The most common and most likely answer to this crossword clue is the 9 letter word CELEBRATE
I've seen this crossword clue in Independent
C
E
L
E
B
R
A
T
E
More clues leading to the result CELEBRATE
- Commemorate Beetle
- Praise be! Electra complex!
- Honour A-lister fee
- Enjoy the price of fame?
- Take the car, beetle off and whoop it up
- Observe speed of star?
- Observe judge squashed by bigwig
- Famous person, judge, to paint the town red
- In 13 across, on 16 across Day, take car, beetle off — enjoy!
- Praise for remodelled 'Beetle' car
Buddy explains!

The straight part
We know that "Observe" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case observe = celebrate.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does CELEBRATE mean?
CELEBRATE verb- To extol or honour in a solemn manner.
- To honour by rites, by ceremonies of joy and respect, or by refraining from ordinary business; to observe duly.
- To engage in joyful activity in appreciation of an event.
- To perform or participate in, as a sacrament or solemn rite; to perform with appropriate rites.