Punjab-Haryana High Court
Brindco Sales Private Limited vs State Of Punjab And Ors on 10 January, 2025
1. Necessary facts, shorn of details, are that the petitioner -
company is engaged in wholesale distribution and import of alcoholic
beverages across several States in India. For the State of Punjab, it had an
L-1 licence for the year 2022-23 which was renewed for 2023-24.
As on 31.03.2024, petitioner's annual turnover was
approximately Rs.2,378 crores. They are aggrieved by the respondents'
action regarding the non-renewal/denial of fresh L-1 licence for State of
Punjab for the year 2024-25. The L-1 licence is issued for wholesale
distribution to ensure the supply chain from manufacturers to retails, while
L-2/L-14 Licenses are issued for retail liquor vends, under the Punjab
Excise Act, 1914. The power to reject, suspend or cancel licence is
permissible only under specific conditions as mentioned in the statute.
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
2. Learned Senior counsel for the petitioner submits that the
present petition is third round of litigation on the issue, and by way of this
petition, he challenges the order dated 17.05.2024 passed by respondent
No.3 – Excise Commissioner, and order dated 10.04.2024 passed by
respondent No.5 i.e. Collector-cum-Deputy Commissioner (Excise).
3. By the aforesaid orders, the petitioner has been denied grant of
L-1 licence for wholesale of liquor on the premise of its having been
involved in an FIR, registered against one of the Directors of the Company.
The order passed by the Collector-cum-Deputy Commissioner (Excise) has
been upheld by the Excise Commissioner in the appeal, vide its order dated
17.05.2024.
Learned Senior counsel for the petitioner submits that the order
dated 17.05.2024, passed by respondent No.3 suffers from non-application
of mind, and therefore, the order is wholly arbitrary and non-speaking in
nature.
4. It is stated that on 11.03.2024, the respondents issued the
Excise Policy for the year 2024-25, whereby it amended the earlier policy of
renewal of L-1 licence, and decided that all existing L-1 licence holders
would be required to obtain a fresh licence for the excise year 2024-25.
5. As per the new Excise Policy, L-1 licence was divided into L-1
(PML) i.e. Punjab Medium Liquor and L-1 (IMFL/IFL) i.e. Imported
Foreign Liquor, and one entity was allowed to hold only one type of L-1
licence out of the two.
6. The petitioner, having vast experience and having fulfilled all
the conditions as laid down under the new Excise Policy, applied for grant
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
of L-1 licence on 18.03.2024. However, the respondents have demanded
further clarification on 04.04.2024 from the petitioner with regard to FIR
dated 25.08.2023 and also the information regarding FIR registered against
son of one of the Directors of the company. The petitioner was also asked to
provide information for grant of L-1 licenses in other states.
7. It is stated by learned Senior counsel for the petitioner that the
petitioner – company consists of three Directors. However, prior to the year
2023, one Amandeep Singh Dhall was also the Director of the company, and
he resigned on 19.09.2022. His resignation was accepted, however, an FIR
was registered by the Police Station CBI, ACB, New Delhi on 25.08.2023
for offences under Section 120-B I.P.C. and Sections 7, 7A and 8 P.C. Act,
1988. In the said FIR, one of the Directors of the petitioner – company is
accused, allegedly due to political vendetta and competition in the field of
liquor trade. The investigation is still on going, and neither charges have
been framed nor any charge-sheet has been filed.
8. In response to the queries raised by the respondents, it is stated
that the detailed reply was filed along with the affidavits of all the Directors
of the company. Learned Senior counsel for the petitioner has submitted that
there was no statutory requirement under the Excise Policy or any other
relevant laws to disclose pending FIRs at the time of applying for L-1
licence.
9. Affidavits were submitted by the Directors of the company
reiterating that they had not been convicted under the Punjab Excise Act,
1914, or the East Punjab Opium Smoking Act, 1948, East Punjab Molasses
(Control) Act, 1948, or under the Indian Power Alcohol Act, 1948, or under
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
the Narcotics Drugs and Psychotropic Substances Act, 1985, nor any case
had been registered for any non-bailable offence against the petitioner.
