Whether the Respondent is entitled to refund of the licence fee and the differential amount for the period during which the unit was sealed. ?
Apex court held that when there is no prior adjudication in favour of the Respondent and the Respondent was given an opportunity to show cause as to why the premises should not be sealed - when after considering the explanation submitted by the Respondent, the penalty was imposed on the Respondent and due to the failure of the payment of the amount of penalty, the premises were sealed - the respondent is not entitled for any refund of licence fee and differentaial amount during which the unit was sealed
Non-Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 7951 of 2019
(Arising out of SLP (C) No.4647 of 2019)
THE STATE OF BIHAR & ORS.
.... Appellant(s)
Versus
M/S RIGA SUGAR CO. LTD.
…. Respondent (s)
With
Civil Appeal No. 7952 of 2019
(Arising out of SLP (C) No.4664 of 2019)
THE STATE OF BIHAR & ORS.
.... Appellant(s)
Versus
M/S WELCOME DISTILLERIES PRIVATE LIMITED.
…. Respondent (s)
Civil Appeal No. 7957 of 2019
(Arising out of SLP (C) No.3593 of 2019)
THE STATE OF BIHAR & ORS.
.... Appellant(s)
Versus
M/S SHIPRA BEVERAGE PRIVATE LIMITED.
…. Respondent (s)
Civil Appeal No. 7958 of 2019
(Arising out of SLP (C) No.3595 of 2019)
THE STATE OF BIHAR & ORS.
.... Appellant(s)
Versus
M/S K.M. SUGAR MILLS LIMITED. …. Respondent (s)
1 | P a g e
J U D G M E N T
L. NAGESWARA RAO, J.
1. These Appeals arise from a judgment of the High
Court of Judicature at Patna in the Writ Petitions filed by
the Respondents. The Writ Petitions were allowed by the
High Court and the Appellant- State was directed to refund
the licence fee and the differential amount recovered from
the Respondents for the period during which their premises
were unlawfully sealed/closed.
As the facts of each case are different, we proceed to
deal with the Appeals separately.
Civil Appeal No. 7951 of 2019
(Arising out of SLP (C) No.4647 of 2019)
(M/S RIGA SUGAR CO. LTD.)
2. A tender notice dated 31.01.2014 was issued by
the Department of Excise and Prohibition, Government of
Bihar, inviting applications for grant of Exclusive
Privilege for manufacture and supply of country liquor in
PET bottles. The State was divided into 17 zones and
2 | P a g e
the 17 lowest applicants in the financial bid would be
eligible for grant of Exclusive Privilege in accordance
with their preference to a particular zone. By an order
dated 04.03.2014, Exclusive Privilege for manufacturing
and supply of country liquor for zone 11 constituting the
districts of Muzzafarpur, Sitamarhi and Sheohar for the
period between 01.04.2014 to 31.03.2019 was awarded
to M/s Riga Sugar Company Limited (hereinafter, ‘the
Respondent’). The base rate fixed for supply of 200 ML
PET bottle of country liquor was fixed at Rs.5.78/-. The
difference between the base price and the bid price (in
this case Rs.4.07/-) calculated on the Minimum
Guaranteed Quantity (MGQ) was payable by the supplier
to the Government in advance for a period of every
three months i.e. on 15th March, 15th June, 15th
September and 15th December. As per the tender
conditions the supplier is required to obtain a licence in
Form 27 for manufacture and supply of country liquor to
Bihar State Beverages Corporation Limited (BSBCL) at
the rate of Rs.1/- per litre calculated on the Minimum
Guaranteed Quantity.
3 | P a g e
3. The Respondent was required to supply
5,25,220.786 LPL country liquor of 60 degree strength
per month. After issuance of a letter of grant on
04.03.2014, a liquor licence was obtained by the
Respondent. Pursuant thereto, the Respondent
established a bottling plant at Muzzafarpur and
commenced production and supply of country liquor to
BSBCL on 01.02.2015. As the Respondent was not
supplying the prescribed quantity of country liquor to
BSBCL, a warning was issued to ensure that the
prescribed quantity of country liquor was supplied. On
09.12.2015, a penalty of Rs.1 lakh was levied on the
Respondent for non-supply of minimum quantity of
country liquor. Pursuant to the inspection report dated
13.12.2015, the premises of the Respondent was sealed
by the Superintendent of Excise, Muzzafarpur for nonsupply of minimum quantity of country liquor.
4. The State of Bihar announced a New Excise Policy
and imposed total ban on consumption of alcohol in the
4 | P a g e
State in a phased manner. The New Excise Policy which
was announced on 21.12.2015 contemplated that no
licence for manufacturing, trading and consumption of
country liquor shall be granted from 01.04.2016. The
respondent questioned the order dated 13.12.2015 by
which its premises was sealed by filing a writ petition.
