Case Note & Summary
The Supreme Court dismissed appeals by the State of Bihar against a Patna High Court judgment directing refund of licence fee and differential amount to four distilleries whose premises were unlawfully sealed or suspended. The lead case involved M/s Riga Sugar Co. Ltd., which was granted exclusive privilege for manufacturing country liquor in Zone 11 from 01.04.2014 to 31.03.2019. On 13.12.2015, its premises were sealed by the Superintendent of Excise for non-supply of minimum quantity. The High Court set aside the sealing order on 25.01.2016 for lack of opportunity. Meanwhile, on 20.01.2016, the licence was suspended under Section 42(3) of the Bihar and Orissa Excise Act, 1915 for supplying liquor of higher strength. The suspension was withdrawn on 04.02.2016. The respondent sought refund for the closure period from 13.12.2015 to 04.02.2016. The High Court allowed the writ petition, directing refund and consideration of compensation for raw material. The State appealed, arguing that under Clause 22 of the licence and Section 42(4) of the Act, no refund or compensation is payable upon suspension or cancellation. The Supreme Court held that the sealing order was already adjudged unlawful and the judgment had become final, so refund for that period was justified. Regarding the suspension period, the Court held that since no show-cause notice was given before the punitive order, principles of natural justice were violated, entitling the respondent to refund. The Court affirmed the High Court's judgment and dismissed the appeals. Similar reasoning applied to the other three appeals involving M/s Welcome Distilleries Private Limited, M/s Shipra Beverage Private Limited, and M/s K.M. Sugar Mills Limited, which were also dismissed.
Headnote
A) Excise Law - Refund of Licence Fee - Unlawful Sealing - The respondent's premises were sealed on 13.12.2015 for non-supply of minimum quantity of country liquor. The High Court set aside the sealing order on 25.01.2016 for lack of opportunity. The Supreme Court held that the respondent is entitled to refund of licence fee and differential amount for the period between 13.12.2015 and 20.01.2016 as the sealing was adjudged unlawful and the judgment became final. (Paras 10) B) Excise Law - Suspension of Licence - Natural Justice - The respondent's licence was suspended on 20.01.2016 under Section 42(3) of the Bihar and Orissa Excise Act, 1915 without show-cause notice. The Supreme Court held that since orders of cancellation and suspension are punitive, the licensee should be given an opportunity before the licence is cancelled or suspended. Therefore, the respondent is entitled to refund for the period of suspension from 20.01.2016 to 04.02.2016. (Paras 10) C) Excise Law - Compensation - Clause 22 of Licence and Section 42(4) - The appellant argued that under Clause 22 of the licence and Section 42(4) of the Act, the licensee is not entitled to compensation or refund upon cancellation or suspension. However, the Court did not apply these provisions as the sealing and suspension were held to be unlawful and without proper procedure. (Paras 8, 10)
Issue of Consideration
Whether the respondent is entitled to refund of licence fee and differential amount for the period during which its manufacturing unit was sealed and subsequently suspended without opportunity of hearing.
Final Decision
The Supreme Court dismissed the appeals, affirming the High Court's judgment directing refund of licence fee and differential amount for the period during which the premises were sealed and suspended. The Court held that the respondent is entitled to refund for the period between 13.12.2015 and 20.01.2016 (sealing) as the earlier judgment had become final, and for the period between 20.01.2016 and 04.02.2016 (suspension) because no show-cause notice was given before the punitive order.
Law Points
- Refund of licence fee
- Differential amount
- Unlawful sealing
- Suspension without show-cause notice
- Natural justice
- Bihar and Orissa Excise Act
- 1915
- Section 42
