Full Judgment Text
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PETITIONER:
TRADE LINKS LTD., NEW DELHI AND ANR. ETC. ETC.
Vs.
RESPONDENT:
STATE OF UTTAR PRADESH AND ANR. ETC. ETC.
DATE OF JUDGMENT07/05/1982
BENCH:
TULZAPURKAR, V.D.
BENCH:
TULZAPURKAR, V.D.
CHANDRACHUD, Y.V. ((CJ)
DESAI, D.A.
REDDY, O. CHINNAPPA (J)
ISLAM, BAHARUL (J)
CITATION:
1982 AIR 1137 1982 SCR (3) 755
1982 SCC (2) 337 1982 SCALE (1)486
ACT:
Uttar Pradesh Excise (Amendment) Act 13 of 1979,
constitutional validity of-Whether violative of Articles
14,19 and 31 of the constitution.
Uttar Pradesh Excise Act, 1910, Section 30(2), Proviso
to clause (c) and Explanations I and II to Clause (c) of
Section 41 as amended by (Amendment) Act 13 of 1979, whether
ultra vires the constitution.
HEADNOTE:
In exercise of the power conferred upon him under the
amended clause (c) of section 41, the Excise Commissioner
with the previous sanction of the State Government framed
Rules Called the U.P. Excise (Wholesale and Retail Vend of
Foreign Liquor (2nd Amendment) Rules, 1976 by issuing the
Notification No. 27/Licence-3 dated 14th April 1976, which
were brought into force with effect from the date of
publication in the Gazette, namely, 14th April 1976; by this
Notification the existing Rules 639, 641 and 642 as
appearing in Excise Manual Vol. (1962 Edn.) were amended;
Rule 639(2) as amended provides that "Licences in form FL-2
shall be settled by the public auction" while Rule 641 as
amended provides that "the fee for a licence in form FL-2
shall be the amount of money accepted at the auction of the
licence as ’fixed fee’ together with an "assessed fee"
charged on the basics of the scales of surcharge fee
prescribed in Rule 642.
By the very notification dated 14th of April, 1976 the
Excise Commissioner added one more condition in the form of
a proviso to the terms and conditions of FL-2 Licence and
the said addition made after condition No. 1(c), runs thus:-
"Provided that the assessment fee on the sales
made on the licence in the prescribed manner at such
scales of surcharge fee as may be prescribed by the
Government and announced at the time of the auction,
shall also be payable by the licencee."
Relying upon the amendments made in the U.P. Excise Act,
1910 by Act 5 of 1976 and the amended Rules 639, 641 and 642
and the insertion of the new condition in FL-2 licence, the
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respondents introduced the auction system for the grant of
licence in form FL-2 for wholesale vend of beer and Indian
Made
756
Foreign Liquor and started levying and recovering the
"assessed fee" in addition to the "fixed fee" (auction
money) from the grantees of the licences.
The Petitioners who were successful bidders and who had
acquired vending rights in Indian Made Foreign Liquor for
the financial years 1976-77, 1977-78, 1978-79 and 1979-80
challenged the levy of "assessed fee", in addition to the
"fixed fee" on the following grounds: (i) Under Section
30(2) of the Principal Act of 1910 prior to its amendment by
U.P. Ordinance No. 4 of 1979 and U.P. Act 13 of 1979 it was
open to the respondents to adopt either one or the other
method of granting FL-2 licences and determine the licence
fee payable by the grantee accordingly, that is to say, the
respondents could grant the licence "either by auction or by
calling tenders" and once a particular mode was adopted it
was incumbent upon them to apply the same for the purpose of
determining the sum payable by the grantee; in other words
it was not opens them to adopt a combination of two or more
methods and claim "assessed fee" in addition to "fixed fee"
and this would be illegal and without authority of law. A
combination of two or more methods became available to the
respondents only under Section 30(2) as amended by U.P.
Ordinance No. 4 of 1979 and by U.P. Act 13 of 1979; (ii) In
as much as the petitioners were not informed that any
"assessed fee" had been fixed by the State Government, which
would be payable by the successful bidder, the respondent’s
attempt to levy and recover the "assessed fee" over and
above the "fixed fee" (auction money) was unwarranted and
illegal in as much as the respondents could not enhance the
petitioners’ contractual liability which was limited to the
payment of auction money and (iii) as per the newly inserted
conditions in FL-2 Licence the "assessed fee" was required
to be "prescribed by the Government and announced at the
time of auction" but in the instant case such "assessed fee"
had been prescribed by the Excise Commissioner and not by
the State Government and was not announced at the time of
the auction and for this reason also the same would not be
recoverable.