Lack of opportunity to the Respondent before the order
of sealing was passed prompted the High Court to allow
the Writ Petition by its judgment dated 25.01.2016. In
the meanwhile, the licence of the Respondent was
suspended for a period of 90 days by an order dated
20.01.2016 issued under Section 42 (3) of the Bihar and
Orissa Excise Act, 1915 (for short “the Act”) as the
liquor supplied by the Respondent was found to be of
higher strength of 70.8 degrees UP instead of required
strength of 60 degree UP. Another Writ Petition was filed
by the Respondent questioning the order of suspension
dated 20.01.2016 which was dismissed as withdrawn in
view of the order of the Excise Commissioner, Bihar
dated 04.02.2016 by which the earlier order of
suspension dated 20.01.2016 was withdrawn. A
5 | P a g e
notification was issued on 04.02.2016 directing that
production, sale and utilization of all country liquor shall
be completely prohibited in the State of Bihar w.e.f.
01.04.2016 and that the remaining stocks of all country
liquor lying in the outlets as on 31.03.2016 shall be
destroyed.
5. The Respondent submitted a representation
seeking refund of the licence fee and differential amount
for the period between 13.12.2015 to 04.02.2016 during
which its manufacturing unit was closed. The
Respondent quantified the amount of refund at
Rs.1,29,42,928/-. On 31.03.2016, a notification was
issued implementing the New Excise Policy by imposing
an absolute ban on manufacturing, bottling, distribution,
sale, purchase, possession and consumption of country
liquor w.e.f. 01.04.2016.
6. The Respondent filed a Writ Petition in the High
Court seeking a direction to the Appellants to refund the
proportionate amount of licence fee calculated at the
6 | P a g e
rate of Rs.1/- per LPL on the Minimum Guaranteed
Quantity of country liquor and the differential amount
calculated on the Minimum Guaranteed Quantity of
country liquor for the period between 13.12.2015 and
04.02.2016.
7. The High Court heard the Writ Petition filed by the
Respondent along with three other Writ Petitions. It was
held that there was an earlier adjudication that the
sealing of the premises was wholly unjust and improper
and hence, the Respondent and other writ petitioners
were entitled for refund of the licence fee and the
differential amount as prayed for. The Appellants,
therefore, were directed to refund the amount of licence
fee and the differential amount recovered from the
Respondent for the period during which the
manufacturing unit was sealed. Another reason for grant
of relief by the High Court is that the manufacturers
were not given an opportunity before orders of
suspension and cancellation of licenses were passed.
There was a further direction that the Appellant should
7 | P a g e
consider the claims of the Respondent and the other Writ
Petitioners regarding compensation for the value of the
furnished raw material which could not be liquidated by
31.03.2016 due to the unlawful closure of the
manufacturing premises.
8. It was contended by Mr. Maninder Singh, learned
Senior Counsel appearing for the Respondent that the
tender conditions were incorporated in the Exclusive
Privilege and the licence was granted to the Respondent
as per the scheme of the Act. The Exclusive Privilege in
relation to the activities of the Respondent was under
the supervision and control of the State. The employees
of the Excise Department are deployed on the
manufacturing plant to ensure that the tender conditions
are complied with scrupulously. He submitted that the
premises of the Respondent was sealed on 13.12.2015
for non-supply of the prescribed quantity of country
liquor for the month of December, 2015 despite the
warning issued on 23.11.2015 and a penalty levied on
09.12.2015. Another ground for sealing the premises
8 | P a g e
was violation of the condition to maintain required buffer
stock. During the pendency of the Writ Petition filed
against the order dated 13.12.2015 by the Respondent
in the High Court, the licence of the Respondent was
suspended on 20.01.2016 on the basis of an inspection
report of the Excise Chemical Engineer in which it was
found that the strength of the liquor was higher than the
prescribed 60 degree UP. Though the sealing order was
set aside by the High Court on 25.01.2016, the premises
were de-sealed only on 04.02.2016, on which date the
order of suspension was withdrawn. Mr. Singh
submitted that the order of sealing dated 13.12.2015
has no connection with the order of suspension dated
20.01.2016 which was for a different violation of the
conditions of licence. He relied upon Clause 22 of the
licence to submit that the Respondent is not entitled for
any compensation. In this regard, he also referred to
Section 42 (4) of the Bihar Excise Act according to which
the holder of a licence shall not be entitled for any
compensation for its cancellation or its suspension. The
said provision further contemplates that the licensee is
9 | P a g e
not entitled for any refund of any fee or deposit made. It
was further submitted by Mr. Singh that the High Court
committed an error in taking up all the four Writ Petition
together, especially when the facts are different. He also
questioned the finding of the High Court that the showcause notice is necessary before an order of suspension
was passed.
