Accountability Important For Liquor License : Supreme Court Allows UP To Reopen Action Against Country Liquor Trader

The Supreme Court recently allowed the Uttar Pradesh government to restart action against a wholesale country liquor licence holder for alleged licence violations, while holding that the earlier cancellation of his licence was not legally sustainable due to procedural violations.

A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe observed that accountability in liquor licensing is necessary for effective regulation of the trade and distribution of liquor.

“Accountability, particularly in the context of liquor license is important for effective regulation of liquor trade and distribution. In this view of the matter we are of the opinion that the directions issued by the High Court is required to be modified to the extent of permitting the State to take appropriate action following the due procedure and complying with the principles of natural justice”, the Court observed.

The Court held that the Allahabad High Court was right in setting aside the cancellation of the liquor licence of respondent Mayoor Ahuja. However, it modified the High Court's directions to allow the State to take action in accordance with law after following due procedure and principles of natural justice.

Ahuja held a CL-2 licence for wholesale vend of country liquor in Badaun and Sambhal for the excise year 2020–21. After inspecting his licensed premises on March 04, 2021, excise authorities alleged several violations, including failure to install a signboard, shortage of 1980 packets, absence of CCTV cameras and lack of fire safety equipment. They issued a show cause notice on March 05, 2021 asking him to explain these alleged breaches of licence conditions.

Ahuja denied the allegations. On March 27, 2021, the Excise Commissioner cancelled his licence and forfeited his security deposit. The order also relied on interception of a truck, statements of its driver, FIRs alleging illegal transportation and allegations of forged barcodes causing loss to the State exchequer.

His revision petition was dismissed by the State Government on February 23, 2024. He then approached the Allahabad High Court, which on April 23, 2025 set aside the cancellation.

The High Court found that the show cause notice referred only to certain violations under Rule 16 of the Uttar Pradesh Excise Rules, 2020. It held that these were minor and compoundable breaches under the Rules and did not justify cancellation of the licence.

It also held that the cancellation order relied on additional grounds that were never put to Ahuja in the show cause notice, including alleged violations relating to transport passes, record maintenance, CCTV installation and GPS-enabled transport. These findings were recorded without prior notice or supporting material.

The Supreme Court agreed that the cancellation order could not stand because it went beyond the show cause notice and denied Ahuja a proper opportunity to respond.

At the same time, the Court said the High Court's order effectively prevented the State from taking any action on the alleged violations. It clarified that the State can examine those allegations again, but only after issuing a fresh show cause notice and following the procedure under the Uttar Pradesh Excise (Settlement of Licenses for Wholesale of Country Liquor) Rules, 2002.

The Court directed that Ahuja must be given full opportunity to file his response and documents before any fresh decision is taken.

Case no. – State of Uttar Pradesh & Ors. v. Mayoor Ahuja

Case Title – Special Leave Petition (C) (@ Diary No.60095/2025