STATE OF UTTAR PRADESH versus KISHORI LAL MINOCHA

Citation: [1980] 2 S.C.R. 724 · Decided: 21-12-1979 · Supreme Court of India · Bench: A.C. GUPTA · Disposal: Dismissed

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Judgment (excerpt)

724 
A 
STATE OF UTTAR PRADESH 
v. 
KISHORI LAL MINOCHA 
December 21, 1979 
:B 
[A. C. GUPTA, V. D. TULZAPURKAR AND E. S. VEt<KATARAMIAll, JJ.J 
·C 
D 
E 
F 
G 
H 
(;onstitution of India 1950, Article 299 and U.P. Excise Act 1910, S. 39-
Rule 357( 5) of Excise Manual requiring purchaser at excise auction to depi,;sit 
one-sixth of annual fee on conclusion of sale-Purchaser not making deposit-
Rrsale by excise authorities fetching lesser price-Original purchaser whefher 
liable to pay tlcficiency in price. 
U.P. Excise Act 1910, S. 77 & Excise ·Manual R11lc 35?-R11le not p11blislitd 
as required-Whether has the force of Ia'w. 
The respondent who was a bidder at the annual excise auction offered the 
highest bid for two groups of country liquor shops, and \Vhich were knocked down 
in his favour. 
He affixed his signature to the respectiYe bid sheets in token of his 
acceptance and also in the register of Settlement Record. He, however, did not 
deposit 1 /6th of the bid amounts on conclusion of the sales as required under 
the Excise Rules but took time for deposit. In spite of repeated reminders he 
did not pay the advance deposits. The Excise Authorities resold the excise 
privileges in respect of the two groups of shops and in the re-auction the shops 
fetched a lesser !amount than what the respondent had offered. The State Gov-
ernment, appellant directed the respondent to make good the loss. Since be failed, 
a suit for recovery was instituted by the appellant. The suit was contested, the 
respondent pleading (1) that there were no completed contracts between the State 
Governm'ent and himself and consequently there could be no breach of contracts; 
(2) that the entire auction proceedings, having been against the rules and instruc-
tions of the Govemn1ent were illegal and void; (3) the contracts, if any, \Yere 
unenforceable as they did not satisfy the conditions ment_ipned in Article 299 of 
the Constitution; and ( 4) that the State Government having accepted his prayer 
to be relieved from the bids made by him and subsequently re-auctioning the 
groups of shops to others \Vas estopped from fixing any civil liability on 1'.:m. 
The trial court decreed the suit. 
On appeal, the Jligh Court dismissed the suit on the vie\\" that there was no 
valid contract \'Vhich could be enforced by the appellant as the ·requirements of 
Article 299(1) of the Constitution had not been complied with. It, however, held 
that the failure to deposit 1/6 of the bid amount did not make the proposal in-
complete and that the absence of the approval of the Excise Commissioner which 
was in the nature of a power vested in him to reverse the acceptance of a bid made 
by the officer holding the auction did not in any way exeonerate the respondent 
from the liability if he was otherwise liable. 
In the appeal to this Court on the question whether the respondent v...·ould 
not be liable to make good the loss even though no contract in writing had been 
executed in accordance with Article 299 of the Constitution. 
> •
( 
U. P. STATE V. KISHORILAL 
725 
HELD : [Per Gupta and Tulzapurkar, JJ.] 
1. The ~uit must be dismissed as there was no concluded contI\1'Ct between the 
parties, nor \Vas there any statutory rule permitting recovery of the deficiency 
on re-sale from the respcncient. [728 BJ 
2. The last part of the 5th clause to Rule 357 providing that in case of 
default, i£ the .J?ricc fetched at the re-sale was less than the bid at the first sale 
the difference would be recovered from the defaulter had not b'een published. 
[729 CJ 
3. Assur.1ing that the different clauses of Rule 357 barring the last part of the 
5th clause embody the conditions of sale, .-it isl clear from the 2nd clause that iri 
the absence of the final sanction of the Excise Commissioner the bid cannot be said 
to have been finally accepted. Jn the instant case it is not claimed that the bid 
offered by the respondent \Vas sanctioned by the Excise Commissioner. [729 E] 
There v1as thus no concluded contract between the parties to make the res-
pondent liable for the alleged loss. [729 F] 
Union of India and others v. Mis-. Bhin1sen Walaiti Rani [1970] 2 S.C.R. 594 
referred to. 
(Per Venkataramiah J, dissenting) 
1. The respondent should be made liable for the sum claimed 
and the decree made by the trial court shoulc\ be restored. [745 G] 
in the suit; 
2. The respondent was liable for the claim made by the State Government 
-even though no contracts were formally e

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