Satish Dahiya vs State of Haryana and Others

Ajay Kumar Mittal, J.—The petitioner who was an applicant for liquor outlet is seeking quashing of part of Clause 2.8 of the Excise Policy 2012-13 which provides for forfeiture of earnest money in case where the bid exceeds the reserve price by more than 25%, the bidder is required to enclose a demand draft of an amount equivalent to 20% of his bid amount and having failed to do so, the earnest money was liable to be forfeited. Briefly stated, the facts necessary for adjudication of the present writ petition are that for the allotment of liquor vend in the State of Haryana, respondent had issued Excise Policy for the year 2012-13 (Annexure P-1). The petitioner applied for allotment of proposed Indian Manufactured Foreign Liquor (IMFL) Vend/Group for the year 2012-13 in general category shown at Serial Nos. 17 and 18 in the list of proposed IMFL Vend/Group (Annexure P-2). Accordingly, the petitioner deposited a sum of Rs. 75,000/-each for the two separate applications as participation fee. Along with the applications, the petitioner had also deposited earnest money of Rs. 5 lacs for both the applications separately besides submitting his financial bids to the tune of Rs. 2,01,40,000/-against each application. The bids of the petitioner were opened on 9.3.2012 and his financial bid was rejected by respondent No. 4 on the same day on the ground that since the financial bid exceeded the reserve price by more than 25% and he failed to enclose a demand draft of an amount equivalent to 20% of the bid amount. On enquiry, the petitioner came to know that respondent No. 2 had issued instructions dated 29.2.2012 prescribing procedure for the allotment of liquor vend by inviting sealed bids for the year 2012-13. As per Clauses 7.2 and 8 of the said Instructions, in case any applicant submits his bid which exceeds the reserve price by more than 25%, he was required to enclose a demand draft of an amount equivalent to 20% of the bid amount along with the financial bid. Further, as per Clause 8, if the 20% of the bid amount is not deposited, the bid was liable to be cancelled and the earnest money was to be forfeited. Feeling aggrieved, the petitioner has filed the present writ petition challenging the Instructions dated 29.2.2012 issued by respondent No. 2 and the order dated 9.3.2012 passed by respondent No. 4.

We have heard the learned counsel for the petitioner.

A perusal of the petition shows that against the reserve price of Rs. 1,36,50,000/-, the petitioner had given a bid amount of Rs. 2,01,40,000/-. Admittedly, the said amount exceeded 25% of the reserve price. Once that was so, the petitioner was required to enclose a demand draft of 25% of the bid amount in terms of Clause 2.8 of the Excise Policy 2012-13. The petitioner having failed to do so, the amount was forfeited. The petitioner has sought to challenge the said condition of the Excise Policy on the ground that the same is unreasonable, arbitrary and is violative of Article 14 of the Constitution of India.

After hearing the learned counsel for the petitioner, we are unable to subscribe to the argument raised by the learned counsel.

Article 14 of the Constitution guarantees equality before the law and confers equal protection of law. There is prohibition relating to discrimination embraced within this Article. It does not forbid classification provided if such classification is legal, valid and reasonable. The person who alleges arbitrariness has to establish it, which can be done by showing that the impugned action of the State or its instrumentality is uninformed by reason inasmuch as there is no discernible principle on which it is based or it is against the prescribed mode of exercise of the power or is unreasonable. In other words, for testing that the action of the State is not arbitrary or unreasonable, every action of the State or an instrumentality of the State, must be informed by reason and must be subject to rule of law. In order to answer, whether an impugned act is arbitrary, unreasonable or not, it is to be examined in the facts and circumstances of a given case.

Adverting to the factual matrix in the present case, it would be expedient to refer to Clause 2.8 of the Excise Policy 2012-13 which reads thus:

2.8. REQUIREMENT OF DEMAND DRAFT IN SPECIFIC CIRCUMSTANCES:

A bidder will have to enclose a demand draft in favour of DETC(Excise) of the district of an amount equivalent to 20% of his bid amount along with the sealed financial bid, in case his bid exceeds the reserve price by more than 25%. In case such bidder fails to submit the DD of required amount along with the financial bid, his bid shall be deemed cancelled on the spot i.e. At the time of opening of bids and the bidder next in row will be considered. The earnest money of such cancelled bids shall be forfeited.

A perusal of the aforesaid clause shows the Government has required the bidder to enclose a demand draft for an amount equivalent to 20% of the bid amount in those cases where the bid amount exceeds 25% of the reserve price as the purpose for the same is to curtail arbitrary and inflated bids which are not likely to be honoured by the bidders in the absence of requirement of 20%. A person can give bid for an amount which he may not be prepared to honour and the same would result in futile and unnecessary exercise for the respondents. The respondents are, thus, justified in imposing the aforestated condition which cannot be said to be either unreasonable or arbitrary. Accordingly, there is no merit in this writ petition and the same is hereby dismissed.