M/S. PRODUCE EXCHANGE CORPN. LTD. versus COMMISSIONER OF EXCISE, ASSAM & ORS.

Citation: [1973] 1 S.C.R. 201 · Decided: 17-04-1972 · Supreme Court of India · Bench: G.K. MITTER · Disposal: Dismissed

Judgment (excerpt)

A 
B 
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D 
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201 
M/S. PRODUCE EXCHANGE CORPN. LTD. 
v. 
COMi,llSSIONER OF EXCISE, ASSAM & ORS. 
April 17, 1972 
[K. S. HEGDE, A. N. GROVER AND G. K. MITTER, JJ.] 
Eastern Bengal and Assam Excise Act (1 of 1910), s. 19 and Rules 
made thereunder, r. 93-G.overnmenfs power to refuse tender and enter 
into nenotidUons with te"'tderers. 
The respondent inviti:d tenders for supplying country spirit to retail 
vendors. In the notification issued by the Commissioner, it was stated 
that pref.,.ence will oo given to manufacturers of spirit. Several per-
sons submitted ti:nders including the appellant and the 5th respondent who 
was a· manufacturer of spirit. The appellant offered to supply .the spirit 
at 74 P and the 5th respondent at 95 P. The Government was 
not 
satisfied with any of the tenders and the tenderers were called upon to 
intimate lo the Government whether they were willing to reduce their 
rate. None of th,e tenderers was willing to reduce the rate, except the 
5th respondent who agreed to accept the ·rate fixed by tlx> Government, 
and the Government, reduced bis rate to 74 P and accepted his tender. 
The appellant challenged the order granting the contract to the 5th 
respondent, but the High Coun dismissed the petition. 
In appeal to this Court, it was contended that : (I) the impugned 
order could not be sustained because the Government nowhere stated 
that the tenders were not acceptable, on the ground thaf none of them, 
on due consider.ations, appeared to be satisfactory, as provided in r .. 93 of 
the Rules framed under the Eastern Bengal and Assam Excise Act, 1910; 
<Uld ( 2) under the rule, Government could not have entered into oogo 
tiations with any of the tend,Mers. 
Dismissing the appeal, 
HELD : ( 1) It is clear from the letter to the renderers asking them 
to reduce the price quoted that the respondent Gov.emment considered 
the tenders to be unsatisfactory and hence unacceptable. [20SB-C] 
(2) Rule ~3 does .not prohibit any negotiations with the tenderers. 
On the other hand, it authorises Gov"'"°ment to negotiate even 
with 
p.,.sons who ha"' not tendered. In the absence of any rule prohibiting 
Governmer,t from negotiating with the tenderers, Government can fall 
back on its powers under s. 19. In order to get country spirit at the 
cheapest possible rates and to have P'gular supp)ies, Government can 
negotiate with the tendercrs or others. [205Fl 
(3) (a) No one has a fundamental rigbt to get a Government con-
tract. In matters like this no question of maring parties arises. All 
that is Jequired is fair play. Th,e appellant had an opportunity to sub· 
mit its tender which was considered and rejected on grounds which are 
not irrati<>nal. [306AJ 
(b) Section 19 of the Act undoubtedly confers on the Gowrnment 
H 
very wide powers in the matter of granting the exclllllive privilege of 
manufacturing or of supplying to licensed vendors any country liquolr 
or 1ntoxicating drug within any specified local area. 
In the absence of 
a rule prohibiting Government from preferring one set of sellers to others, 
14-L1208 Sup. cin2 
· 
202 
SUPREME COURT REPORTS 
[1973] l S.C.R. 
Government could roly on the section fen- such a power so long as the 
classification made by it is based on rational grounds. 
Therefore, the 
Government could exercise that povirer in the manner most advantageous 
to it provided It did not infringe any Constitutional guarantee. [205G] 
( c) It is true that the Government granted the contract to too 5th 
respondent at the rate quoted by the appellant and thus preferred the 5th 
respondent. But the Government, as the purchaser, can prefer one seller 
to another for . good reasons, though, it cannot show any undue favour 
to any one. 
(d) In the notification c:alling for tenders it was mentioned that pre-
ference will be given to manufacturers; and there was jus.tification for pre-
ferring a manufacturer to others, Ir.cause, there would be a reasonable 
guarantee in the matter of supply of country liquor. [205C] 
CIVIL APPELLATE JURISDICTION: C.A. No. 15 of 1972. 
Appeal by Special Leave from the judgment and order dated 
December 16, 1971 of the Assam and Nagaland High Court in 
Civil Rule No. 431 of 1970. 
C. K. Daphtary and D. N. Mukherjee, for the appellant. 
S. N. Chowdhury, for respondent Nos. 1 to 4. 
M. C. Setalvad and K. P. Gupta, for respondent No. 5. 
The Judgment of the Court was de'.ivered by-
Hegde, J.-~ this appeal by special leave the appellant chal-

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