Dismissing the petitions the Court,
^
HELD: 1. The levy and recovery of the "assessed fee"
over and above the "fixed fee" by the respondents for
granting FL-2 licences to all the petitioners would be legal
and valid under the U.P. Excise Act of 1910 as amended by
Act 5 of 1976 and the amended rules framed thereunder. [768
D-E]
2:1. A plain reading of Section 30(2) of the Uttar
Pradesh Excise Act 1910 prior to its amendment by U.P.
Ordinance No. 4 of 1979 and by U.P. Act No. 13 of 1973 makes
it clear that the consideration for the grant of FL-2
licence could be determined either by auction or by calling
tenders or otherwise. [765 C-E]
2:2. The phrase "or otherwise" was sufficiently wide
and conferred on its plain grammatical construction, power
on the State Government or the Excise Commissioner to grant
the licence either by auction or by tenders or partly by
auction and partly by tenders or even by adopting yet other
methods than by auction or by inviting tenders. In other
words, the phrase "or otherwise"
757
enabled the State Government or the Excise Commissioner to
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adopt a combination of one or more methods for granting the
FL-2 licence and determine the licence fee accordingly.
Having regard to the phrase "or otherwise" occurring in the
provision it can not be said that only one method to the
exclusion of the others could be adopted for granting the
licence or that one type of fee appropriate to that method
could alone be charged. [765 E-G]
2:3. Sub-section (2) of Section 3 as amended by U.P.
Ordinance 4 of 1979 or U.P. Act 13 of 1979 is clarificatory
of the legal position which obtained under Sec. 30(2) that
was operative prior to the said amendment. [765G, 766A-B]
3:1. The bidders who gave their bids must be deemed to
have knowledge of the provisions of the relevant Rules
subject to which the auctions were held and therefore, the
bidders including the successful bidders whose highest bid
was accepted did not offer their bids believing that only
"fixed fee" would be charged, since it was to their
knowledge that the auctions for the grant of FL-2 licence
were held under the amended provisions of the Act of 1910 by
the Amendment of 1976 and that Rule 641 of Excise Manual
clearly provided that the fee for the FL-2 licence shall be
the amount of money accepted at the auction of the licence
as "fixed fee" together with the "assessed fee" charged on
the scales of surcharge fees prescribed in Rule 642. Further
even according to the petitioners, the new condition
inserted by the Excise Commissioner in the said licence was
read out. If admittedly the said condition inserted in FL-2
licence was read out at the time of auction then it is clear
that the fact that "assessed fee" on the sales made on the
licence was also payable by the licensee was announced at
the time of auction. [766 D-H. 767 B-C]
3:2. If once it was announced at the time of the
auction that "assessed fee" on the sales affected on the
licence at the prescribed scales shall also be payable by
the Licensee, then the bidders were put on enquiry to find
out what scales of surcharge fees had been prescribed under
the relevant Rule. In other words the bidders presented at
these auctions had full knowledge that "assessed fee" at
prescribed rates will also be charged and it was with full
knowledge of this position that they gave their bids. If
that be so, there was no question of the respondents’
attempting to enhance the contractual liability of the
successful bidder. Further admittedly, not only did the
bidders know that "assessed fee" would be charged over and
above the "fixed fee" (auction money) but many of them
actually passed on the "assessed fee" at the prescribed
rates to and recovered the same from the retailers to whom
they effected sales of beer and Indian Made Foreign Liquor.
[767 C-F]
4. Section 24B(c) which expressly declares that "the
Excise Commissioner as the head of Excise Department of the
State shall be deemed, while determining or realising such
fee, to act for and on behalf of the State Government, makes
it clear that the Excise Commissioner has been statutorily
declared to be the agent of the State Government and "while
determining" such fees by framing the amended Rules 642 he
acted for and on behalf of the State Government, in other
words, scales of "assessed fee" under Rule 642 must be
deemed to have been prescribed by the State Government. [768
B-C]
758
JUDGMENT:
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ORIGINAL JURISDICTION: Writ Petition Nos. 528-529,
1645, 288,293, 362,363, 374, 388, 404-406, 510, 512-14, 644-
46, 647, 663-65, 707, 710, 720 to 722, 745,793,1037 of
1979,341-43,344-47, 5257,519,5293, 3531-35, 4322 of 1980,
4824, 4825, 5246, 3236, 2963,3472-74,3415-17, 3420, 1363-65,
1327-28, 1337-41, 4101-2, 5326,4949-50 of 1981 and 311 of
1982.
