Holding

The levy and recovery of the assessed fee in addition to the fixed auction fee is legal and valid under the Uttar Pradesh Excise Act, 1910 as amended.

Summary

The petitioners, wholesale dealers of beer and Indian Made Foreign Liquor, challenged the levy of an "assessed fee" in addition to the "fixed fee" (auction money) for FL‑2 licences under the Uttar Pradesh Excise Act, 1910 as amended by the 1976 Re‑enactment Act and later 1979 amendments. They argued that the statute allowed either auction or tender methods, not a combination, and that the assessed fee was not properly prescribed or announced, violating Articles 14, 19 and 31 of the Constitution. The Court examined Section 30(2) and the phrase "or otherwise", holding that it expressly permits the State to use any combination of methods for determining licence fees, including a hybrid of auction and assessed fees. It further found that the bidders were aware of the rules prescribing both fees, as the conditions were read out at the auction and the scales were set by Rule 642, which the Excise Commissioner could prescribe as the State's agent under Section 24B(c). Consequently, the levy of the assessed fee was deemed legal and valid, and the petitions were dismissed with costs awarded to the State.

Issues considered

Whether the levy of an assessed fee in addition to the fixed auction fee for FL‑2 licences is authorized by the Uttar Pradesh Excise Act, 1910 as amended.
Whether the phrase "or otherwise" in Section 30(2) limits the State to a single method of fee determination.
Whether the assessed fee was properly prescribed and announced as required by the statutory provisions.
Whether the levy violates constitutional guarantees under Articles 14, 19 and 31.

Legislation cited

Uttar Pradesh Excise Act, 1910s. 24A, s. 24B(c), s. 30(2), s. 41(c)
Uttar Pradesh Excise (Amendment) Act 5 of 1976 (Re‑enactment and Validation Act)
Uttar Pradesh Excise (Amendment) Act No. 13 of 1979
Uttar Pradesh Excise (Amendment) Ordinance No. 4 of 1979

Subjects

Excise lawLicence feeAuctionAssessed feeConstitutional validityArticle 14Article 19Article 31Uttar PradeshWholesale liquorFL‑2 licenceStatutory interpretation

Judgment

'{
~
755 A
'
TRADE LINKS LTD., NBW DELHI AND ANR. ETC. ETC.
v.
STATE OF UTTAR PRADESH ~ND ANR. ETC. ETC.
8
y
May 7, 1982

[Y.V. CHANDRACHUD C.J., V.0. TULZAPURKAR.,.
~ /' 0.A. DESAI, 0. CHJNNAPPA REDDY AND
/,
BAHARUL !SLAM, JJ.)
c
_._ Uttar Pradesh Excis• ( Amendm1nt) Act 13of1979, constitutional validity
of-Whether violatiVI of Artic/11 14, 19 and 31 of the constitution.

Utiar Pradesh Excise Act, 1910, Section 30(2), Proviso to clau•i ( c) and
Explanation.I and llto ClauH (c) of Section 41 as amended by (Amendment/ Act
l!J of 1919, whether ultra vire• the constitution. D'
In exercise of .the power conferred upon hiin under the amended clause
',{
(c) of section ·41;the Excise_ Commissioner_ with the previou~ sanction· of the
State Go'(.trnment framed Rules called tho U.P. Excise (Wholesal~and Retail
Vend of Foreign Liquor (2nd Amendment) Rules, 1976 by issuing the 'Notific,..,.
tion No. 27/Licence-3 dated 14th April 1976, which were brought into force
with effect rrom the date of.publication in the Gazette, namely, 14th April W16;
by thia Notification the existing Rules 639, 641 and 642 as appearing in Ex~
B
• Manual Vol. (1962 Edn.) were amended; Rule. 639(2) as amended provides that
... "Licences in form FL·2 shall he settled by tho public avction" while Rule 641 as

-
amended provides that "the foefor a licence in form FL-2 shall be the amount
" of money acc•pted at the auction of the licence a.r 'fixed /et' tog1ther with an
"a.ru1Hd !••" chart•d on the ba.riu of thuca/eJ of surcharg• fe• prescr/lnd .in
Rule 642.
-~ F
...._ By tho very notification dated 14th of April, 1976 tho Excise Com·
;
missioner added one 111ore condition. in tho form of a proviso ·to the terms and
... conditions ofFL;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 Ille prescribed manner ai such scales of surchar~e fee as
G
.may be prescribed by the Government and announced at the . time
of the auction, shall also be payable by tho licenceo."

