MARY versus STATE OF KERALA AND ORS,

Citation: [2013] 9 S.C.R. 1126 · Decided: 22-10-2013 · Supreme Court of India · Bench: C.K. PRASAD · Disposal: Dismissed

Judgment (excerpt)

A 
B 
(2013] 9 S.C.R. 1126 
MARY 
v. 
STATE OF KERALA AND ORS. 
(Civil Appeal No. 9466 of 2003) 
OCTOBER 22, 2013. 
[CHANDRAMAULI KR. PRASAD AND V. GOPALA 
GOWDA, JJ.] 
KERALA ABKARI SHOPS (DISPOSAL IN AUCTION) 
C RULES, 1974: 
"· 5 (10), (15) and (19) - Auction purchaser failing to 
execute the agreement - Forfeiture of deposit - Held: In terms 
of sub-r. (15) of r. 5, security money deposited by auction 
0 purchaser is liable to be forfeited. 
CONTRACT ACT, 1872: 
s. 56 - Contract to do act, afterwards becoming 
impossible - Doctrine of frustration - Statutory contract -
E Auction purchaser finding impossible to run abkari shops due 
to resistance by local residents, the area being a holy place 
- State also found it impossible to re-sell or re-dispose of 
arrack shops -- Held: Doctrine of frustration excludes 
ordinarily further performance where the contract is silent as 
F to the position of the parties in the event of performance 
becoming literally impossible -- However, in a statutory 
contract in which party takes absolute responsibility, it cannot 
escape liability whatever may be the reason -- In such a 
situation, events will not discharge the party from the 
G consequence of non-performance of contractual obligation -
- Further, in a case in which consequence of non-performance 
of contract is provided in statutory contract itself, parties shall 
be bound by that and cannot take shelter behind s. 56 - In 
the instant case, by reason of sub-r. (15) of r. 5 of 197 4 Rules, 
H 
1126 
MARY v. STATE OF KERALA 
1127 
State was entitled to forfeit the security money -- In the face 
A 
of specific consequences having been provided, appellant 
shall be bound by it and could not take benefit of s.56 - Kera/a 
Abkari Shops (Disposal in Auction) Rules, 1974 -- r. 5(15) -
Doctrines/ Principles -- Doctrine of frustration - Doctrine of 
fairness. 
B 
ADMINISTRATIVE LAW: 
Doctrine of fairness - Held: It is a doctrine developed in 
the administrative law field to ensure rule of law and to prevent 
failure of justice where an action is administrative in nature -
C 
- Where the function is quasi-judicial, the doctrine of fairness 
is evolved to ensure fair action -- But, it certainly cannot be 
invoked to amend, alter, or vary an express term of the 
contract between the parties -- This is so even if the contract 
is governed by a statutory provision - Sub-r.(15) of r.5of1974 o 
Rules cannot be struck down on the ground of 
reasonableness and fairness -- Kera/a Abkari Shops 
(Disposal in Auction) Rules, 1974 - r.5(15). 
E 
The appellant, being the successful bidder in an 
auction conducted for sale of privilege to vend arrack in 
two shops, deposited 30% of the bid amount and 
executed a temporary agreement in terms of r. 5(10) of the 
Kerala Abkari Shops (Disposal in Auction) Rules, 1974, 
which was subject to confirmation by the Board of 
Revenue. The area being the holy place, the local 
F 
residents objected to the running of any abkari shop in 
the area. A large number of people collected and offered 
physical resistance to the opening of the abkari shops 
and the law and order enforcing agency could not assure 
smooth conduct of business. However, the appellant was 
G 
asked to deposit the balance amount payable by her, 
together with interest at the rate of 18% thereon. Revenue 
recovery notice was also issued for realisation of the 
amount. The appellant challenged the notices in a writ 
petition before the High Court contending that rr.5(15) and 
H 
1128 . SUPREME COURT REPORTS 
[2013] 9 S.C.R. 
A 5(16) were arbitrary and violative of Art. 14 of the 
Constitution of India. The appellant filed another writ 
petition, inter alia, praying for direction to the State 
authorities to refund the amount paid by her as initial 
deposit. The writ petitions were allowed by the single 
8 Judge and the notices and all the proceedings initiated 
against the appellant were quashed. The amount 
deposited by the appellant was directed to be refunded 
along with interest. However, the single Judge did not 
strike down rr. 5(15) and 5(16). The writ appeal filed as 
C regards the recovery of the balance amount was 
dismissed whereas the writ appeal against the direction 
for refund of the initial deposit was allowed by the 
Division Bench. 
In the instant appeal filed by the bidder, the appellant 
D contended, inter alia, that r. 5(15) did not meet the 
requirement of the doctrine of reasonableness or fairness 
and on this ground alo

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