9. Mr. Navaniti Prasad Singh, learned Senior Counsel
appearing for the Respondents submitted that the
sealing order dated 13.12.2015 was set aside by the
High Court by a judgment dated 25.01.2016 in CWJC
No.1364 of 2016. The judgement has become final and
necessarily the Respondent is entitled for refund of the
licence fee and the deferential amount for the period
between 13.12.2015 and 20.01.2016. The order dated
20.01.2016 by which the licence of Respondent was
suspended was not brought to the notice of the High
Court by the Appellants when CWJC 1364 of 2016 was
heard. He submitted that in this case no notice was
given before the order of suspension was passed. The
10 | P a g e
Writ Petition filed assailing the validity of the suspension
order had to be withdrawn in view of the revocation of
the order suspending the licence. He argued that the
Respondent is entitled for refund of the licence fee and
the differential amount even for the period between
20.01.2016 and 04.02.2016.
10. The point that arises for our consideration in this
case is whether the Respondent is entitled to refund of
the licence fee and the differential amount for the period
during which the unit was sealed. Admittedly, the
closure for the period between 13.12.2015 and
20.01.2016 was the subject matter of the judgement in
CWJC No.1364 of 2016 which was allowed by the High
Court and the judgment has become final. There cannot
be any dispute that the Respondent is entitled for the
refund of the licence fee and the differential amount in
respect of the period between 20.01.2016 and
04.02.2016 covered by sealing order. We are also of the
opinion that the Respondent is entitled for refund of the
licence fee and differential amount even for the period of
11 | P a g e
suspension i.e. 20.01.2016 to 04.02.2016 for the reason
that no show-cause notice was given before the order
was passed. Since orders of cancellation and suspension
are punitive, the licensee should be given an opportunity
before the licence is cancelled or suspended.1
Therefore, the judgment of the High Court is affirmed.
Appeal is dismissed.
Civil Appeal No. 7952 of 2019
(Arising out of SLP (C) No.4664 of 2019)
(M/S Welcome Distilleries Private Limited).
11. M/s Welcome Distilleries Private Limited, the
Respondent herein was granted Exclusive Privilege for
manufacture and supply of country liquor at the rate of
Rs.4.32/- per 200 ml. PET bottle for Zone-4, constituting
the districts of Rohtas and Kaimur for the period
between 01.04.2014 to 31.03.2019. The Respondent
established a bottling plant and commenced production
and supply of country liquor to BSBCL on 01.02.2015.
During an inspection conducted on 08.05.2015, it was
1 Thakko Choudhary vs. The State of Bihar, 1971 PLJR 199; Ramnath
Prasad
vs. The Collector of Darbhanga and Ors., AIR 1955 Pat 345
12 | P a g e
found that the Respondent was not manufacturing
country liquor as per the Minimum Guaranteed Quantity.
A notice was issued to the Respondent on 15.07.2015 to
deposit the advance of the differential amount upto that
date as the Respondent failed to deposit earlier
instalments of the differential amount. Consequently,
the licence of the Respondent was suspended on
17.07.2015. The suspension was revoked on 20.07.2015.
During the inspection conducted on 07.10.2015, it was
discovered that the alcohol was substandard as the
strength was higher than the prescribed strength of 60
degrees UP. The premises was sealed on 19.12.2015
and the Respondent received a show-cause notice dated
24.10.2015 to which he replied on 04.01.2016. After
considering the response of the Respondent, an order
was passed on 17.01.2016 suspending the licence which
was challenged before the Board of Revenue. The Board
of Revenue stayed the order of suspension on
01.02.2016. Thereafter, the premises were un-sealed on
09.02.2016. The unit was closed for five days between
29.02.2016 to 04.03.2016 and for 15 days between
13 | P a g e
17.03.2016 to 31.03.2016 for non-payment of the
outstanding amount and for short supply of country
liquor. The New Excise Policy was implemented by a
total ban on manufacturing of country liquor w.e.f.
31.03.2016.
12. The Respondent filed a Writ Petition seeking refund
of licence of fee and the differential amount for a period
of 95 days during which either his premises was sealed
or his licence was suspended. It was contended on
behalf of the Respondent that the repeated sealing of
the premises and the suspension of the licence was
illegal.
13. The High Court allowed the Writ Petition filed by the
Respondent and directed refund as claimed for. The
main reason given by the High Court for allowing the
Writ Petitions was there was a prior adjudication that the
sealing orders were illegal, is not applicable to the
Respondent. According to the learned Senior Counsel for
the State, the orders of sealing of the premises and the
14 | P a g e
suspension of the licence were not the subject matter of
any earlier adjudication by the High Court. On behalf of
the Respondent, it was submitted that the repeated
orders of sealing of the premises and the suspension of
the licence would show the mala fide intention of the
State. He brought to our notice that the order passed by
the Board of Revenue on 01.02.2016, staying the
suspension order dated 17.01.2016, in spite of which the
premises continued to be sealed thereafter.
14. The sealing of the premises and suspension of
licence of the Respondent was due to the non-payment
of the required instalment of the differential amount and
manufacturing of substandard country liquor. The order
of suspension of the licence dated 17.01.2016 was
stayed by the Board of Revenue on 01.02.2016. The
State filed a Review Application before the Board of
Revenue which was dismissed on 17.02.2016.
