JUDGMENT R. B. Mehrotra, J. 1. By means of this writ petition under Article 226 of the Constitution of India, the petitioners have challenged the proceedings for realisation of Rs. 39,330/- as arrears of land revenue from the petitioners. 2. The necessary facts for decision of the writ petition are as under : The petitioners were highest bidder for a foreign liquor shop of Nigha- san Road, district Lakhimpur Kheri for the year 1980-81. F. L 5 licence was settled with the petitioners for a licence fee of Rs 1,52,000/- being the highest bid for the aforesaid shop. In accordance with Rule 373 (6) of the Excise Manual, the petitioners deposited the l/4th of the annual licence fee i.e., an amount of Rs. 38 000/- immediately. Thereafter the petitioners were granted the provisional licence subject to approval of the Excise Commissioner as required under Rule 373 (2) of the Manual. The petitioners' contention is that the petitioners' bid was never accepted by the Excise Commissioner, that the petitioners were permitted to run F. L. 5 licence on provisional basis. It seems that the petitioners failed to pay the monthly instalments of the licence fee Consequent thereupon, the petitioners' licence was cancelled on 4th November, 1980. On petitioners' licence having been cancelled in the midst of the licensing year, Nighasan Road shop was put to re-auction on 17th November, 1980. On re-auction, one Sri Suresh Chandra Sharma offered a bid of Rs. 52,500/- as highest bid for the remaining licensing period. The second highest bid was of one Sri Raj Narain. That was for an amount of Rs. 52,000/-. Both the aforesaid persons were fully qualified for being granted the licence. The had solvency certificate to participate in the auction. The necessary requirement of Rule 373 (5) and (6) of the Excise Manual for settling the shop with the aforesaid Sri Suresh Chandra Sharma and Sri Raj Narain was also got completed and the signatures of the highest and next highest bidders were also taken on the bid sheet. Petitioners' contention is that if the highest bid of Rs. 52,500/- was accepted by the authorities then there would have been a short fall only for an amount of Rs. 10,830/-. The petitioners in fact deposited an amount of Rs. Petitioners' contention is that if the highest bid of Rs. 52,500/- was accepted by the authorities then there would have been a short fall only for an amount of Rs. 10,830/-. The petitioners in fact deposited an amount of Rs. 10,830/- in the State Bank of India towards the short fall of the second auction As such the petitioners were no more liable for any amount towards short fall of the auction money. The details regarding petitioners' account is as under :- (i) Initial bid in favour of the petitioners .. 1,52,000/- (ii) Total money deposited by the petitioners as licencee .. 88,670/- (iii) Balance of licence fee .. 63,330/- (iv) In the second auction the shop was auctioned .. 52,500/- Balance Rs. 10,830/- This amount was deposited by the petitioners. 3. Lateron, it was revealed that the highest bid offered by Sri Suresh Chandra Sharma and the next highest bid offered by Sri Raj Narain was not accepted by the Commissioner on the ground that the bid money is not adequate and consequent thereto the said excise shop was again re-auctioned and this time the bid was only for Rs. 24,000/-. The Excise Commissioner, however, this time settled the re-auction with one Sri Ram Dularey only for an amount of Rs. 24,000/-. This resulted in a situation that the short fall in the auction came to Rs. 39,330/-. It is this amount which is being sought to be recovered from the petitioners as arrears of land revenue. 4. The petitioners have made two submissions for challenging the aforesaid recovery. The first submission is that since there was no concluded 206 Saroj Devi v. Excise Commissioner (R. B. Merotra, J.) [1991 contract between the petitioners and the State Government and the petitioners were only running the shop on a provisional licence basis, the short fall in the auction money could not have been recovered as arrears of land revenue, the State Government could have recovered the same only by way of suit. The second submission of the petitioners is that there was absolutely no justification for the Commissioner in not accepting the highest bid of Sri Suresh Chandra Sharma, in the first re-auction for an amount of Rs. 52,500/-. The petitioners had already deposited the short fall in the auction money on the basis of the first re-auction of the shop. The second submission of the petitioners is that there was absolutely no justification for the Commissioner in not accepting the highest bid of Sri Suresh Chandra Sharma, in the first re-auction for an amount of Rs. 52,500/-. The