10. The petitioner’s Directors were asked to remain present for
personal hearing before the Collector-cum-Deputy Commissioner (Excise),
and the authorised Signatory of the petitioner – company attended the
hearing with all relevant documents and pointed out that the petitioner was
already holding similar L-1 licences for other States across India. However,
still the application of the petitioner was rejected.
11. Aggrieved thereto, the petitioners preferred writ petition
No.8512 of 2024 before this Court, wherein directions were issued to the
respondents to file an appeal, in terms of Section 14 of the Punjab Excise
Act, 1914, within a period of ten days.
12. It is stated that the appeal was not heard by the Appellate
Authority who recused himself, whereafter the petitioner again preferred a
writ petition No.9951 of 2024, and on the date of hearing of the writ
petition, Advocate General appeared and intimated that the State of Punjab
had issued a notification on 07.05.2024 appointing Additional
Commissioner of State Tax, Punjab as the person who would decide the
excise appeal. The High Court accordingly, passed an order on 08.05.2024
directing the nominated officer for Excise Commissioner to hear and decide
the Excise Appeal, preferably within 7 days. However, the appeal was
dismissed, upholding the rejection of grant of L-1 licence to the petitioner.
13. Feeling aggrieved thereto, present writ petition has been filed.
14. Learned Senior counsel appearing for the petitioner has
vehemently submitted that the respondents have arbitrarily rejected the
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
application of the petitioner, without adequately considering the merits of
the case.
15. It is submitted that in the previous licensing years 2022-23,
2023-24, and current licensing year 2024-25, several similarly situated
entities, against whom FIRs for severe offences had been registered, and
who had even been charge-sheeted in cases pending, have been granted L-1
licence by the respondents, and therefore, the order is wholly discriminatory.
16. It is further submitted that the excuse taken by the respondents
is artificial and motivated by favouritism. Petitioner has a reputable standing
in the market for over 40 years and has incurred several financial losses due
to this decision. At the close of licensing year 2023-24, the petitioner held
huge number of cases of liquor and beer worth over Rs.56 crores, with
market outstanding dues of Rs.34.82 crores. The refusal to grant a licence
has exposed the petitioner to financial loss exceeding Rs.90 crores.
17. It is submitted that the Additional Commissioner of State Tax,
Punjab, who heard the appeal, did not apply his mind nor examined the
merits of the appeal and has based his order entirely on the findings of the
order impugned and mechanically reaffirmed the finding of respondent
No.5.
It is submitted that merely on the basis of the reasonable
suspicion, the order of rejection could not have been passed. The FIR was
registered against the Director of the petitioner – company on 17.08.2022
yet the petitioner was issued L-1 licence for the year from 01.07.2022 to
31.03.2023 and again from 01.04.2023 to 31.03.2024.
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
18. Learned Senior counsel for the petitioner submits that the
petitioner cannot be singled out, and cited cases of other similarly situated
licensees, who were granted L-1 licence for the year 2024-25 and against
whom FIRs in criminal cases were pending. That apart for other licensees
also, the criteria of criminal cases pending was not applied and licenses have
been issued to them.
Learned Senior counsel for the petitioner further submits that
merely on account of a case registered against one of the Directors of the
company, the business of the company cannot be jeopardized and it cannot
be said that the company itself was involved in any criminal activity.
It is submitted that once, the company has presented that it was
doing business not only with the respondent – State, but was also having
similar licenses for the State of Haryana, Maharashtra and Uttar Pradesh for
the year 2024-25, the petitioner could not have been deprived of a similar
licence for the State of Punjab.
19. A prayer therefore, has been made to quash the orders dated
10.04.2024 and 17.05.2024, and direct the respondents to grant licence for
the remaining licensing year at a pro-rata licence fee payable for the
remaining licensing period i.e. up to March, 2025 or as extended month.