Immediately thereafter, the premises were un-sealed on
19.02.2016. The closure of the premises, according to
the Appellant, for five days between 29.02.2016 and
15 | P a g e
04.03.2016 was due to the non-deposit of the
outstanding differential amount and from 17.03.2016 to
31.03.2016 was due to short supply of country liquor are
justified.
15. As the closure of the premises of Respondent was
due to the violation of the tender conditions and the
conditions of licence, the High Court committed an error
in allowing the Writ Petitions filed by the Respondent.
Admittedly, there was no prior adjudication in respect of
the sealing of the premises or suspension of the licence
in favour of the respondent. Therefore, the reason given
by the High Court for holding that the Respondent is
entitled for refund i.e., on the ground of prior
adjudication is not correct. The High Court erred in
holding that no show-cause notices were issued before
the orders of suspension and sealing of the premises
were passed. The notices given on 15.07.2015,
24.12.2015, 25.02.2016 and 26.03.2016 would indicate
that the Respondent was given sufficient opportunity.
Moreover, in its response to show-cause notice dated
16 | P a g e
24.12.2015, the Respondent submitted his explanation
in which there was an admission of production of substandard country liquor. The judgment of the High Court
cannot be sustained and is set aside.
Civil Appeal No. 7957 of 2019
(Arising out of SLP (C) No.3593 of 2019)
(M/S Shipra Beverage Private Limited).
16. M/s Shipra Beverage Private Limited, the Respondent
herein was granted Exclusive Privilege for manufacture
and supply of country liquor in zone-5 constituting Gaya
and Aurangabad districts. An inspection was conducted on
04.01.2016 during which it was found that there is a deficit
stock and there was violation of Clauses 2(d) (iii) and
Clause 2(d) (ii) (f) of the letter of grant and Clause 9(f) of
the Licence. A show-cause notice was issued to the
Respondent on 27.01.2016. In view of the aforesaid
irregularities, the licence of the Respondent was
suspended under Section 42 of the Bihar Excise Act on
02.02.2016. Thereafter, the licence was cancelled on
13.02.2016. The Respondent filed CWJC No.2704 of 2016.
The High Court set aside the order dated 13.02.2016 by its
judgment dated 20.04.2016.
17 | P a g e
17. The complaint of the Respondent is that the
manufacturing unit stood closed between 02.02.2016 and
31.03.2016 due to suspension and cancellation of the
licence. The orders were challenged successfully in the
High Court. The Respondent filed a Writ Petition seeking
refund of the licence fee and the differential amounts for
the period of closure between 02.02.2016 and 31.03.2016.
18. As the suspension of the licence of the Respondent
and cancellation of the licence have been declared illegal
by the High Court by its judgment dated 20.04.2016 in
CWJC No.2704 of 2016, the Respondent is entitled for the
relief granted by the High Court. The Appeal is dismissed.
Civil Appeal No. 7958 of 2019
(Arising out of SLP (C) No.3595 of 2019)
(M/S K.M. SUGAR MILLS LIMITED).
19. M/s K.M. Sugar Mills Limited, the Respondent-herein
was a successful bidder for manufacturing and supply of
country liquor for Zone-10, constituting districts of East
Champaran and West Champaran for the period from
01.04.2014 to 31.03.2019. An inspection was conducted on
27.05.2015 during which it was found that the strength of the
18 | P a g e
manufactured liquor was below the required strength of 60
degree UP. A notice was issued on 27.05.2015 by which the
Respondent was directed to show cause as to why his licence
should not be terminated for causing huge loss to the
Government. The Respondent was also directed to explain
as to why a fine of Rs.4,51,08,493/- should not be imposed
on him for not maintaining the prescribed strength of 60
degree UP and for illegally manufacturing excess liquor. The
Respondent submitted its explanation on 11.06.2015 and
01.07.2015. After considering the explanation submitted by
the Respondent, the Excise Commissioner imposed a penalty
of Rs.4,51,08,493/- under Section 42 (g) (i) of the Act. As the
Respondent failed to pay the penalty amount, the premises
were sealed on 22.02.2016. As stated above, the New Excise
Policy came into force on 31.03.2016, and the grievance of
the Respondent in the Writ Petition was that the sealing of
the premises for the period between 02.02.2016 to
31.03.2016 is illegal. Therefore, the Respondent is entitled
for refund of licence fee and the differential amount. The
High Court failed to notice that there is no prior adjudication
in favour of the Respondent and the Respondent was given
an opportunity to show cause as to why the premises should
not be sealed. After considering the explanation submitted
19 | P a g e
by the Respondent, the penalty was imposed on the
Respondent and due to the failure of the payment of the
amount of penalty, the premises were sealed.
20. In view of the above, the Civil Appeal No. 7958 of 2019
arising out of SLP (C) No. 3595 of 2019 is allowed.
All the Appeals are disposed of accordingly.
..…................................J.
