1982 (5) TMI 186

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.... 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. It may be stated that the aforesaid challenge....

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....s 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 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 liquo....

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....toring 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...... (....

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....inancial 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 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 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 challenge....

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.... 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 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....

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....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 payable by the successful bidder is not quite correct. It has been admitted by the petitioners that at the time of these 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 prescri....