied on. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 445 of2000. From the Judgment and Order dated 20.4.1999 of the High Court of Madhya Pradesh at Jabalpur in LPA 35/1999. Prakash Shrivastava for the Appellant. BH
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