[L. NAGESWARA RAO]
..…................................J.
[HEMANT GUPTA]
New Delhi,
October 18, 2019.
20 | P a g e
Apex court held that when there is no prior adjudication in favour of the Respondent and the Respondent was given an opportunity to show cause as to why the premises should not be sealed - when after considering the explanation submitted by the Respondent, the penalty was imposed on the Respondent and due to the failure of the payment of the amount of penalty, the premises were sealed - the respondent is not entitled for any refund of licence fee and differentaial amount during which the unit was sealed
Non-Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 7951 of 2019
(Arising out of SLP (C) No.4647 of 2019)
THE STATE OF BIHAR & ORS.
.... Appellant(s)
Versus
M/S RIGA SUGAR CO. LTD.
…. Respondent (s)
With
Civil Appeal No. 7952 of 2019
(Arising out of SLP (C) No.4664 of 2019)
THE STATE OF BIHAR & ORS.
.... Appellant(s)
Versus
M/S WELCOME DISTILLERIES PRIVATE LIMITED.
…. Respondent (s)
Civil Appeal No. 7957 of 2019
(Arising out of SLP (C) No.3593 of 2019)
THE STATE OF BIHAR & ORS.
.... Appellant(s)
Versus
M/S SHIPRA BEVERAGE PRIVATE LIMITED.
…. Respondent (s)
Civil Appeal No. 7958 of 2019
(Arising out of SLP (C) No.3595 of 2019)
THE STATE OF BIHAR & ORS.
.... Appellant(s)
Versus
M/S K.M. SUGAR MILLS LIMITED. …. Respondent (s)
1 | P a g e
J U D G M E N T
L. NAGESWARA RAO, J.
1. These Appeals arise from a judgment of the High
Court of Judicature at Patna in the Writ Petitions filed by
the Respondents. The Writ Petitions were allowed by the
High Court and the Appellant- State was directed to refund
the licence fee and the differential amount recovered from
the Respondents for the period during which their premises
were unlawfully sealed/closed.
As the facts of each case are different, we proceed to
deal with the Appeals separately.
Civil Appeal No. 7951 of 2019
(Arising out of SLP (C) No.4647 of 2019)
(M/S RIGA SUGAR CO. LTD.)
2. A tender notice dated 31.01.2014 was issued by
the Department of Excise and Prohibition, Government of
Bihar, inviting applications for grant of Exclusive
Privilege for manufacture and supply of country liquor in
PET bottles. The State was divided into 17 zones and
2 | P a g e
the 17 lowest applicants in the financial bid would be
eligible for grant of Exclusive Privilege in accordance
with their preference to a particular zone. By an order
dated 04.03.2014, Exclusive Privilege for manufacturing
and supply of country liquor for zone 11 constituting the
districts of Muzzafarpur, Sitamarhi and Sheohar for the
period between 01.04.2014 to 31.03.2019 was awarded
to M/s Riga Sugar Company Limited (hereinafter, ‘the
Respondent’). The base rate fixed for supply of 200 ML
PET bottle of country liquor was fixed at Rs.5.78/-. The
difference between the base price and the bid price (in
this case Rs.4.07/-) calculated on the Minimum
Guaranteed Quantity (MGQ) was payable by the supplier
to the Government in advance for a period of every
three months i.e. on 15th March, 15th June, 15th
September and 15th December. As per the tender
conditions the supplier is required to obtain a licence in
Form 27 for manufacture and supply of country liquor to
Bihar State Beverages Corporation Limited (BSBCL) at
the rate of Rs.1/- per litre calculated on the Minimum
Guaranteed Quantity.
3 | P a g e
3. The Respondent was required to supply
5,25,220.786 LPL country liquor of 60 degree strength
per month. After issuance of a letter of grant on
04.03.2014, a liquor licence was obtained by the
Respondent. Pursuant thereto, the Respondent
established a bottling plant at Muzzafarpur and
commenced production and supply of country liquor to
BSBCL on 01.02.2015. As the Respondent was not
supplying the prescribed quantity of country liquor to
BSBCL, a warning was issued to ensure that the
prescribed quantity of country liquor was supplied. On
09.12.2015, a penalty of Rs.1 lakh was levied on the
Respondent for non-supply of minimum quantity of
country liquor. Pursuant to the inspection report dated
13.12.2015, the premises of the Respondent was sealed
by the Superintendent of Excise, Muzzafarpur for nonsupply of minimum quantity of country liquor.
4. The State of Bihar announced a New Excise Policy
and imposed total ban on consumption of alcohol in the
4 | P a g e
State in a phased manner. The New Excise Policy which
was announced on 21.12.2015 contemplated that no
licence for manufacturing, trading and consumption of
country liquor shall be granted from 01.04.2016. The
respondent questioned the order dated 13.12.2015 by
which its premises was sealed by filing a writ petition.