20. Learned Senior counsel for the petitioner has placed reliance
upon the following orders, office notice and judgments:-
1. P. Bhima Reddy vs. State of Mysore [(1969) 1 SCC 68]
2. Ramana Dayaram Shetty vs. International Airport Authority of
India [(1979) 3 SCC 489]
3. State of M.P. vs. Nandlal Jaiswal [(1986) 4 SCC 566]
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
4. Shrilekha Vidyarthi (Kumari) vs. State of U.P. [(1991) 1 SCC 212]
5. Monarch Infrastructure (P) Ltd. vs. Ulhasnagar Municipal
Corporation [(2000) 5 SCC 287]
6. Reliance Energy Limited vs. Maharashtra State Road Development
Corporation Limited [(2007) 8 SCC 1]
7. Gwalior Distilleries (P) Ltd. vs. State of Madhya Pradesh [(2020) 12
SCC 690]
9. Bangalore Turf Club Limited vs. State of Karnataka and others
[Order dated 18.06.2024 passed by Karnataka High Court at
Bengaluru in W.P. Nos.13503, 13528, 13575, 14556 and
15294 of 2024]
10. Adharv Enterprises vs. Government of NCT of Delhi [W.P.(c)
No.13668/2021] Delhi High Court dated 09.12.2024
21. Per contra, learned counsel appearing for the respondents
submits that the orders passed by the respondents do not warrant any
interference, and relies on Section 43 of the Punjab Excise Act, 1914, to
submit that no entitlement is available to a person to claim renewal of
licence, permit or pass.
The Punjab Liquor Licence Rules, 1956 also does not create
any right in favour of the petitioner for seeking renewal of fresh licence by
way of mandamus from this Court.
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
22. It is submitted that the Government has taken a policy decision,
not to grant licence if criminal case is registered and the same cannot be said
in any manner to be unjustified. It is submitted that the case registered
against the petitioner is with relation to the excise policy at Delhi, and
therefore, the petitioner has been denied L-1 licence. The case of the
petitioner is distinctly differentiated from the cases concerning other
entities.
It is further submitted that the petitioner – company has been
asked to file an affidavit and as per the application form, the petitioner has
self-declared that in case any other formalities required to be completed in
the due course, it would undertake to comply with the same. Upon
submission of the affidavit, the petitioner was found to be ineligible and
accordingly, L-1 licence was not granted to the petitioner. It is stated that
there has been a proper application of mind in passing the orders and the
petitioner’s allegations are baseless.
23. Learned counsel for the respondents has further relied upon the
judgment passed by Supreme Court in the case of “Khoday Distilleries Ltd.
v. State of Karnataka, (1995) 1 SCC 574” to submit that no one can claim,
as against the State, the right to carry on trade or business in any intoxicants,
nor the State can be compelled to part with its exclusive right or privilege of
sale, manufacture or storage of liquor.
He further relies upon the judgment passed by the Supreme
Court in the case of R. Muthukumar vs. The Chairman and Managing
Director TANGEDCO, 2022 SCC OnLine SC 151, to submit that there can
be no negative equality, merely because the petitioner has been granted
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
licence in other States would not mean that he has a right or entitlement for
licence in the State of Punjab and submits that the present writ petition be
accordingly dismissed.
24. We have carefully considered the submissions addressed by
counsel for both the parties and noticed as above as well as the judgments
cited at bar.
25. During the course of arguments, index of compilation of
various cases registered against the various licence-holders under the Excise
Policy 2024-25 was handed over to the Court, which included FIR relating
to Excise Policy of Delhi. The said aspects were not denied by the
respondents.
26. The question before this Court arises whether the denial of L-1
licence to an existing company who was already holding L-1 licence in the
State of Punjab for the previous two years and were eligible as per the
Excise Policy of 2024-25 can be said to be justified and what relief can be
granted to the petitioner.