(Under Article 32 of the Constitution of India)
G.L. Sanghi, Dr. L.M. Singhvi, S.N. Kacker, Yogeshwar
Prasad, Ashok Grover, V.N. Koura, S.C. Budhwar, L.K. Pandey,
Ravindra Narain, D.N. Mishra, P. Krishna Rao, K.R. Nagaraja,
Miss Kamini Jaiswal and Mrs. Rani Chhabra for the appearing
Petitioners.
L,N. Sinha, Attorney General, S.C. Maheshwari,
Additional Advocate General, O.P. Malhotra, G. N. Dikshit,
H.R. Bhardwaj, B.P. Maheshwari, Suresh Sethi, Miss Asha Rani
Jain, and Pravir Choudhary for the appearing Respondents.
The Judgment of the Court was delivered by
TULZAPURKAR, J. There is no substance in this group of
writ petitions filed under Art. 32 of the Constitution
whereby the petitioners, who carry on business, inter alia,
of the wholesale vend of beer and Indian Made Foreign Liquor
at various places in the State of U.P. on the strength of
licences granted to them in Form FL-2 under the U.P. Excise
Act, 1910, have challenged the constitutional validity of
ss. 1(2), 3 and (5) of U.P. Excise (Amendment) ordinance No.
4 of 1979 as also the constitutional validity of ss. 1(2), 3
and 5 of U.P. Excise (Amendment) Act No. 13 of 1979 (which
replaced the said ordinance No. 4 of 1979) as being
violative of their fundamental rights under Arts. 14, 19 and
31 of the Constitution; the petitioners have also sought a
declaration that s. 30(2), proviso to cl. (c) of s. 41 and
Explanations I and II to cl. (c) of s. 41 of the U.P. Excise
Act 1910 as amended by ss. 3 and 5 of the said ordinance No.
4 of 1979 as well as by ss. 3 and 5 of the said Act No. 13
of 1979 and the provisions of sub-s. (2) of s. 1 of the said
ordinance (No. 4 of 1979) as well as of the said Act (No. 13
of 1979) are ultra vires the Constitution and have prayed
for the issuance of an appropriate writ, order or direction
restraining the respondents (the State of U.P., the Excise
Commissioner and other officers) either directly or through
their agents, servants or otherwise from giving effect to
the amended provision.
759
It may be stated that the aforesaid challenge to the
U.P. Ordinance No. 4 of 1979, the U.P. Act No. 13 of 1979
and the concerned amended provisions of the U.P. Excise Act,
1910 has been made solely with a view to avoid the payment
of the "assessed fee" which the respondents are seeking to
recover from the petitioners in addition to the "fixed fee"
(auction money) as and by way of consideration for the grant
of licences in Form FL-2 for the wholesale vend of beer and
Indian Made Foreign Liquor. However, as it became clear
during the hearing that even without the amendments affected
in the U.P. Excise Act, 1910 (being the Principal Act) by
the said ordinance No. 4 of 1979 and by the said Act No. 13
of 1979 the "assessed fee" in addition to the "fixed fee"
(auction money) could be and was being recovered under the
Principal Act of 1910 as amended by the U.P, Amending
(Reenactment and Validation) Act 5 of 1976 and the Rules
framed thereunder, the aforesaid challenge was given up and
no arguments in support thereof were at all advanced by any
of the counsel for the petitioners and the contentions
centered round the question whether such "assessed fee" in
addition to the "fixed fee" (auction money) could be levied
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and recovered under the Principal Act of 1910 as amended by
the Act 5 of 1976.