Lack of opportunity to the Respondent before the order
of sealing was passed prompted the High Court to allow
the Writ Petition by its judgment dated 25.01.2016. In
the meanwhile, the licence of the Respondent was
suspended for a period of 90 days by an order dated
20.01.2016 issued under Section 42 (3) of the Bihar and
Orissa Excise Act, 1915 (for short “the Act”) as the
liquor supplied by the Respondent was found to be of
higher strength of 70.8 degrees UP instead of required
strength of 60 degree UP. Another Writ Petition was filed
by the Respondent questioning the order of suspension
dated 20.01.2016 which was dismissed as withdrawn in
view of the order of the Excise Commissioner, Bihar
dated 04.02.2016 by which the earlier order of
suspension dated 20.01.2016 was withdrawn. A
5 | P a g e
notification was issued on 04.02.2016 directing that
production, sale and utilization of all country liquor shall
be completely prohibited in the State of Bihar w.e.f.
01.04.2016 and that the remaining stocks of all country
liquor lying in the outlets as on 31.03.2016 shall be
destroyed.
5. The Respondent submitted a representation
seeking refund of the licence fee and differential amount
for the period between 13.12.2015 to 04.02.2016 during
which its manufacturing unit was closed. The
Respondent quantified the amount of refund at
Rs.1,29,42,928/-. On 31.03.2016, a notification was
issued implementing the New Excise Policy by imposing
an absolute ban on manufacturing, bottling, distribution,
sale, purchase, possession and consumption of country
liquor w.e.f. 01.04.2016.
6. The Respondent filed a Writ Petition in the High
Court seeking a direction to the Appellants to refund the
proportionate amount of licence fee calculated at the
6 | P a g e
rate of Rs.1/- per LPL on the Minimum Guaranteed
Quantity of country liquor and the differential amount
calculated on the Minimum Guaranteed Quantity of
country liquor for the period between 13.12.2015 and
04.02.2016.
7. The High Court heard the Writ Petition filed by the
Respondent along with three other Writ Petitions. It was
held that there was an earlier adjudication that the
sealing of the premises was wholly unjust and improper
and hence, the Respondent and other writ petitioners
were entitled for refund of the licence fee and the
differential amount as prayed for. The Appellants,
therefore, were directed to refund the amount of licence
fee and the differential amount recovered from the
Respondent for the period during which the
manufacturing unit was sealed. Another reason for grant
of relief by the High Court is that the manufacturers
were not given an opportunity before orders of
suspension and cancellation of licenses were passed.
There was a further direction that the Appellant should
7 | P a g e
consider the claims of the Respondent and the other Writ
Petitioners regarding compensation for the value of the
furnished raw material which could not be liquidated by
31.03.2016 due to the unlawful closure of the
manufacturing premises.
8. It was contended by Mr. Maninder Singh, learned
Senior Counsel appearing for the Respondent that the
tender conditions were incorporated in the Exclusive
Privilege and the licence was granted to the Respondent
as per the scheme of the Act. The Exclusive Privilege in
relation to the activities of the Respondent was under
the supervision and control of the State. The employees
of the Excise Department are deployed on the
manufacturing plant to ensure that the tender conditions
are complied with scrupulously. He submitted that the
premises of the Respondent was sealed on 13.12.2015
for non-supply of the prescribed quantity of country
liquor for the month of December, 2015 despite the
warning issued on 23.11.2015 and a penalty levied on
09.12.2015. Another ground for sealing the premises
8 | P a g e
was violation of the condition to maintain required buffer
stock. During the pendency of the Writ Petition filed
against the order dated 13.12.2015 by the Respondent
in the High Court, the licence of the Respondent was
suspended on 20.01.2016 on the basis of an inspection
report of the Excise Chemical Engineer in which it was
found that the strength of the liquor was higher than the
prescribed 60 degree UP. Though the sealing order was
set aside by the High Court on 25.01.2016, the premises
were de-sealed only on 04.02.2016, on which date the
order of suspension was withdrawn. Mr. Singh
submitted that the order of sealing dated 13.12.2015
has no connection with the order of suspension dated
20.01.2016 which was for a different violation of the
conditions of licence. He relied upon Clause 22 of the
licence to submit that the Respondent is not entitled for
any compensation. In this regard, he also referred to
Section 42 (4) of the Bihar Excise Act according to which
the holder of a licence shall not be entitled for any
compensation for its cancellation or its suspension. The
said provision further contemplates that the licensee is
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not entitled for any refund of any fee or deposit made. It
was further submitted by Mr. Singh that the High Court
committed an error in taking up all the four Writ Petition
together, especially when the facts are different. He also
questioned the finding of the High Court that the showcause notice is necessary before an order of suspension
was passed.
