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 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 Page 8 of 11 http://JUDIS.NIC.IN SUPREME COURT OF INDIA 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 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 Page 9 of 11 http://JUDIS.NIC.IN SUPREME COURT OF INDIA 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 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 counteraffidavit 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 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 Page 10 of 11 http://JUDIS.NIC.IN SUPREME COURT OF INDIA 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. Page 11 of 11