The Madhya Pradesh High Court has upheld the suspension of multiple licences of Som Distilleries Pvt. Ltd. and its associated entity, ruling that convictions of employees and persons acting on behalf of the licensee are sufficient to attract action under the Madhya Pradesh Excise Act, 1915.
Justice Vivek Agarwal dismissed the writ petition challenging the Excise Commissioner’s order suspending eight licences, holding that the statutory requirements under Section 31 of the Excise Act were duly satisfied. The Court found that the show cause notice clearly recorded reasons, detailed the allegations, and afforded an opportunity of hearing, thereby complying with principles of natural justice.
The case arose from the seizure of a truck carrying foreign liquor allegedly transported using forged permits, leading to conviction of several individuals including company employees, directors, and transport personnel. Rejecting the petitioner’s contention that such convictions could not be attributed to the company, the Court held that Section 31(1)(c) expressly extends liability to acts committed by “servants or persons acting on behalf of the licence holder.”
Importantly, the Court ruled that conviction of the driver and cleaner under the Excise Act would also bind the licensee, as they were acting on its behalf, and such acts resulted in loss of excise revenue. It further held that convictions under IPC provisions for cognizable and non-bailable offences independently attracted Section 31(1)(d), justifying suspension of licences.
On the argument that licences for subsequent years were fresh grants and could not be affected by past allegations, the Court rejected the plea, holding that such licences are subject to annual renewal and compliance with statutory conditions. It distinguished the Supreme Court’s ruling in N.S. Shethna and others vs. Vinubhai Harilal Panchal, 1966 SCC OnLine SC 239, noting that the excise regime specifically contemplates renewal rather than fresh grant.
The Court also observed that the petitioners failed to deny the core allegation of transportation of liquor using forged permits in their replies to the show cause notice, which weighed against them. Emphasising that liquor trade is not a fundamental right and is subject to strict regulatory control, the Court held that the action of the Excise authorities was proportionate and within statutory bounds.
Finding no illegality or arbitrariness in the impugned order, the Court dismissed the writ petition and upheld the suspension of licences.