9. Mr. Navaniti Prasad Singh, learned Senior Counsel
appearing for the Respondents submitted that the
sealing order dated 13.12.2015 was set aside by the
High Court by a judgment dated 25.01.2016 in CWJC
No.1364 of 2016. The judgement has become final and
necessarily the Respondent is entitled for refund of the
licence fee and the deferential amount for the period
between 13.12.2015 and 20.01.2016. The order dated
20.01.2016 by which the licence of Respondent was
suspended was not brought to the notice of the High
Court by the Appellants when CWJC 1364 of 2016 was
heard. He submitted that in this case no notice was
given before the order of suspension was passed. The
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Writ Petition filed assailing the validity of the suspension
order had to be withdrawn in view of the revocation of
the order suspending the licence. He argued that the
Respondent is entitled for refund of the licence fee and
the differential amount even for the period between
20.01.2016 and 04.02.2016.
10. The point that arises for our consideration in this
case is whether the Respondent is entitled to refund of
the licence fee and the differential amount for the period
during which the unit was sealed. Admittedly, the
closure for the period between 13.12.2015 and
20.01.2016 was the subject matter of the judgement in
CWJC No.1364 of 2016 which was allowed by the High
Court and the judgment has become final. There cannot
be any dispute that the Respondent is entitled for the
refund of the licence fee and the differential amount in
respect of the period between 20.01.2016 and
04.02.2016 covered by sealing order. We are also of the
opinion that the Respondent is entitled for refund of the
licence fee and differential amount even for the period of
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suspension i.e. 20.01.2016 to 04.02.2016 for the reason
that no show-cause notice was given before the order
was passed. Since orders of cancellation and suspension
are punitive, the licensee should be given an opportunity
before the licence is cancelled or suspended.1
Therefore, the judgment of the High Court is affirmed.
Appeal is dismissed.
Civil Appeal No. 7952 of 2019
(Arising out of SLP (C) No.4664 of 2019)
(M/S Welcome Distilleries Private Limited).
11. M/s Welcome Distilleries Private Limited, the
Respondent herein was granted Exclusive Privilege for
manufacture and supply of country liquor at the rate of
Rs.4.32/- per 200 ml. PET bottle for Zone-4, constituting
the districts of Rohtas and Kaimur for the period
between 01.04.2014 to 31.03.2019. The Respondent
established a bottling plant and commenced production
and supply of country liquor to BSBCL on 01.02.2015.
During an inspection conducted on 08.05.2015, it was
1 Thakko Choudhary vs. The State of Bihar, 1971 PLJR 199; Ramnath
Prasad
vs. The Collector of Darbhanga and Ors., AIR 1955 Pat 345
12 | P a g e
found that the Respondent was not manufacturing
country liquor as per the Minimum Guaranteed Quantity.
A notice was issued to the Respondent on 15.07.2015 to
deposit the advance of the differential amount upto that
date as the Respondent failed to deposit earlier
instalments of the differential amount. Consequently,
the licence of the Respondent was suspended on
17.07.2015. The suspension was revoked on 20.07.2015.
During the inspection conducted on 07.10.2015, it was
discovered that the alcohol was substandard as the
strength was higher than the prescribed strength of 60
degrees UP. The premises was sealed on 19.12.2015
and the Respondent received a show-cause notice dated
24.10.2015 to which he replied on 04.01.2016. After
considering the response of the Respondent, an order
was passed on 17.01.2016 suspending the licence which
was challenged before the Board of Revenue. The Board
of Revenue stayed the order of suspension on
01.02.2016. Thereafter, the premises were un-sealed on
09.02.2016. The unit was closed for five days between
29.02.2016 to 04.03.2016 and for 15 days between
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17.03.2016 to 31.03.2016 for non-payment of the
outstanding amount and for short supply of country
liquor. The New Excise Policy was implemented by a
total ban on manufacturing of country liquor w.e.f.
31.03.2016.
12. The Respondent filed a Writ Petition seeking refund
of licence of fee and the differential amount for a period
of 95 days during which either his premises was sealed
or his licence was suspended. It was contended on
behalf of the Respondent that the repeated sealing of
the premises and the suspension of the licence was
illegal.
13. The High Court allowed the Writ Petition filed by the
Respondent and directed refund as claimed for. The
main reason given by the High Court for allowing the
Writ Petitions was there was a prior adjudication that the
sealing orders were illegal, is not applicable to the
Respondent. According to the learned Senior Counsel for
the State, the orders of sealing of the premises and the
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suspension of the licence were not the subject matter of
any earlier adjudication by the High Court. On behalf of
the Respondent, it was submitted that the repeated
orders of sealing of the premises and the suspension of
the licence would show the mala fide intention of the
State. He brought to our notice that the order passed by
the Board of Revenue on 01.02.2016, staying the
suspension order dated 17.01.2016, in spite of which the
premises continued to be sealed thereafter.
14. The sealing of the premises and suspension of
licence of the Respondent was due to the non-payment
of the required instalment of the differential amount and
manufacturing of substandard country liquor. The order
of suspension of the licence dated 17.01.2016 was
stayed by the Board of Revenue on 01.02.2016. The
State filed a Review Application before the Board of
Revenue which was dismissed on 17.02.2016.
