Liquor Trade Not a Fundamental Right: Madhya Pradesh High Court Upholds Licence Suspension of Som Distilleries

The Madhya Pradesh High Court has upheld the suspension of multiple excise licences granted to Som Distilleries Pvt. Ltd. and related entities, ruling that the State authorities acted within the framework of law while invoking powers under the Madhya Pradesh Excise Act, 1915.

The decision, delivered by Justice Vivek Agarwal on March 23, 2026, dismissed a writ petition challenging the Excise Commissioner’s order dated February 4, 2026, which had suspended eight licences linked to the petitioners.

The petitioners, represented by Senior Advocate Naman Nagrath assisted by Rahul Diwakar, argued that the impugned suspension was rooted in a show cause notice issued in February 2024, relating to licences that had already expired on March 31, 2024. They contended that fresh licences granted for subsequent years could not be affected by earlier proceedings, and that the continuation of the show cause notice violated settled legal principles. It was further submitted that the notice was vague, issued jointly to distinct legal entities, and failed to specify individual liability, thereby breaching principles of natural justice.

On the other hand, the State, represented by Additional Advocate General Harpreet Singh Ruprah assisted by Manas Mani Verma, defended the action, asserting that the licences in question were not fresh grants but annual renewals subject to compliance with statutory conditions. The State emphasized that the show cause notice was based on serious findings, including the conviction of employees and agents associated with the petitioners for offences involving forged permits and illegal transportation of liquor.

Senior Advocate Sanjay K. Agrawal, appearing for the intervener and assisted by Nitesh Kumar Barman, further argued that the doctrine of “alter ego” applied, making the company liable for acts committed by its directors and employees. He highlighted that the Managing Director, though not expressly named in the show cause notice, had been convicted, and the omission itself raised concerns regarding the conduct of the authorities.

The court framed key issues including whether the show cause notice satisfied statutory requirements, whether principles of natural justice were violated, and whether the acts in question attracted Sections 31(1)(b), (c), and (d) of the Excise Act. After examining the record, the court found that the notice clearly detailed the allegations, referred to relevant convictions, and provided an opportunity for reply, thereby fulfilling the mandate of Section 31(1-A).

Rejecting the argument that fresh licences insulated the petitioners from prior proceedings, the court held that excise licences are subject to renewal conditions and cannot be treated as entirely independent grants. It distinguished the precedent relied upon by the petitioners, observing that the statutory framework governing excise licences expressly permits action based on past conduct where violations are established.

Importantly, the court noted that the petitioners had failed to deny the core allegation of transporting liquor using forged permits. It observed that “there is no explanation to the said allegation,” and that the replies filed did not rebut the factual foundation of the show cause notice. The Court further held that under Section 31(1)(c), liability extends not only to the licence holder but also to acts committed by servants or persons acting on their behalf with implied permission.

The bench also underscored that transporting liquor without valid permits results in loss of excise revenue, thereby attracting statutory consequences. It ruled that convictions under both the Excise Act and provisions of the Indian Penal Code for cognizable and non-bailable offences justified the suspension of licences.

Addressing the argument on proportionality, the court held that the regulatory nature of the liquor trade permits strict enforcement measures. It reiterated that “liquor business is not a fundamental right,” and that the State is entitled to take action to protect revenue and ensure compliance with law.

Finding no procedural irregularity or legal infirmity in the decision-making process, the court concluded that the impugned order could not be faulted. Consequently, the writ petition was dismissed.

Case Title: Som Distilleries Pvt. Ltd. and Others v. The State of Madhya Pradesh and Others

Date of Order: March 23, 2026

Bench: Justice Vivek Agarwal