K.P. PERIANNAN versus GOVERNMENT OF TAMIL NADU AND ORS.

Citation: [1990] 2 S.C.R. 609 · Decided: 20-04-1990 · Supreme Court of India · Bench: S. RATNAVEL PANDIAN · Disposal: Appeal(s) allowed
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Judgment (excerpt)

K.P. PERIANNAN 
v. 
A 
GOVERNMENT OF TAMIL NADU AND ORS. 
APRIL 20, 1990 
[S. RATNAVEL PANDIAN AND K. JAYACHANDRA 
B 
REDDY, JJ.) 
Tamil Nadu Toddy and Arrack Shops (Disposals in Auction 
Rules, 19&1: Rules 3-6, 8, JO, 12, 14-16, 20 and 21.Auction of Arrack 
shop-Successful bid found inadequate and not confirmed~Shop 
re-auctioned and bid provisionally confirmed but bidder failed to 
comply with requirements-Shop again re-auctioned-Notional loss: bet-
ween original sale and resale-Held not recoverable from original suc-
cessful bidder. 
The appellant gave the highest bid at the auction of an arrack 
shop but his bid was considered inadeqnate. The shop was re-auctioned 
and the bid of 'C' was provisionally accepted. 'C' failed to comply with 
certain requirements and the shop was again re-auctioned in which the 
bid offered was lower than that offered by the appellant in the original 
sale. The respondent sought recovery of the difference between the 
original sale amount and the resale amount from the appellant, under 
Rule 21 of the Tamil Nadu Toddy and Arrack Shops (Disposal in 
Auction) Rules, 1981. The appellant challenged the recovery by filing a 
writ petition in the High Court which was dismissed by a Single Judge 
and the decision was confirmed by a Division Bench on appeal. 
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D 
E 
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In the appeal to this Court it was contended on behalf of the 
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appella~t that since his bid was not confirmed under the rules, no 
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. .._ . recovery can be made from him and that 'C', whose bid was provision-
ally accepted, was liable for the notional loss. The respondent however 
i,_ contended that since 'C' failed to comply with Rule IS, hi.s bid was not 
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provisionally accepted and hence he was not liable for the resultant loss. 
Allowing the appeal, this Court, 
G 
HELD: I. Normally it may be correct to say that the sale officer 
under Rnle 16 accepts provisionally the bid after there is compliance of 
Rule 15; but in the instant case, the Court is concerned with the 
- _.,_ re-auction and about the liabiHty of the original highest bidder in the 
light of Rule 20(4). [616D-E] 
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609 
610 
SUPREME COURT REPORTS 
I 1990] 2 S.C.R. 
A 
2. In view of the document dated 19th June, 1981 it must be held 
that the bid of 'C' was accepted provisionally by the Sale Officer and by 
virtue of Rule 20 sub-Rule (4) when once the bid of 'C' was accepted 
provisionally as the highest bid, the bid with which the sale began 
namely the hid of the appellant, got lapsed and consequently the appel-
lant cannot be held liable for the resultant loss. [616C-D I 
B 
D 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 
1932 of 1990. 
From the Judgment and Order dated 4.7.1989 of the Madras 
High Courtin Writ Appeal No. 1153 of 1983. 
R. Mohan and R. Ayyamperumal for the Appellant. 
V. Krishnamurthy for the Respondents. 
The Judgment of the Court was delivered by 
K. JAYACHANDRA REDDY, J. Leave granted. Heard both 
the sides. 
The right to conduct arrack sale in Tamil Nadu was auctioned on 
28.5.1981 for the excise year 1981-82. Shop No. 49 in Koneripatti 
E village in Sankari Taluk District Salem was auctioned for the excise 
year 1981-82. In respect of the auction of this shop, the appellant was 
the successful Mdder and the bid amount was Rs.6550 per month. As 
per the term~, the appellant paid the caution deposit of Rs. 1000 and a 
half month's rent on the same day. 
· Since the bid amount was found to be inadequate there was a 
re-auction on 11.6.1981 but there was no bidder on that day. Therefore 
again on 19.6.1981 the same shop was re-auctioned and one Mr. Che!-
..-<:_ 
lamuthu was successful bidder at Rs.6575 per II)Onth but he failed to 
comply with certain requirements. Therefore it was re~auctioned on 
27 .6.81 but there were no bidders and the shop was re-auctioned again 
G on 17.8.1981 when the bid was only Rs.3000 by one Doraisamy. The 
appellant was called upon by way of a COII)II)unication dated 17.4.82 to 
pay the notional loss. It was claimed by the department that the bid of 
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the appellant was confirmed on 28.6.81 but the appellant refused to 
receive the confirmed order and consequently the shop was re-
auctioned for Rs.3,000 only and therefore the difference amount is 
recoverable from the appellant. This impugned order was questioned 
·--* -
K.P. PERIANNAN v. GOVT. OF TAMIL NADU [REDDY, J.) 
611 
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and the learned Single Judge of the High Court dismissed the writ 
petition. It was observed by the learned Judge that r
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