Relying. upon, the amlndmonts made in the U.P. Excise Act, 1910 by Act S of
1976 and the amended Rules 639, 641 and 642 and the insertion of the new H
condition in FL-2 licence, the respondents introduced the auctioli system for tho
grant of licence in form FL-2 for wholesale vend of beer and Indian Malk

•
7s6 [1982) ~ s.c.it.
A Foreign Liquor and started levying and recovering the "assessed fee" in addition
to the "fixed fee" (auction money) from the gratltces of the licences.

The Pe.titiooers who were succes.Sful 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 nf "assessed fee", in addition to ,the
"fixed fee" on the following grounds : (i) U 0 der Section 30(2) of the Principal
B Act or 1910 prior to its amendment by U.P. Ordinance No. 4 or 1979 and U.P.
Act 13 of 1979 it WlS open to the respondents to adopt either ooe or the other
method or granting FL-2 licences and determine the licence fee payable by the
grantee accordingly, that is to -say, the resporidents could grant the licence
"either by' auctio'n or by caI!ing tenders" 8.nd once 'a particUJar mode was
adopted it was incumbent upon ~hem to apply tl\e saine f.or the purpo$C of
determining the sum payable by the grantee; in other words it was not opens them
c to adopt a combination of two or more methods and claim "assessed fee''· in
-addition to "''fixed fee" ~d·this would be illegal and without authority of law.
A combination of twQ (!l:f more methods became available to the respondents only
I . .
under Section 30(2) as amended by U.P. Ordinance No. 4.of 1979 and by U.P.
·Act 13 of 1979; (ii) In asmuch 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 tevy and recover the
D ""-"''assessed· fee" over and above the "fixed fee" (aUction · money) was unwarranted
and ilJegal in as much as the_ respondents could not enhance the petitioners'
contrac'tual liability which was limited to tbc payment of auction money and
(iii) as per the newly inserted cOnditions in FL~2 Licence the "assessed fee" was
required to be ''pre.scribed by ihe Government and <!DQounced 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'th.e time of the auction aDd for this, 'reason also the same would not be
rccoverabJe.

Di.smissing the pCtitions the_ Court, ..l

HELD : ' 1. The levy ana recovery of the "asse.ssed fee" over and
above the "fixed fee" by the respondents for granting .FL-2 iicenccs to
petitioners would be legal 1lild valid under the U.P. Excise Act of 1910
tbe

amended by Act 5 of 1976 and the amended: rules framed thereunder. [768 D-E]

2:1. A plain re"ading of Section 3U(2) qr -the Uttai Pradesh Excise Act
_ah
as
(
-
19lb prior to its amendment by U.P. Ordinance No. 4 of 1979 and by l,),P. :,Act
No. 13 or 1979 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.
.G [765 C-B]
·"t-'

2:2. The p_hrase "or otherwise" was sufficiently wide , and conferred on
its plain grammatical construction, power on the State Government or ihe
&:else Commissioner to grant thbi licence either J.ly auction or ~Y tenders _·,~r
H partly by auction.and partly by tenders or even by, adopJilll!.yet other. metho~s
lhan by auction or by:invitiog .tend_ers._ ln ot_bcr w.or_~s, the phta~ "or otherw~s~"

,..
•
'rkADB LINKS v. U.P. STATB 757
·-
~- _enabled tbC Stat~ Government· ot the Excise C<>mmissioner to adopt a combi· A·
• niition OronC Or oiol'e nlethods ·for gnintiog the FL-2 licence an,d determine . . the
ljtence: fecl_lllccordiagly. Hilvilig. rtgard,fb the· phrase "or c:aberwise"' occu_rring in
t5eProvision it can not be said that only ODC method to the Cxclusion Of the
- others could be.adopted.for granting the licence or that one type of fee
-appropriate to that method could alone ,be i:harsed- [765 E-G]