petitioners had already deposited the short fall in the auction money on the basis of the first re-auction of the shop. The petitioners cannot be held responsible for the short fall of the auction money for the second re- auction as the Commissioner had no justification for not accepting the highest bid of Rs. 52,500/- in the first re-auction and thereafter accepting the bid only of Rs 24,000/- in the second re-auction. The said action of the Commissioner is wholly arbitrary as such the petitioners cannot be held responsible for the short fall in the second auction. So far as the first submission of the petitioners is concerned, the question as to whether it is open to a provisional licencee to give up the licence at his choice and then contend that the short fall in the first re- auction cannot be recovered from him as arrears of land revenue has recently came up for consideration in Civil Misc. Writ Petition No. 682 of 1989 Radhey Shyam Jaiswal v. The State of U. P and others decided on 17th January, 1991. In the said decision, a Division Bench of this Court in which one of us (Honourable B. P. Jeevan Reddy, C.J.) was a member, has taken view that it is not open to a provisional licensee to walk out of the licence during the middle of the licensing year and if he does so, he owes full responsibility for paying balance amount of licence fee and in case of re-auction, the short fall in the auction money shall be recovered from him as arrears of land revenue. In view of this decision, the first submission of the petitioners is rejected. 5. The second submission of the petitioners has merit and deserves consideration. Under the scheme of the Excise Act, if a licensee fails to run the shop for the whole of the licensing year, the licensing authority will cancel the licence and will re-auction the excise shop, if on such re-auction, the Revenue suffers any loss, the loss is required to be recovered from the licensee who fails to run the shop for the whole of the year. As has been held in the case of Radhey Shyam Jaiswal (supra), such a short fall in the re-auction can be recovered from the licensee as arrears of land revenue as it is in essence the excise revenue within the meaning of section 39 of the U P. Excise Act. However, the question in the present case is, can a licensee be held responsible, if for no fault of his, the Excise Commissioner refuses to accept the highest bid in the first re-auction and arbitrarily accepts a much lower bid in the second re-auction. In the facts of the present case, the petitioners have specifically stated that they were never informed regarding the second auction and they were all the way under an impression that the shop has been settled with the highest bidder of the first re-auction. The petitioners have a liability to pay the short fall in the auction money. The auction was held and a bid was offered. There is nothing on record to show as to why the Excise Commissioner refused to accept the highest bid and ultimately who on a second re-auction, accepted the much lower bid ? There is no justification for this action of the Commissioner. The petitioners cannot be held responsible for the arbitrary decision of the Commissioner if any short fall occurs to the revenue due to arbitrary decision of the State authorities, the petitioners cannot be held responsible for the same. No counter- affidavit has been filed in the case. The petitioners' statement has to be accepted as on the face of the record. The petitioners have categorically stated that the Commissioner has no justification for not accepting the highest bid of Rs. 52,500/- in the first re-auction and thereafter accepting the highest bid of only Rs 24,000/- in the second re-auction The action of the auctioning authorities and acceptance of bid by the Excise Commissioner seems to be arbitrary on the face of it. In this view of the matter, we are clearly of the opinion that if the Revenue has suffered any loss due to arbitrary decision of the State Authorities, the petitioners cannot held responsible for the said loss. In the present case, the petitioners have already deposited the short faill amount of the first re-auction. No further recovery is called for from the petitioners. 6. The writ petition is accordingly allowed. In the present case, the petitioners have already deposited the short faill amount of the first re-auction. No further recovery is called for from the petitioners. 6. The writ petition is accordingly allowed. The recovery certificat issued against the petitioners for an amount of Rs. 39,330/- as licence fee for the licensing year 1980-81 for the Nighasan Road shop, district Lakhime pur Kheri is quashed. The parties will bear their own costs. Petition allowed.