27. Perusing Punjab Intoxicants Licence and Sales Orders, 1956
reflects that under Clause 7, a licence for the vend of liquor or drugs may
not be given in following circumstances:-
”
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
So far as L-1 licence is concerned under the Excise Policy, it is
provided that for granting L-1 licence, following terms and conditions have
been laid down, which are reproduced as under:-
“(i) L-1 license granted for the Excise Policy for the
year 2023-24 shall not be renewed i.e. L-1 license shall
be granted afresh in the year 2024-25.
(ii) The whole-sale license in form L-1 is meant for
sale of Punjab Medium Liquor (PML), Indian Made
Foreign Liquor (IMFL)/ IFL, Beer, Wine, cider, RTD and
other liquor products.
(iii) L-1 (PML) is meant for the sale of Punjab Medium
Liquor (PML) only.
(iv) L-1 (IMFL/IFL) & L-1 (Others) are meant for the
sale of Indian Made Foreign Liquor (IMFL), Imported
Foreign Liquor (IFL), Beer, Wine, Ready to drink (RTD)
alcoholic beverages, Cider and other liquor products
etc. but excluding PML.
(v) Further, one entity can be granted only one type of
L-1 out of L 1(IMFL/IFL), L-1 (Others) and L-1 (PML).
(vi) After the grant of L-I license, a manufacturing
entity or entities, as the case may be, can choose L-1
licensee for distribution of its products, subject to the
terms and conditions mentioned below:
(vii) In this Excise Policy, in order to eliminate any
possibility of nexus amongst the manufacturer,
wholesaler and retailer of liquor and also to promote the
availability of quality brands and further to have a
seamless supply chain, it is envisaged that the L-1
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
license will be granted only to the
person/firm/company/Joint Venture/ any other form of
legal entity:
a. having a requisite experience of at least 2
years in the whole sale distribution of liquor in
India and a minimum annual turnover of Rs 30
crores in whole sale distribution of liquor business
in each year of at least 2 years out of immediately
preceding 5 years in a State/UT of India. In case
of Joint Venture, at least one of the Joint Venture
entity es should individually have the afore-
mentioned experience and turnover in wholesale
distribution of liquor. The turnover and experience
of the Joint Venture entities will not be added for
the purpose of qualifying the minimum eligibility
criteria. For the purpose of qualifying the
eligibility criteria, only the turnover of entire
wholesale distribution business consisting of all
types of Liquor will be counted.
b. An applicant entity shall neither have
license for manufacturing of liquor anywhere in
India or outside India nor retail sale liquor license
in Punjab through any L-2/L-14A license. Vice-
versa conditions shall also apply. Further, in case
of joint venture entity, this condition shall apply to
all the partners in the joint venture entity. The
applicant shall submit a declaration in the form of
affidavit and a certificate to the aforesaid effect,
as per books of accounts, duly certified by
Chartered Accountant.”
28. Upon perusal of the said policy, it is reflected that while L-1
licence shall be granted ‘afresh’ for the year 2024-25 and there shall be no
renewal. The conditions laid down for grant of L-1 licence nowhere reflect
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
any condition of denying licence on the ground of registration of FIR
against any Director of the company.
29. It is a settled principle of law that the company holds an
independent entity and is a separate person. A criminal case registered
against any Director would therefore not automatically treat the company to
be involved in criminal activities unless it is also named in the FIR. From
the perusal of the FIR, we find that the name is of the Director of the
company and it is not an allegation that the company was in any manner
involved in the criminal case.
30. In the judgment titled as “Gwalior Distilleries Private Limited
vs. State of Madhya Pradesh and others, (2020) 12 SCC 690, the Supreme
Court noticed as under:-
“This Court in State of M.P. & others v. Nandlal Jaiswal
(1986) 4 SCC 566 has held that no one can claim as
against the State the right to carry on trade or business
in liquor and the State cannot be compelled to part with
its exclusive right or privilege of manufacturing and
selling liquor. But when the State decides to grant such
right or privilege to others the State cannot escape the
rigour of Article 14. It cannot act arbitrarily or at its
sweet will. It must comply with the equality clause while
granting the exclusive right or privilege of
manufacturing or selling liquor. The Appellant’s request
for grant of a CS-1 license requires to be considered
strictly in accordance with law.”