• 2:3. Sub-section (2) of Section 3•l as amended by U.P. Ordinance 4 of
1979 or U:P. Act 13of1979 is clarifiCa.to~y ..of the Ieial pooition,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 musi be deemed to have knowledge
of'\the prOtisicins·or the reJ~vant ·Rules subject tot which the auctions were. ·held
l!ld therefore, -the bidders including the suocessful bidders whose highest bid .C
_,.--
was accepted did- not offer their bids believing that only "fixed fce"·would
be charged, since it was to their knowledge that the auctions for the grant of
l'l,,Z !icenti> were held UJi<ler the amend~d provisions of iiie Act of 1910 by the
Alllendmen_t of 1976 and thl\t Rule 641 of _Excise Manual clearly provided that
the fee for'the FL·2 licence'sball be the_ amount ofmoney accepted at the auctioll
of the licence as ,·,fixed fee"_ltogether ~ith the "assessed fee" ·charged on the
scales of surcharge fees prescribed in Rule 642. Further even according to the D
petitioner!, the new condition inserted-by the EJtcise Commissioner in the said
iicence was read out. -If 8.Gmittedty tho said condition inserted in FL-2 licence
w&s read out at the time of auction tben it is clear .that the fact that "assessed
(ce" on the sales made ,on the lice1,1ce -wa_s also payable by the licensee was
announced at the time of_ auction._ [i66 oca. 767 B-C] '

... -3:2. 1f once it was announc~d at the time of the auction that "aSse~sed ·E
fee'' on the sales affected on lhe licence at the Prescribed Scales shall~also be pay·
able by -the ~icensee, then the bidders-were put on enquiry to find out what scS:les
of surcharge fees had been prescribed under the relevant Rule. In other Words
the. bfdders presented at th~ auctions had fulJ knowledge that "assessed feC"
' at presctibed rates will also be-charged and it was with fulL knowledge of this
position that they gave their. bids. I( that be so, there was . no question of the
fcspondeD.ts' attemPting to enhance the conJr'a.ctua1 liabifity of the· successful F
bidder. Further admittedly, not.only di<Jrthe 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 10 and
r~covercd the satrie from the retailers to wham \hey_ effected sales of beer and
Indian Made ForeignLiquor. [767 C.FJ

G
4. Section·24B(c) which expresslY ·decJares that "the E~cise COrilmis-
si6neF·a$ the head of ExCise Departinent of the State· shall be deemed, while
d•terml~(ng o_r realising such fee, t<> act for and on bebalf of the State Govern,
·Went, makes.Jr cl~af that the Excise Comrrlissioner...,has. ~n statlltorily declarc;d
lo ile thc,agent·ofthe State Government am! "while determining" .such fees by
fftmli\s ·the. amen_ded. Rules 642 be "acted Uo!)and on behalf of the State . H
(JoVernmenf.·in·other words, scales of "assessed fee" under- Rule '642 must be
ll~m•4 \o hav~ been prescribed by the St~te Goyer 0 ment. p68 B·CJ

.,
758 SUPRBMB COURT REPORTS (1982) 3 a.c.a.

A, ORIGINAL JURISDICTION : Writ Petition Nos. 528-529, 1645,
. 288, 293, ~62, 363, 374, 388, 404-406, SIO, _512-14, 644-46, 647,
663-65, 707, 710, 720 t~ 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. , .
8 •
(Under Article 32 of the Constitution of India)

G.L. Sanghi, Dr, L.M. Singhvi, S.N. Kacker, Yoge1hwar
Prasad, Ashok Grover, /l.N. Koura, S.C. Budhwar, L.K. Pandey,
Ravindra Narain, D., N. Mishra, P. Krishna Rao, K. R. Nagaraja,
c Miss Kamin/ Jaiswal and Mrs. Rani Chhabra for. the appearing
Petitioners. ..
0
L,N. Sinha,, Attorner 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 ,
D 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 peti"
'E tioners, who carry on business, inter alia, of the wholesale vend of ,
beer .and Indian Made Foreign Liquor at various places in th.e 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 (Amenclment) Ordinance

-
No. 4 of 1979 as.also the constitutional validity of ss. 1(2), 3 and 5.
F of U.P. Excise (Amendment) Act No, 13 of 1979 (which replaced
the said' Ordinance No. 4. of 1979) as being violative of their funda·
·mental rights under Arts. 14, 19 and 31 of the Constitution; the
petitiofiers 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 Ordi-
G nance 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. I 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
H State of U.P., the Excise Commissioner and other officers) either
directiy o't through their agents, servants or otherwise from giving
effect to tlie 1111len\Jed provision,