It was not disputed before us that the grant of
exclusive privilege of manufacture, supply or sale by
wholesale or by retail of liquor was always governed by the
provisions of the Principal Act of 1910 and the Rules framed
thereunder and that licences for wholesale vend of beer and
Indian Made Foreign Liquor were granted in Form FL-2 which
contained the terms and conditions on which sales by
wholesale of the said commodities could be effected by the
grantees thereof. It appears that prior to April 1976 these
FL-2 licences were not settled under any auction system but
were renewable from year to year and the licence fee was
based on the quantity of beer and Indian Made Foreign Liquor
actually sold from the concerned shop and was assessed and
charged at the rate of Rs. 5 per quart bottle on spirits and
60 p. per quart bottle on beers. But from April 1976 auction
system was introduced whereunder FL-2 licences were
auctioned under the provisions of paragraph 373 of the U.P.
excise Manual Vol. I and "fixed free". being the highest bid
(auction money) accepted at such auction came to be charged
for the grant of FL-2 licences and this system was
introduced on the strength of the amendments that were made
in the Principal Act of 1910 by the Amending (Re-enactment
and
760
Validation) Act 5 of 1976. Three or four amendments made by
Act 5 of 1976 are material and we shall refer to these
presently:
A new s. 24A dealing with the grant of exclusive or
other privilege in respect of foreign liquor was introduced
in the Principal Act, which reads as under:
"24-A. Grant of exclusive or other privilege in
respect of foreign liquor. (1) Subject to the
provisions of Section 31, the Excise Commissioner may
grant to any person a licence or licences for the
exclusive or other privilege:
(a) of manufacturing or of supply by wholesale, or of
both; or
(b) of manufacturing or of supplying by wholesale, or
of both and selling by retail; or
(c) of selling by wholesale (to wholesale or retail
vendors); or
(d) of selling by retail at shops (for consumption
’off’ the premises);
any foreign liquor in any locality.
(2) The grant of licence or licences under clause
(d) of sub-section (1) in relation to any locality
shall be without prejudice to the grant of licences for
the retail sale of foreign liquor in the same locality
in hotels and restaurants for consumption in their
premises.
(3) Where more licences than one are proposed to
be granted under clause (d) of sub-section (1) in
relation to any locality for the same period, advance
intimation of the proposal shall be given to the
prospective applicants for every such licence.
(4) The provisions of Section 25, and proviso to
Section 39 shall apply in relation to grant of a
licence for an exclusive or other privilege under this
section as they apply in respect of the grant of a
licence for an exclusive privilege under Section 24,"
761
Section 24-B which was also introduced by Act 5 of 1976 in
the Principal Act reads thus:
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"24-B. Removal of doubts-For the removal of
doubts, it is hereby declared-
(a) that the State Government has an exclusive right
or privilege of manufacture and sale of country
liquor and foreign liquor;
(b) that the amount described as licence fee in clause
(c) of Section 41 is in its essence the rental or
consideration for the grant of such right or
privilege by the State Government;
(c) that the Excise Commissioner as the head of the
Excise Department of the State shall be deemed,
while determining or realising such fee, to act
for and on behalf of the State Government."
By the same Act section 30 of the Principal Act was
amended and the amended s. 30 read thus:
"30. (1) Instead of or in addition to any duty
leviable under the Chapter the State Government or on
its behalf the Excise Commissioner may accept payment
of a sum in consideration of the grant of licence for
any exclusive or other privilege under section 24 or
Section 24-A.
(2) The sum payable under sub-section (1) may be
determined either by auction or by calling tenders or
otherwise."
Section 41 of the Principal Act which confers power on
the Excise Commissioner to make Rules subject to the
previous sanction of the State Government touching the
matters or topics specified therein was amended by Act 5 of
1976 by substituting cl. (c) thereby conferring power on the
Excise Commissioner to frame Rules on the substituted matter
or topic and the amended cl. (c) runs thus:
"(C) Prescribing the scale of fees or manner of fixing
the fees payable for any licence, permit or pass
including
762
any consideration for the grant of any exclusive
or other privilege granted under Section 24 or
Section 24-A or for storing of any intoxicant."
