Renewal Of Liquor Licences Must Follow Law, Not Prior Litigation: Madhya Pradesh High Court

The High Court of Madhya Pradesh has clarified that renewal of excise licences must be considered independently on statutory criteria and cannot be prejudiced by earlier judicial findings, while disposing of a writ appeal filed by Som Distilleries Pvt. Ltd. and others against the State.

The Division Bench of Justice Vivek Rusia and Justice Pradeep Mittal held that apprehensions of bias in renewal decisions were unfounded and directed that applications be examined strictly in accordance with law.

The dispute arose after the Excise Commissioner issued a show-cause notice to the appellants under Section 31 of the M.P. Excise Act, 1915, citing the conviction of five employees under various provisions of the IPC. The licences held by the companies covering manufacturing and sale of liquor were subsequently suspended by an order dated February 4, 2026. The appellants challenged this action, arguing that the convictions were unrelated to offences under the Excise Act and therefore did not attract the statutory consequences contemplated under Section 31.

Senior Advocate Naman Nagrath, appearing for the appellants along with Advocate Rahul Diwaker, contended that the show-cause notice pertained to licences valid only up to March 31, 2024, and no fresh notice had been issued for subsequent licence periods. It was also argued that although criminal appeals had been filed against the convictions and sentences were suspended, the authorities proceeded to suspend all licences, causing severe financial prejudice.

The State, represented by Additional Advocate General Harpreet Singh Ruprah with Advocate Adwitiya Parashar, defended the Commissioner’s action and submitted that the writ appeal had become infructuous since the licence period had already expired. The intervener, represented by Senior Advocate Sanjay K. Agrawal with Advocate Nitesh Kumar Barman, also opposed continuation of the appeal, arguing that fresh licence applications must be decided independently under the statutory framework.

The Bench noted that during the pendency of proceedings, licences for subsequent financial years had been issued and had also expired by March 31, 2026. It recorded that the appellants had applied for renewal but no decision had been taken due to the pendency of the appeal. Addressing the appellants’ concern that adverse observations by the writ court might influence future decisions, the Court categorically rejected such apprehensions.

“The renewal application is liable to be considered in accordance with the Act, subject to the fulfilment of conditions for the grant of a licence,” the Court observed, adding that such consideration must occur “without being prejudice from the judgment passed by the writ court.”

The Court further clarified that there is no specific rule governing renewal of licences under the Excise framework, and that Section 31 applies only to suspension or cancellation, not renewal. This distinction formed the basis of its conclusion that renewal decisions must stand on their own statutory footing.

On the issue of unsold stock, the Court pointed to existing provisions governing post-expiry handling of liquor inventory. It noted that upon expiry or cancellation of a licence, the entire stock must be placed under the control of the Distillery Officer and may be sold or transferred within 30 days with prior permission of the Excise Commissioner. The State also retains the power to purchase such stock at notified rates.

Rejecting the plea to keep the writ appeal pending, the Bench held that no substantive issue remained for adjudication and disposed of the matter, while leaving it open for authorities to decide renewal applications on merits.

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

Date of Order: April 15, 2026

Bench: Justice Vivek Rusia and Justice Pradeep Mittal