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Case Law Details

Case Name : Bihar Distillers & Bottlers Pvt. Ltd. Vs The State of Bihar (Patna High Court)
Appeal Number : Civil Writ Jurisdiction Case No. 1713 of 2017
Date of Judgement/Order : 03/05/2017
Related Assessment Year :
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1. Challenging the constitutional validity of certain provisions under the Bihar Prohibition and Excise Act, 2016 (hereinafter referred to as the Prohibition Act‘), these writ petitions have been filed and the reliefs claimed are to declare Section 2(40) (ii), Section 13, Section 23 and Section 24(1) of the Prohibition Act as ultra vires to the Constitution and in excess to the legislative power of the State, so far as they prohibit manufacture and prevent renewal of license pertaining to industrial alcohol vis-à-vis spirit including silent spirit or ENA. It is said that by including spirit or ENA within the definition of intoxicant‘ as provided under Section 2(40) (ii), the State Legislature has acted in excess of the jurisdiction vested in it. Further prayer is to declare Sections 23 and 24(2) as ultra vires being in conflict to Article 300A of the Constitution inasmuch as it mandates that no compensation in consequence to withdrawal or non-renewal of distillery license shall be paid to the distillers so also on account of the fact that it confers unguided and uncontrolled power on the executive authority. Further prayer is to declare as null and void and to issue a writ in the nature of certiorari for quashing the Notification dated 24th January, 2017 issued  provided under Section 2(40) (ii), the State Legislature has acted in excess of the jurisdiction vested in it. Further prayer is to declare Sections 23 and 24(2) as ultra vires being in conflict to Article 300 A of the Constitution inasmuch as it mandates that no compensation in consequence to withdrawal or non-r  newal of distillery license shall be paid to the distillers so also on account of the fact that it confers unguided and uncontrolled power on the executive authority. Further prayer is to declare as null and void and to issue a writ in the nature of certiorari for quashing the Notification dated 24th January, 2017 issued by the State in exercise of the powers conferred upon it under Section 24(1) of the Prohibition Act whereby it prohibits renewal of license in Form 28A issued to the petitioners-distilleries with regard to manufacture of ENA after 1st of April, 2017.

2. The petitioners are engaged in the business of manufacture of Extra Neutral Alcohol (ENA), which is unfit for human consumption, and according to the petitioners, as the entire power to legislate with regard to ENA and other industrial alcohol or alcohol unfit for human consumption is exclusively with the Union, the power exercised by the State is ultra vires. 

3. It is said that the State Government floated its Industrial Incentive Policy in the year 2011 for promoting industrial growth in the State of Bihar and in furtherance thereto, various incentives were offered to companies, firms and individuals intending to set up industries within the State. The incentives offered were in the form of reimbursement of VAT, capital subsidy, subsidy for capital power generation and Distillery was an industry which was brought within the ambit of the aforesaid Industrial Policy. The Industrial Policy has been brought on record as Annexure-1 in CWJC No. 1713 of 2017 and suffices it to say that it provided various incentives.

4. It is the case of the petitioners that being encouraged and influenced by the incentive so offered, they set up their establishment, namely, a distillery plant of various capacities after investing huge amount ranging from Rs. 150 to 200 Crores for the production of Extra Neutral Alcohol (ENA), rectified spirit and impure alcohol and the units were grain based. For the purpose of establishment of the industry, captive (generation) power plant were also set up, various documents and materials have been adduced in detail in the writ petitions to show that in pursuance to the policy, applications and offers were submitted. They were discussed and thereafter the State Cabinet approved the same. The State Investment Promotion Board issued certain clarifications, the  Registration, Excise and Prohibition Department in the Government of Bihar, granted permission and the industries in question have been set up by all the petitioners after investing huge amount and obtaining loans and capital from various Banks. Documents evidencing these facts have been brought on record and there being no dispute with regard to these factual aspects of the matter, it is not necessary to go into various details thereto as canvassed in the writ petitions.

5. However, it may be relevant to take note of the fact that all the petitioners are manufacturing Extra Neutral Alcohol (ENA), its‘ a grain based industry and the spirit so obtained has a strength of 96% v/v, is a non- potable highly toxic substance and is totally unfit for human consumption. However, it is also an admitted position that if subjected to certain further processing, the product can be converted into potable liquor fit for human consumption. Primarily, the ENA produced is used as a raw material for various Chemical and Allied Industries and can also be used as a material for manufacturing of potable liquor, like Indian Made Foreign Liquor.

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