Liquor Business Is Not A Fundamental Right: MP High Court Upholds License Suspension Of Distilleries
The Madhya Pradesh High Court has upheld the suspension of multiple licenses held by Som Distilleries, observing that the liquor trade is not a fundamental right and is subject to strict statutory regulations. The bench of Justice Vivek Agarwal observed; "Firstly, liquor business is not a fundamental right and secondly, when the test of proportionality is applied, then on that touchstone...
The Madhya Pradesh High Court has upheld the suspension of multiple licenses held by Som Distilleries, observing that the liquor trade is not a fundamental right and is subject to strict statutory regulations.
The bench of Justice Vivek Agarwal observed;
"Firstly, liquor business is not a fundamental right and secondly, when the test of proportionality is applied, then on that touchstone also, decision of the authority being within the framework of the Excise Act and the Rules framed thereunder, cannot be faulted with".
The petitioners challenged the order of February 4, 2026, passed by the Excise Commissioner suspending eight licenses, granted to two entities - Som Distilleries Pvt. Ltd. and Som Distilleries and Breweries Pvt. Ltd.
The action stemmed from the show-cause notice issued in February 2024, based on criminal convictions arising out of the illegal transportation of liquor using forged permits. The licenses in question had originally expired on March 31, 2024, but were subsequently renewed for later years. The petitioner contended that the show cause notice could not survive beyond the original license period and could not be applied to renewed licenses.
The counsel for the petitioner argued that the show cause notice became infructuous upon expiry of the earlier licenses and could not be extended to renewed licenses for subsequent years. It was further contended that since criminal appeals had been filed and sentences were suspended, the very basis of the show cause notice lost its efficacy.
The counsel further argued that there was a violation of principles of natural justice, including the lack of a proper opportunity of hearing and improper issuance of a composite show cause notice against two distinct entities.
Additionally, the petitioners submitted that the convictions of employees could not be attributed to the companies, and that relevant statutory provisions were incorrectly invoked.
The counsel for the State contended that the licenses were subject to annual renewal conditional upon compliance with statutory provisions and, therefore, prior violations continued to have legal consequences. It was further argued that there was no stay on conviction, and mere suspension of sentence did not negate the findings of guilt.
The court rejected the petitioner's arguments, holding that the licenses were not fresh grants but were renewals subject to compliance with the Act and Rules. Therefore, prior violations did not lose relevance upon renewal.
Further, the court clarified that suspension of sentence does not amount to a stay of conviction, noting that no material was produced to show that the conviction itself had been stayed.
On the issue of natural justice, the court found that the statutory requirements under Section 31(1-A) were duly complied with, as the show cause notice recorded reasons, provided necessary details and afforded an opportunity to respond. The court further noted that the petitioners failed to deny the core allegation of transporting liquor using forged permits in their replies, which weighed against them.
"Even Clause V of the Licence provides for cancellation of licence for violation of the terms, therefore, on this touchstone also, act of the Excise Commissioner, cannot be faulted with", the court held.
The court further held that under Sections 31(1)(c) and 44 of the Excise Act, acts of employees, agents and persons acting on behalf of the licence holder are attributable to the licensee. Thus, convictions of the driver, cleaner and other associated persons were sufficient to trigger statutory consequences.
The bench held, "Thus, the expression 'anyone acting on his behalf with his express or implied permission', will include the driver and cleaner of the truck in which material was transported. Therefore, their conviction under Section 34(2) of the Madhya Pradesh Excise Act, will bind the licencee in terms of the language of Clause (c) of Sub-section (1) of Section 31 of the Excise Act".
Applying the doctrine of proportionality, the court concluded that the State's action was reasonable and justified in the light of the seriousness of violations, which involved forged permits and loss of excise revenue.
The bench observed, "Therefore, in terms of the fraud perpetuated in using forged permits to transport foreign liquor, the impugned acts of the respondents, when tested on the touchstone of doctrine of proportionality, cannot be faulted with".
The court thus dismissed the writ petition.
Case Title: Som Distilleries v State of Madhya Pradesh [WP-4915-2026]