Immediately thereafter, the premises were un-sealed on
19.02.2016. The closure of the premises, according to
the Appellant, for five days between 29.02.2016 and
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04.03.2016 was due to the non-deposit of the
outstanding differential amount and from 17.03.2016 to
31.03.2016 was due to short supply of country liquor are
justified.
15. As the closure of the premises of Respondent was
due to the violation of the tender conditions and the
conditions of licence, the High Court committed an error
in allowing the Writ Petitions filed by the Respondent.
Admittedly, there was no prior adjudication in respect of
the sealing of the premises or suspension of the licence
in favour of the respondent. Therefore, the reason given
by the High Court for holding that the Respondent is
entitled for refund i.e., on the ground of prior
adjudication is not correct. The High Court erred in
holding that no show-cause notices were issued before
the orders of suspension and sealing of the premises
were passed. The notices given on 15.07.2015,
24.12.2015, 25.02.2016 and 26.03.2016 would indicate
that the Respondent was given sufficient opportunity.
Moreover, in its response to show-cause notice dated
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24.12.2015, the Respondent submitted his explanation
in which there was an admission of production of substandard country liquor. The judgment of the High Court
cannot be sustained and is set aside.
Civil Appeal No. 7957 of 2019
(Arising out of SLP (C) No.3593 of 2019)
(M/S Shipra Beverage Private Limited).
16. M/s Shipra Beverage Private Limited, the Respondent
herein was granted Exclusive Privilege for manufacture
and supply of country liquor in zone-5 constituting Gaya
and Aurangabad districts. An inspection was conducted on
04.01.2016 during which it was found that there is a deficit
stock and there was violation of Clauses 2(d) (iii) and
Clause 2(d) (ii) (f) of the letter of grant and Clause 9(f) of
the Licence. A show-cause notice was issued to the
Respondent on 27.01.2016. In view of the aforesaid
irregularities, the licence of the Respondent was
suspended under Section 42 of the Bihar Excise Act on
02.02.2016. Thereafter, the licence was cancelled on
13.02.2016. The Respondent filed CWJC No.2704 of 2016.
The High Court set aside the order dated 13.02.2016 by its
judgment dated 20.04.2016.
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17. The complaint of the Respondent is that the
manufacturing unit stood closed between 02.02.2016 and
31.03.2016 due to suspension and cancellation of the
licence. The orders were challenged successfully in the
High Court. The Respondent filed a Writ Petition seeking
refund of the licence fee and the differential amounts for
the period of closure between 02.02.2016 and 31.03.2016.
18. As the suspension of the licence of the Respondent
and cancellation of the licence have been declared illegal
by the High Court by its judgment dated 20.04.2016 in
CWJC No.2704 of 2016, the Respondent is entitled for the
relief granted by the High Court. The Appeal is dismissed.
Civil Appeal No. 7958 of 2019
(Arising out of SLP (C) No.3595 of 2019)
(M/S K.M. SUGAR MILLS LIMITED).
19. M/s K.M. Sugar Mills Limited, the Respondent-herein
was a successful bidder for manufacturing and supply of
country liquor for Zone-10, constituting districts of East
Champaran and West Champaran for the period from
01.04.2014 to 31.03.2019. An inspection was conducted on
27.05.2015 during which it was found that the strength of the
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manufactured liquor was below the required strength of 60
degree UP. A notice was issued on 27.05.2015 by which the
Respondent was directed to show cause as to why his licence
should not be terminated for causing huge loss to the
Government. The Respondent was also directed to explain
as to why a fine of Rs.4,51,08,493/- should not be imposed
on him for not maintaining the prescribed strength of 60
degree UP and for illegally manufacturing excess liquor. The
Respondent submitted its explanation on 11.06.2015 and
01.07.2015. After considering the explanation submitted by
the Respondent, the Excise Commissioner imposed a penalty
of Rs.4,51,08,493/- under Section 42 (g) (i) of the Act. As the
Respondent failed to pay the penalty amount, the premises
were sealed on 22.02.2016. As stated above, the New Excise
Policy came into force on 31.03.2016, and the grievance of
the Respondent in the Writ Petition was that the sealing of
the premises for the period between 02.02.2016 to
31.03.2016 is illegal. Therefore, the Respondent is entitled
for refund of licence fee and the differential amount. The
High Court failed to notice that there is no prior adjudication
in favour of the Respondent and the Respondent was given
an opportunity to show cause as to why the premises should
not be sealed. After considering the explanation submitted
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by the Respondent, the penalty was imposed on the
Respondent and due to the failure of the payment of the
amount of penalty, the premises were sealed.
20. In view of the above, the Civil Appeal No. 7958 of 2019
arising out of SLP (C) No. 3595 of 2019 is allowed.
All the Appeals are disposed of accordingly.
..…................................J.
[L. NAGESWARA RAO]
..…................................J.
[HEMANT GUPTA]
New Delhi,
October 18, 2019.
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