In exercise of the power so conferred upon him under
the amended cl. (c) of s. 41, the Excise Commissioner with
the previous sanction of the State Government framed Rules
called the U.P. Excise (Wholesale and Retail Vend of Foreign
Liquor) (2nd Amendment) Rules, 1976 by issuing the
Notification No. 27/Licence-3 dated 14th April, 1976, which
were brought into force with effect from the date of
publication in the Gazette, namely, 14th April, 1976, by
this Notification the existing Rules 639, 641 and 642 as
appearing in Excise Manual Vol. I (1962 End.) were amended;
Rule 639(2) as amended provides that "licences in form FL-2
shall be settled by public auction" while Rule 641 as
amended provides that "the fee for a licence in Form FL-2
shall be the amount of money accepted at the auction of the
licence as ’fixed fee’ together with an ’assessed fee’
charged on the basis of the scales of surcharge fee
prescribed in the next paragraph following" and Rule 642 as
amended runs thus:
"642. The scales of licence fee applicable to
whole-scale licences for the vend of foreign liquor
shall be as follows:
(i) For a licence in Form FL.1......
(ii) For a licence in Form FL-2-The fixed fee
obtained for the licence at the auction in
addition to the assessed fees according to
the following scales:
(a) Spirits, Rs. 5.00 per
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wines, liquors reputed quart
etc. of all bottle on sale
kinds. to licensed
vendors.
(b) Beer, Stout and Rs. 0.60 per
other fermented reputed quart
liquors. bottle on sale
to
licensed
vendors.
Note: The fixed fee in respect of licence FL-2: one
fourth of the licence fee as obtained in the
auction
763
shall be payable in advance immediately on
the acceptance of the bid and the balance by
such instalments as may be specified in the
licence to be granted."
By the very notification dated 14th of April, 1976 the
Excise Commissioner added one more condition in the form of
a proviso to the terms and conditions of FL-2 Licence and
the said addition made after condition No. 1 (c), runs thus:
"Provided that the assessment fee on the sales
made on the licence in the prescribed manner at such
scales of surcharge fee as may be prescribed by the
Government and announced at the time of the auction,
shall also be payable by the licencee."
Obviously relying upon the aforesaid amendments made in
the Principal Act of 1910, by Act 5 of 1976 (some of which
were given retrospective effect from the date of the
commencement of the Principal Act and others from 16th
August 1972) and the said amended Rules 639, 641 and 642 and
the insertion of the new condition in the FL-2 Licence (all
of which came into force from 14th April, 1976), the
respondents introduced the auction system for the grant of
licences in Form FL-2 for wholesale vend of beer and Indian
Made Foreign Liquor and started levying and recovering the
"assessed fee" in addition to the "fixed fee" (auction
money) from the grantees of the licences. Question raised is
whether such levy and recovery are legal and valid ?
Before we deal with the question it will be desirable
to set out the facts giving rise to it that lie in a narrow
compass and it will suffice if the facts obtaining in Writ
Petition No. 528 of 1979, being typically representative of
the group, are stated. The petitioners in that petition are
liquor dealers and carry on business inter alia of wholesale
vend of beer and Indian Made Foreign Liquor and for that
purpose have wholesale depots in various districts in the
State of U.P. For the financial years 1976-77 and 1977-78
they acquired by auction bids wholesale vending rights in
respect of Indian Made Foreign Liquor at Agra, Meerut,
Varanasi, Kanpur, Bareilly and Dehradun; for the financial
year 1978-79 they similarly acquired wholesale vending
rights in Indian Made Foreign Liquor at Agra, Meerut and
Varanasi and for the financial year 1979-80 they acquired by
auction similar rights at Agra, Meerut, Ghaziabad
764
and Pilibhit. In other words being the highest bidder at
these places for these years licences for the wholesale vend
of Indian Made Foreign Liquor in Form FL-2 were granted to
them. At the time of acceptance of their bids at these
auctions the petitioners deposited the entire auction money
called the "fixed fee" in respect of each of the said years
with the respondents. The petitioners’ case is that
thereafter the respondents are seeking to levy and recover
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from them the "assessed fee" at the rate of Rs. 5 per quart
bottle on spirits and 60 p. per quart bottle on beers
actually sold during each of the financial years by their
concerned shops or depots in addition the "fixed fee". Such
levy and recovery of the "assessed fee" by the respondents
is challenged on two or three grounds indicated hereunder.
