UNION OF INDIA & ORS. versus M/S. BHIM SEN WALAITI RAM

Citation: [1970] 2 S.C.R. 594 · Decided: 29-09-1969 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 6 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

594 
UNION OF INDIA & ORS. 
v. 
MIS. BHIM SEN WALAITI RAM 
September 29, 1969 
[J.C. SHAH, V. R.AMASWAMI AND A. N. GROVER, JJ.J 
Delhi Liquor Licence Rules framed 
under Punjab 
Excise Act- 1 of 
1914--C/ause 21 Rule 5.34 requiring purchase at auction of license to 
deposit one-sixth of annual fee within seven days of auction-Payment. not 
made by purchaser-Commissioner refusing licen!e under els. 31 and 33 
of conditions of sale-Resale of licence by Collector at lesser price-
Original purchaser whether liable to pay deficency in price. 
The respondent gave the highest bid at an auction for the sale of 
license for a country liquor shop in. Delhi for the year 1949-50. Under 
cl. 31 of the conditions of sale for that year, the Chief Commissioner was 
under no obligation to grant a license until he was assured of the financi•l 
status of the bidder. 
Und<* cl. 33 all final bids were made sub1ect to 
confirmation by the Chief Commissioner who could reject any bid wi•.hout 
assigning any reasons. 
However under cl. 21 of r. 5.34 of the Delhi 
Liquor License Rules a person to whom a shop bad been sold had to 
pay one-sixth of the annual fee within seven days of the auction. 
The 
respondent not havir.g paid one-sixth of the annual fee as required bv. the 
said cl. 21, the Chief Commissioner did not confirm his bid. Resale of the 
excise shop was ordered. At the new auction it was sold at a lower price. 
The Collector Delhi thereupon held the respondent liable to pay the 
difference between his bid and the bid for which the shop was later sold, 
and commenced pioceedings for the recovery of the sum. The respondent 
filed a suit in the Court of the Senior Subordinate Judge, Delhi praying 
for a permanent injunction restraining the appellants· (Uni·on of India 
& Ors.) from taking any proceedings for the r~covery of the am0:;nt. The 
tria> judge decreed the suit. The decree was upheld by the first appellate 
court. In second appeal the Single.,~udge decided against the respondent. 
The Division Bench deci9ed in ~1is favour. 
The appellants came to this 
Court witfi certificate. It was contended on behalf of the appellants that 
the respondent was under a legal obligation to pay one-sixth of the 
annual fee within seven days of the auction under cl. 21 of r. 5.34; it was 
due to his default that a re·sale of the excise shop 
was 
ordered; and 
under cl. 22 of r. 5.34 the respondent was liable for the deficiency in price 
and all expenses of such resale which was caused by his default. 
HELD : (i) An acceptance of an offer may be either absolute or 
conditional. If the acceptance is conditional the offer can be withdrawn 
at any moment until absolute acceptance has taken place. [H 597] 
From cl, 33 of the conditions of sale it is clear that the contract of 
aale is not complete till it is confirmed by the Chief Commissioner and till 
11\lch confirmation the person whose bid has been provisionally accepted is 
enl!tled to withdraw hts bid. If the bid is so withdrawn before the con-
firmation of the Chief Commissioner the bidder will not be 
!table for 
damages on account of any breach of contract or for the shortfall on .he 
resale. [G-H 597] 
Hu!l§ery v. Horne PGyne, [1878] 8 Ch. D. 670, 676, referred to. 
A 
B 
c 
D 
E 
F 
G 
H 
A 
B 
c 
D 
II 
G 
H 
UNION v. BHIM SEN (Ramaswami, J.) 
595 
(ii) The phrase "person to whom a shop has been sold" in cl. 21 
~. 5.34' cannot be accepted to mean a "person whose bid has beoo pro-
visionably accepted". The first part of cl. 21 deals with a completed sale 
alld the second part with a situation where the auction is conducted by an 
officer lower in rank- than the Collector. 
In the, latter case the rule makes 
it clear that if any person whose bid has been accepted by the officer 
presidiPg at the auction fails to make the deposit of one-sixth of the annual 
fee, or if he refuses to -accept the licence. the Collector may resell the 
licence either by public auction or by private contract and any deficiency 
in price and all expenses of such resale shall be recoverable from the 
defaultine bidder. [F-G 5981 
In the present case the first part of cl. 21 was applicable. If the Chief 
Commissioner had not disapproved the bid offered by the respondent under 
cl. 33 of the conditions of sale, the auction sale in favour of the respon-
dent would have 'been a completed transaction and 'he would have been 
hable for any shortfall. on the resale. 
As the essential pre-requisites of a 
completed s

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