"'
'fltAOE LINKS v. u.P. STATE (Tulzapurkar, J.) 759

It may be stated that 'the aforesaid challenge ·to the U.P. A
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 "•sse'ssed
fee" which the respondents are seeking to recover from the peti·
tioners in 11ddition to the "fixed fee" (auction money) as·and by
• way of consideration for the grant of licences in Form FL-2 for B
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, 191Q (being the
Principal Act) by the said Ordinance No. 4 of 1979 and by the said
Act No. 13 of i979 the "assessed fee" in addition to the "fixed fee"
, (auction money) could be and was being recovered under the c
Principal Act of 1910 as amended by .the U.P, Amending (Re·
enactment 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 D
money) could be levied 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 •E
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 \ernls and conditions on
which sales by wholesale of the said commodities could be effected
.~·
by the grantees thereof. It appears that prior tq April i976 these F
'- fL-2 licences were not se!,lled under any auction system but were
~ renewable from year to year and the licence fee was based on the
..i.. . quantity of beer and Indian .Made Foreign Liquor ~ctually 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 ()[I
beers. But from April 1976 auction system was introduced where-
G
under FL-2 licences were auctioned under the provisions· of para·
graph 373 of the U.P. Excise Manual Vol. ·1 and "fixed free" being
the highest bid (auction money) accepted at such auction came to '
. be c~arged for the grant of FL-2 licences and this system was
H
introduced on the strength of the amendments that were made in
theP~incipal
.
Act of 1910, by ihe l\mendin~ (Re·enactment and
760 . SUPREME COUR.T lt.EPO!t.TS 1 [1982} 3 S.C.lt. •

A · 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 : ·
'B •
"24-A. Grant of exclusive or other privilege in respect·
of foreign liquor. (I) Subject to the provisions of_Section
31,the' Excise Copimissioner. may gr.ant 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 manufacturiag or of supplying by wholesale, or of
both and selling by retail; or .

D (c) . of selling by wholesaJ~ (to· wholesale or ,retail ven-
(!ors); or
'
(d) of selling by retail af'~hops (for consumption 'off' the
premises);

-E any foreign liquor iQ any Joc11lity.

(2) The grant of licence or licences under clause (d) of
sub.section (!} 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
··.F
.•
for consumption in their premises.

(3)- Where more licences than one .are proposed . to be
granted under clause (d) of sub-section (I) in relation to
any locality for the same period, advance intimrno'n of the
proposal shall be given to the prospective applicants f.Q!
every such licence.

(4) Tqe provisions of Section 25, and proviso to
Sectio.n 39 shall apply in relation to grant of· a Jicenc~ far
H an exclusive or other privilege (under this section as' they
apply iii· respect of the grant of a licence for an exclusive
privile~e uQder S~tio!I 24,"
.
...

•
TRADE LINKS '· U.P. STATE (Tulzapurkar J.) 761

'1', Section 24-B which was also introduced by Act 5 of .1976 in the A
· Principal Act reads thus :

"24-B. Removal of doubts-For the r,emoval of doubts,
it is hereby declared-

(a) that the State Government :has an exclusive right or B
privilege of manufacture and sale of country liquor
and foreian liquor ;

- (bl that the amount described as licence fee in clause· (c)
of Section 41 is in its essence the rental or considera-
tion for the grant of such right or privilege by the
State Government ; '
c
(c) that the EXcise Commissioner as the head of the Excise
Department of the State shall be deemed, while deter·
mining or realising such fee, to act for and on behalf
of the State Government." D
By the same Act section 30 of the Principal Act was amended
and the amended s. 30 read thus
. :
"30. (I) 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 pther privilege under liection 24 or Section

-
24-A. .

(2) The sum payable under sub-section. (I) may 'be.
determined either by auction or by calling tenders ·or '
otherwise.''.

Section 41 of the Princip.al Act which confers power on the
Excise Commissioner to make Rules subject to the previous sanction G
of the State Government touching the matters or topics specified
therein was amended by.Act 5 of 1976 by substituting cl. (c) thereby
conferring poiTer on the Excise Commissioner to. frame Rules on the
substituted matter or topic and the amended cl. (c) runs thus :
H
"(C) Prescribing the scale of fees or manner of fixing .the
fees payable for an~ Ji~qi;e, ~~!iiit o~ ~~~s \n~\11dinf
762 SUPREME COUltT ·RE!'ORrs (1982) 3 S.C.R'
A' any consideration for the grant of any exclnsive or
other privilege ·granted under Section 24 or Section
24-A or for storing of any intoxicant."