In the first place Counsel for the petitioners have
contended that under s. 30(2) of the Principal Act of 1910
prior to its amendment by U.P. Ordinance No. 4 of 1979 and
U.P. Act 13 of 1979 it was open to the respondents to adopt
either one or the other method of granting FL-2 licences and
determine the licence fee payable by the grantee
accordingly, that is to say the respondents could grant the
licence "either by auction or by calling tenders" and once a
particular mode was adopted it was incumbent upon them to
apply the same for the purpose of determining the sum
payable by the grantee; in other words the contention has
been that it was not open to them to adopt a combination of
two or more methods and claim "assessed fee" in addition to
"fixed fee" and therefore the instant attempt on the part of
the respondents to levy and recover the "assessed fee" in
addition to "fixed fee" would be illegal and without
authority of law. According to the petitioners a combination
of two or more methods became available to the respondents
only under sec. 30(2) as amended by U.P. ordinance No. 4 of
1979 and by U.P. Act 13 of 1979. Secondly, the petitioners
have averred that at the time of the said auctions held for
each of the said financial years the bidders were not
informed that any "assessed fee" had been fixed by the State
Government which would be payable by the successful bidder
and therefore the persons who gave their bids including the
petitioners whose highest bids were accepted were led to
believe that no fee over and above the auction money would
be charged and that the successful bidder would be granted
FL-2 licence merely on payment of the auction money. Counsel
for the petitioners have therefore contended that the
respondents’ attempt to levy and recover the "assessed fee"
over
765
and above the "fixed fee" (auction money) is unwarranted and
illegal in as much as the respondents cannot enhance the
petitioners’ contractual liability which was limited to the
payment of the auction money. Yet another contention raised
by Counsel for the petitioners has been that as per the
newly inserted condition in FL-2 licence the "assessed fee"
was required to be "prescribed by Government and announced
at the time of auction" but in the instant case such
"assessed fee" has been prescribed by the Excise
Commissioner and not by the State Government and was not
announced at the time of the auction and for this reason
also the same would not be recoverable. As will be shown
presently none of these contentions has any merit and each
one is liable to be rejected.
As regards the first contention a plain reading of s.
30(2) prior to its amendment by U.P. Ordinance No. 4 of 1979
and by U.P. Act No. 13 of 1979 will show that there is no
substance in it. The said provision ran thus:
"2. The sum payable under sub-sec. (1) may by
determined either by auction or by calling tenders or
otherwise."
In other words, the consideration for the grant of FL-2
licence could be determined either by auction or by calling
tenders or otherwise. The phrase "or otherwise" was
sufficiently wide and conferred on its plain grammatical
construction power on the State Government or the Excise
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Commissioner to grant the licence either by auction or by
tenders or partly by auction and partly by tenders or even
by adopting yet other methods than by auction or by inviting
tenders. In other words, the phrase "or otherwise" enabled
the State Government or the Excise Commissioner to adopt a
combination of one or more methods for granting the FL-2
licence and determine the licence fee accordingly. Having
regard to the phrase "or otherwise" occurring in the
provision it is impossible to accept the contention that
only one method to the exclusion of the others could be
adopted by the respondents for granting the licence or that
one type of fee appropriate to that method could alone be
charged. It is true that sub-sec. (2) of s. 30 as amended by
U.P. Ordinance No. 4 of 1979 or by U.P. Act No. 13 of 1979
runs thus:
"2. The sum payable under sub-sec. (1) may either
be fixed by auction or inviting tenders or otherwise or
be assessed on the basis of the sales made or quota
lifted
766
under the licence or partly fixed and partly assessed
in the aforesaid manner."
But in our view it is manifestly clear that the aforesaid
amended provision is clarificatory of the legal position
which obtained under sec. 30(2) that was operative prior to
the said amendment. In this view of the matter the first
contention has to be rejected.
The second contention has been that since at the time
of holding the concerned auctions the bidders were not
informed that any "assessed fee" had been prescribed by the
State Government which would be payable by the successful
bidder and since bids were offered on the representation
that the successful bidder would be granted FL-2 licence
merely on payment of the "fixed fee" (auction money) the
respondents’ attempt to levy and recover the "assessed fee"
over and above the "fixed fee" would be unwarranted and
illegal because the respondents cannot enhance the
contractual liability of the successful bidder which was
limited to payment of the auction money. There are two
answers to this contention. In the first place it was not
disputed before us that to the knowledge of all the bidders
these auctions for the grant of FL-2 licences were held
under the provisions of the Principal Act of 1910 as amended
by Act 5 of 1976 and the Rules framed thereunder which were
then in force. We have already referred to the provisions of
the amended Rules 639(2), 641 and 642 which were published
in the Gazette and brought into force with effect from 14th
of April, 1976 and admittedly all auctions for the financial
year 1976-77 were held subsequent to that date. Under the
amended Rule 641 it was clearly provided that the fee for
the FL-2 licence shall be the amount of money accepted at
the auction of the licence as "fixed fee" together with the
"assessed fee" charged on the basis of the scales of
Surcharge fee prescribed in the next following Rule and the
amended Rule 642 prescribed the scales at which the
"assessed fee" would be so charged. In other words, the
bidders who gave their bids must be deemed to have knowledge
of the provisions of the aforesaid Rules subject to which
the auctions were held and therefore it is difficult to
accept the contention that the bidders including the
successful bidder whose highest bid was accepted offered
their bids believing that only "fixed fee" would be charged.
