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)

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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

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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.   

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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  non-

supply 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

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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

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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

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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

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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

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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 show-

cause 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

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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 sub-

standard 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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