· In exercise of the power ~o conferred upon him under the
amended cl. (c) of s. 41, the Excise Commissioner with the previous
B sanction of the State Government framed Rules ca lied the U.P.
facise (Wholesale and Retail Vend of Foreign Liquor) (2nd Amend-
ment) Rules, 1976 by issuing the Notification No. 27/Licence-3
dated 14th April, 1976, which wci:e brought into force with effect
from the date of publication. in the Gazette, namely, 14th April,
1976, by this Notification th~ existing Rules 639, 641 and 642 as
c appearing in Excise Mantia! 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 amot111t 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
D prescribed in the next paragraph following" and Rule 642 as
amended runs thus :

"642. The scales of licence fee applicable to whole·
sale licences for the vend of foreign liquor shall be as
follows :
E
(i) For a licence in Form FL.! ......

(ii) Fot a licence in Form FL-2-The fixed fee obtained
for the licence at the auction in addition ta the
assessed fees according to the following scales :

' (a) Spirits,
wines, liquors
Rs. 5.00per
reputed. quart
etc. of all bottle-on sale
kinds. to licensed
vendors.
G
,(b) Beer, Stout and Re. 0.60per
other fermented reputed quart
liquors. · bottle on sale to
licensed vendors.
.
'H
Note: The fixed fee in respect of licence FL-2 : one
fourth of the lic~nce fee:as obtained in the auction
TRAl>h LINKS v, u.i>, STJO.TB (Tu/zapurkar J.) t61
shalt be payable in· adVance i01medfately oil tile A
11CcepU1ilce of the bid and' the balance by such
' '
instalments as 01ay be specified iii the licence to
be granted;''

,, By the very notification dated 14th of April, 1976 the Excis\l
Conrmilleionet added one more condition ill the form of a Jftoviso to B
tbl! terms and co11ditiolis of FL-2 Lice11ce and the said addition
mtde afttr condition No. I (c); rllns thus :

·"Providtd that the asse!sment fee on the saies made
O.·the lieence in the prescribed, manner at such scales of
surcharge fee as may be prescribed by the Gbverl!ment
c
and announced at the time of the auction, shall 'also be
payable by thi: licencee."

dbviouslyrelying upon the aforesaid amendments made iii
tlfe, PtinCipalAct of 1910, by A.ct 5 of 1976 (some of which were D
~vtn retrospective effect ftom the date of the 9ommencement or
till! P~iticlpal Act and othets from 16th August 1972) and the said
amended Rules 639, 641 and 642 and the insertion of t])e new
conliitiob in the' FL-2 Licence (all of which qame into1_force from
14th· April, 197~, the respondents inttocllJced the auction system
for the g~bt of licences in Ft>rm FL-2. for wholesale 'Vend of beer E
and Indian Made Foreign Liquor and .started levying and recovering
the "a!9essed fee" ill addition to the .. fixed fee" (auction money)
ffo1b th~ grantees ofihe licehces. Question raised is whether such
·( le•Y.and tecovtry are legal ·and valid ?

- Before we deal with the question it ~ill be desirable to set out F
...._ ."-' the; Ja~ts giving rile .t~. it . .that !ie itt .a. narrow compass and it ~ill
-..... ___suffice 1f t])e facts obta1111ng m ·Writ Petit1on No. 528 Of 1979, be1b~
t)'pically representative of the group, are stated. The petitioners iii.
that petition are liquor dealers and· carry on business inter a/ia of
wholesale vevd .;if beer and' Indian Made Foreign Liquor and for
that purpose have wholesale d~pots in various districts in the State G
of U.P. For the financial years !'976-77 and 1977-78 they acquited
by, auctien blds wholesale vending rights iri respect of Indilln Mad~
Foreigo Liquor at Agtil1 Meerut, Varanasi, Kanpur; Bareilly and
Dehradun; for the financial year 197g,79 they similarly acquired
whble1111Je vending rights in Indian Made Foreign Liquor at Agra,
Meerut and. Varanaai and for t])e financial year 1979-80 thi!y
acquired by auction similar rights at Agra, Meerut, Ghaziabad
764 (1982] 3 s.C.ll.