31. The petitioner had placed on record Annexure P-13, which is a
list of licensees for the licence year 2023-24. From the perusal of the said
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
list and contentions raised by learned Senior counsel for the petitioner, it is
apparent that L-1 licence was granted to Rajwinder Singh against whom
criminal case was registered. Similarly, L-1 licence was granted to Anant
Wines & Spirits L-1 IMFL/IFL Village Dugri, Tehsil Payal, Ludhiana;
Bottling plant was granted to M/s Pernod Ricard India Pvt. Ltd. at Rajasthan
Liquors Ltd., Haripur Hindua, Derabassi, M/s Rock & Storm Distilleries
Pvt. Ltd., Village Chhajli, Sangrur, BWH-2, M/s Pernod Ricard India Pvt.
Ltd. at S.D. Beverages Pvt. Ltd., M/s Pernod Ricard India Pvt. Ltd. Village
Ghollumajra, Derabassi, M/s Empire Elcobrew Pvt. Ltd. village Jaula
Khurad, Dera Bassi, and M/s ADS Spirits Private Limited Vill-Basoli,
Tehsil-Dera Bassi; and distillery was granted to M/s Oasis Distilleries
Limited, Ferozepur.
32. So far as the petitioner is concerned, no criminal case is
registered against the petitioner – company, and against the Director while
an FIR has been registered, charge-sheet has not been filed. Thus, the
criteria of a criminal case being registered against the applicant to deny him
a licence, has neither been followed, nor adopted. The petitioner alone
appears to have been chosen differently.
33. In view of the observations made by the Supreme Court in the
case of Gwalior Distilleries (supra), we are satisfied that it is a case of
violation of Article 14 of the Constitution of India, and it is a clear case of
discrimination and arbitrary ‘pick and choose’ treatment. The conditions
outlined in terms of the excise policy also do not require an affidavit
regarding Director’s involvement in any criminal case where the applicant is
a company.
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
34. We are, therefore, of the firm view that the petitioner has been
arbitrarily deprived of getting a fresh licence for L-1.
35. We also noticed that the criminal case was registered during the
pendency, when the petitioner was having L-1 licence. The said licence was
renewed for the next year too, during the pendency of the criminal case. No
new circumstances can be said to have been made out for denying the
petitioner the said benefit of grant of licence and continuing his business.
The petitioner also possesses L-1 licence in other States too. The yardstick
adopted for denial of licence to the petitioner is thus, found to be whimsical
and based on unjustified principles, with no basis in law.
36. From the perusal of the order passed in appeal, we find that the
concerned Appellate Authority designated to decide the appeal, has failed to
perform its duty in accordance with law. The reasons put forth for rejecting
the application are without any basis and lacks any substantial legal support.
The decision making process of the Appellate Authority is found to be
flawed with aberration and misinterpretation of the provisions of law.
37. Taking into consideration that almost nine months have
elapsed, we propose to direct the respondents to consider the case of the
petitioner for awarding L-1 licence during the continuance of the excise
policy of 2024-25 until it is replaced by the new policy. This should be done
on pro rata basis, with the licence fee payable for the remaining licensing
period i.e. up to March, 2025 or any extension thereof. The petitioner would
be free to deposit the amount accordingly for the grant of L-1 licence.
38. Accordingly, this writ petition is allowed. The order passed by
the respondents dated 17.05.2024 denying the grant of L-1 licence to the
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh
petitioner is quashed and set aside with further direction to consider the case
of the petitioner for allotment of L-1 licence in terms of the conditions as
noticed above.
39. No costs.
40. Pending miscellaneous application(s), if any, also stand
disposed of.
LAVISHA
2025.01.16 13:52
I attest to the accuracy and
authenticity of this order/judgment
Punjab & Haryana High Court,
Chandigarh