Secondly, the averment of the petitioners that at the time
of these auctions the bidders were not informed that any
"assessed fee" had been fixed or prescribed which would be
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payable by the successful bidder is not quite correct. It
has been admitted by the petitioners that at the time of
these
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auctions the new condition that was inserted by the Excise
Commissioner in the FL-2 licence by his Notification dated
14th April, 1976 was read out and this newly inserted
condition runs thus:
"Provided that the assessment fee on the sales
made on the licence in the prescribed manner at such
scales of surcharge fee as may be prescribed by the
Government and announced at the time of the auction,
shall also be payable by licensee".
If admittedly the aforesaid condition inserted in FL-2
licence was read out at the time of the auction then it is
clear that the fact that "assessed fee" on the sales made on
the licence was also payable by the licensee was announced
at the time of the auction. The only grievance made by the
petitioners has been that the prescribed scales of surcharge
fee (under Rule 642) were not announced but that is neither
here nor there, for, if once it was announced at the time of
the auction that "assessed fee" on sales effected on the
licence at the prescribed scales shall also be payable by
the licensee then obviously the bidders were put on enquiry
to find out what scales of surcharge fee had been prescribed
under the relevant Rule. In other words the bidders present
at these auctions had full knowledge that "assessed fee" at
prescribed rates will also be charged and it was with full
knowledge of this position that they gave their bids. If
that be so, there is no question of the respondents’
attempting to enhance the contractual liability of the
successful bidder. It will be interesting to mention in this
context that the respondents have stated in their counter-
affidavit that not only did the bidders know that "assessed
fee" would be charged over and above the "fixed fee"
(auction money) but many of the successful bidders to whom
FL-2 licences were granted have actually passed on the
"assessed fee" at the prescribed rates to and recovered the
same from the retailers to whom they have effected sales of
beer and Indian Made Foreign Liquor. At least in the case of
those petitioners before us who have done so the aforesaid
plea put forward on their behalf cannot be regarded as
honest. The second contention therefore fails and is
rejected.
The last contention is merely required to be stated to
be rejected. In support of that contention reliance was
placed on the newly inserted condition in FL-2 licence which
states that the assessed fee "at such scales of surcharge
fee as may be prescribed by the Government" shall also be
payable by the licensee while
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actually the scales of surcharge fee have been prescribed by
the Excise Commissioner by framing the amended Rule 642 in
exercise of the powers conferred upon him by cl. (c) of 41
of the Principal Act. Counsel urged that scales of surcharge
fee ought to have been prescribed by the Government. In this
connection we might refer to sec. 24B(c) which expressly
declares that "the Excise Commissioner as the head of the
Excise Department of the State shall be deemed, while
determining or realising such fee, to act for and on behalf
of the State Government". It is thus clear that the Excise
Commissioner has been statutorily declared to be the agent
of the State Government and "while determining such fee" by
framing the amended Rule 642 he acted for and on behalf of
the State Government. In other words, scales of "assessed
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fee" under Rule 642 must be deemed to have been prescribed
by the State Government.
As regards the alleged non announcement at the time of
the auctions we have already dealt with that aspect of the
matter while dealing with and disposing of the second
contention.
No other point was raised. It is therefore clear that
the levy and recovery of the "assessed fee" over and above
the "fixed fee" by the respondents for granting FL-2
licences to all the petitioners would be legal and valid
under the U.P. Excise Principal Act of 1910 as amended by
Act 5 of 1976 and the amended Rules framed there under and
all the petitions are liable to be dismissed. We accordingly
dismiss all the writ petitions with costs and quantify the
costs payable by each of the petitioners separately at Rs.
5000.
S.R. Petitions dismissed.
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