A and Pilibhit. lo 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 resp.ondents.
B The petitioners' case is that thereafter the respondents are
seeking to levy and recover 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 feee" by the respondents is challenged ·
c 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 amend-
ment 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
D 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 incum1>ent upon them to
apply .the same for the purpose of determining the sum payable
by the grantie; in other .words the contention has been that it
E was not open to them to adopt a combination of two or· more
methods and claim "assessed fee" in addition to "fixed fee"
8J!d 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
F petitioners ·a combination of two or more methods became available -
to the respondents only under sec. 30(2) as amended by U.P. ordi- / _.,,-
nance No. 4 of 1979 and by U.P. Act 13 of 1979. Secondly, the.--"'
petitioners have averred that at-the time of the ~aid auctions hel~ <
for each of the said .financial years the bidders \vere not informed ..}.
that any "assessed fee" had been fixed by the State Government
G 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 o~ the auction
H money. Counsel for the petitioners have therefore contended that
the respondents' attempt to levy and recover the "assessed fee" over
tllADB LINltS 1'. U.P. STATE (tu/zapurkar, J.) 165
•
and above the "fixed fee" (auction money) is unwarranted and A
illegal in as much as the respondents cannot enhance the petitioners' ·
coniractual liability which was limited to the payment .o·f the alctio'!c
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
an4 announced at the time of auction" but in the instant case such B
"assessed fee'' has been preacribed 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 ~onld not be recover-
able: As will be shown presently none of these contentions bas an}'
merit and each one is liable to be rejected. '
c
As regards the first contention a plaiii 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. (I) may by D
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 phras.~ "or otherwise" was sufficiently wide and conferred on
"E
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" enabled the State Govern·
ment or the Excise Commissioner to adopt a combination of one or
F
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 t~e exclusion of the others could be
adopted by the respondents for granting the licence or that one type
G
of fee appropriate to that method could alone be charged. It is
true \hat 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 suJt..sec. (I) may either H
be fixed by auction or inviting tenders or otherwise or be
assessed on the basis of the sales made or quota lifted
sbl'!IEMI! cOURT REi>ollts !1982) ~ s.c.tt.
A 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 clatificatory of the legal position which obtained under
sec., 30(2) that was operative prior to the said amendment. lo ·this
B 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
whiAh would be payable by the successful bidder and since bids were
c 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 an.d abo\.e the "faed fee" would be unwarranted and

.,. illegal because the respondents cannot enhance the contractual
liability of the succes&ful 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 tho 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
broagbt into force with effect from 14th of April, 1976 and admit'
tedlyall auctions for the financial year 1976,77 were held subl;equent
to that date. Under the amended Rule 641 it was clearly provided )
that th'e 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 tb'C bidders including the successftil
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
H ~ot intormed .that any "assessed fee" bad been .fixed or prescribed
which woul!l he payable by the successful bidder is' not quite correct.
'It bas been admitted by the petitioners that. at the time of these
'l'llADB LINKS v. U.P; STATE (Tu/zapurkar J.) 767 ·

a.uctions the new condition that was inserted by· the Excise Com· A
missioner in the FL-2 lice~ce by bis Notification dl!tcd 14th April,
1976 was read out and thi~ newly inserted condition runs thus :

"Provided that the assessment fee on the sales ·made
on the licence in the prescribed manner al such scales of
surcbarse fee as may be prescribed by the Governm'ent and
announced at the timec of 01e 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 theJicensee was announced at the time of the auction. The only
grievance made by the petitioners bas 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 tha( "assessed foe" on sales effected on the licence at
the prescribed scales shall also be· payable by the licensee. then · D
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 ga,ve their bids.
If that be so, there is no question of the respondents' attempting to I
enhance the contractual liability of the successful bidder. It will Ile
interesting to mention in ibis context ·that the respondents have
(
stated in their counter-affidavirthat not only did the bidders know

-
that "assessed fee" would be .charged over and above the "fixed fde"
(auction money) but many of the successful bidders to whom FL-2
licences were granted have actually passed on the "as&essed
fee" at the prescribed rates to and recovered the same from the
retailers to whom they have effected sales of be~r 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 col)tention therefore
fails and is rejected. G

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 H
assessed fee "at such scales of·surcharge fe1 as may be prescribed
by the Government" shall also be payable by the licensee while
768 SUPREME COUllT Rl!POllTS iI982) 3 s.c.ll.
' '
A actually the scales of surcharge. fe~ 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 qf the P,iincipal
Act. Counsel urged that scales of sntcharge fee ought to have been
prescribed by th.e Government. In. this connection we might refer •
B
to sec. 24B(c) whieh expressly declares that "the Excise Commis-
sioner 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 Govern-
c ment. In other words, scales of "assessed 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 d~alt with that aspect of the matter while
dealing with .and disposing of the second contention.
D
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'belegal 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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