THE UNION TERRITORY OF PONDICHERRY AND ORS. versus P.V. SURESH ETC. ETC. AND ORS.

Citation: [1993] SUPP. 2 S.C.R. 487 · Decided: 23-09-1993 · Supreme Court of India · Bench: B.P. JEEVAN REDDY · Disposal: Disposed off

Judgment (excerpt)

THE UNION TERRITORY OF PONDICHERRY AND ORS. 
A 
v. 
P.V. SURESH ETC. ETC. AND ORS. 
SEPTEMBER 23, 1993 
[B.P. JEEVAN REDDY AND S.P. BHARUCHA, JJ.) 
Excise Rules--Grant of a"ack licences, by auction for Excise year 1981-
82---Rate of supply of a"ack-Power of Government to alter-Bidders not 
apprised by Government while conducting auction, of rate/quantum of a"ack 
B 
to be supplied to them-Whether licencees could assume that quantum of C 
supply would be same as in previous excise yea~Whether Ucencees bound 
to pay'Kist' amounts, according to bids, if rate of arrack supply is 
reduced-Jurisdiction of Court in contractual matters. 
Practice and procedure-Grant of interim injunction--Excise of power 
by Court-Passing of interim order not a matter of course-In matters touch- D 
ing revenue, Court to be more cautious and exercise its power with good 
amount of self restraint and sense·of responsibility-Gran! of interim injunc-
tion does not absolve the party from consequences of its action. 
In Union territories of Pondicherry, Mahe and Karaikal, arrack E 
licences were granted by way of auction. For excise year 1981-82 auctions 
were conducted in June, 1981. Licences were granted to highest bidders. 
They made necessary deposits and obtained permits to commence business 
with effect from July 1, 1981. Arrack licencees were obliged to draw their 
supplies only and exclusively from the Government source and were 
obliged to sell arrack at the price ru:ed by the Government. For the F 
previous excise year (1980-81), supplies were made at the rate of one 
decalitre per day for annual Revenue of Rs. 18,000. However, for excise 
year 1981-82, the authorities prescribed the ratio of one decalitre for 
annual bid of Rs.40.000, which meant that the quantum of supply to which 
each arrack shop was entitled, went down as compared with the previous G 
year. On representation of licencees, the ratio was altered to one decalitre 
per day for annual bid of Rs. 34,000,on October 27 ,1981. The Government 
did not notify the said ratio at the time of conducting auctions for 1981-82. 
It was not doing so during earlier years also. 
The arrack licencees from· Pondicherry territory deposited 3 months H 
487 
488 
SUPREME COURT REPORTS [1993] SUPP. 2 S.C.R. 
A 
rental also at inception of the excise year as required by the Rules. They 
drew supplies from the Government depots and carried on business for 3 
months. Thereafter, they filed writ petitions for directing the respondents 
to forbear from collecting the Kist amount in respect of each shop and to 
supply arrack to them at the rate at which it was supplied during the 
B 
previous excise years. 
The grievance of writ petitioners of Pondicherry Territory was that 
since the authorities did not announce or intimate at the auctions that the 
rate of supply would be altered, the petitioners assumed that arrack would 
be supplied at the rate that it was supplied in the previous year. The writ 
C 
petitioners urged that they w~re bound to and were incurring losses on 
account of the change in the rate of supply, that there could not be a 
contract which was so constituted that it could result only in loss to the 
licencee and the contracts were vitated by mistake of fact. 
The Administration (Respondents in the writ petition) opposed the 
D writ Petitions saymg that petitioners had no statutory right to supply of 
any particular quantity of arrack; the Government had reserved to itself 
the right to revise the quantity of arrack even during currency of the lease 
vi de condition 22 (3) of the Licence; change in rate of supply was neces-
sitated to ensure equitable distribution, the rate of supply was not uniform 
E 
F 
in the previous year also; there was no question of writ petitioners suffer-
ing loss, as the rate of supply was changed from one decalitre per day for 
annual bid of Rs. 40,000 to one decalitre per day for annual bid of Rs. 
34,000 and the same price fixed by the Government had. been raised 
substantially with effect from December 29, 1981. The Government also 
raised objection that. the writ petitioners could not wriggle out of their 
contractual obligations and that the writ petitions were not maintainable, 
because the subject matter was purely contractual. 
The High Court overruled objection with respect to maintainability 
of writ petitions. Having found that the licencee was bound to incur loss 
G even at the rate of one decalitre for annual bid of Rs. 34,000, it held th

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