1

CGHC010046832021 2026:CGHC:43102

AFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

WPC No. 1216 of 2021

Judgment Reserved On :01.09.2026.

Judgment Delivered On : 06.10.2026.

1 - Legend Distilleries Pvt. Ltd. Through Authorized Representative Signatory 97-C,

Sector-A, Industrial Area Sirgitti, Bilaspur Chhattisgarh.

--- Petitioner(s)

versus

1 - State Of Chhattisgarh (Through Excise Department ), GST Bhawan, Sector 19,

Atal Nagar, Raipur -492002, Chhattisgarh.

2 - Collector (Excise) Bilaspur District Bilaspur Chhattisgarh.

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director),

Labhandi, Chokra Nala, Raipur Chhattisgarh.

--- Respondent(s)

WPC No. 1407 of 2023

1 - Legend Distilleries Pvt. Ltd. (Through Authorized Representative/ Signatory) 97-

C, Sector-A, Industrial Area, Sirgitti, Bilsapur, Chhattisgarh

---Petitioner(s)

Versus

1 - State Of Chhattisgarh Through Excise Department Gst Bhawan, Sector 19, Atal

Nagar, Raipur -492002, Chhattisgarh

2 - Collector (Excise), Bilaspur, District Bilsapur, Chhattisgarh

3 - Chhattisgarh State Beverages Corporation Ltd. Through Managing Director

Labhandi, Chokra Nala, Raipur Chhattisgarh

--- Respondent(s)

2

WPC No. 2218 of 2021

1 - Legend Distilleris Pvt. Ltd. ( Through Authorized Representative / Signatory) 97-

C, Sector-A, Industrial Area, Sirgitti, Bilaspur, Chhattisgarh.

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department) GST Bhawan, Sector 19,

Atal Nagar, Raipur 492002 Chhattisgarh.

2 - Collector (Excise) Raipur, District Raipur, Chhattisgarh.

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director)

Labhandi, Chokra Nala, Raipur (Chhattisgarh)

--- Respondent(s)

WPC No. 3190 of 2021

1 - Legend Distilleries Pvt. Ltd (Through Authorized Representative/ Signatory) 97-

C, Sector-A, Industrial Area, Sirgitti, Bilaspur, Chhattisgarh.

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department), Gst Bhawan, Sector- 19,

Atal Nagar, Raipur- 492002, Chhattisgarh

2 - Collector (Excise) Raipur, District- Raipur, Chhattisgarh.

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director),

Labhandi, Chokra Nala, Raipur, Chhattisgarh.

--- Respondent(s)

WPC No. 1577 of 2023

1 - Legend Distilleries Pvt Ltd (Through Authorized Representative/signatory) 97-C,

Sector-A, Industrial Area, Sirgitti Bilaspur, Chhattisgarh

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department) G.S.T. Bhawan, Sector-19,

Atal Nagar, Raipur - 492002, Chhattisgarh.

2 - Collector (Excise) Raipur, District : Raipur, Chhattisgarh

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director)

Labhandi, Chokra Nala, Raipur, Chhattisgarh

--- Respondent(s)

WPC No. 5397 of 2021

1 - Som Distilleries And Breweries Odisha Pvt. Ltd. (Through Authorized

Representative/signatory), Barpada, P. O. Garudagaon, P. S. Tangi, Tahsil Tangi,

Choudwar, District Cuttack Odisha

3

---Petitioner(s)

Versus

1 - State Of Chhattisgarh Through Excise Department, Gst Bhawan, Sector-19, Atal

Nagar, Raipur, 492002 Chhattisgarh

2 - Collector (Excise) Bilaspur District Bilaspur Chhattisgarh.

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director,)

Labhandi, Chokra Nala, Raipur Chhattisgar.

--- Respondent(s)

WPC No. 199 of 2022

1 - Som Distilleries And Beverages Ltd. (Through Authorized Representative /

Signatory), Village Rojara Chaak, Raisen, Madhya Pradesh.

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department) Gst Bhawan, Sector 19,

Atal Nagar, Raipur, 492002, Chhattisgarh.

2 - Collector (Excise) Bilaspur District Bilaspur Chhattisgarh.

3 - Chhattisgarh State Beverages Corporation Ltd. Through Managing Director,

Labhandi, Chokra Nala, Raipur Chhattisgarh.

--- Respondent(s)

WPC No. 1849 of 2023

1 - Legend Distilieries Pvt Ltd. Through Authorized Representative / Signatory Mr.

A.K. Sharma) 97 - C, Sector - A, Industrial Area, Sirgitti, Bilaspur, Chhattisgarh

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department) G S T, Bhawan, Sector 19,

Atal Nagar, Raipur - 492002, Chhattisgarh

2 - Collector (Excise) Raipur, District Raipur, Chhattisgarh

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director)

Labhandi, Chokra Nala, Raipur (Chhattisgarh)

--- Respondent(s)

WPC No. 1860 of 2023

1 - Legend Distilleries Pvt Ltd (Through Authorized Representative / Signatory) 97-

C, Sector-A, Industrial Area, Sirgitti, Bilaspur, Chhattisgarh

---Petitioner(s)

Versus

4

1 - State Of Chhattisgarh (Through Excise Department) G S T Bhawan, Sector 19,

Atal Nagar, Raipur- 492002, Chhattisgarh.

2 - Collector (Excise) Raipur, District : Raipur, Chhattisgarh

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director)

Labhandi, Chokra Nala, Raipur (Chhattisgarh).

--- Respondent(s)

WPC No. 1857 of 2023

1 - Scottment Alco Bev Fillers Pvt Ltd (Through Authorized Representative/

Signatory) 448/2/5, Village Khapri Tehsil Dhamdha, District Durg Chhattisgarh

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department) G S T Bhawan, Sector 19,

Atal Nagar Raipur Chhattisgarh 492002 Chhattisgarh.

2 - Collector (Excise) Bilaspur District Bilaspur Chhattisgarh

3 - Chhattisgarh State Beverages Corporation Ltd (Through Managing Director)

Labhandi, Chokra Nala, Raipur Chhattisgarh

--- Respondent(s)

WPC No. 1855 of 2023

1 - Scottmen Alco Bev Fillers Pvt Ltd (Through Authorized Representative/

Signatory) 448/2/5. Village Khapri Tehsil Dhamdha, District Durg Chhattisgarh

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department) GST Bhawan, Sector 19

Atal Nagar, Raipur 492002 Chhattisgarh

2 - Collector, (Excise) Raipur, District Raipur Chhattisgarh

3 - Chhattisgarh State Beverages Corporation Limited. (Through Managing

Director) Labhandi, Chokra Nala, Raipur Chhattisgarh

--- Respondent(s)

WPC No. 1002 of 2022

1 - Legend Distilleries Pvt. Ltd. (Through Authorized Representative/ Signatory) 97-

C, Sector- A, Industrial Area, Sirgitti, Bilaspur Chhattisgarh.

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department) Gst Bhawan, Sector 19,

Atal Nagar, Raipur 492002 Chhattisgarh.

2 - Collector (Excise), Bilaspur, District Bilaspur Chhattisgarh.

5

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director),

Labhandi, Chokra Nala, Raipur, Chhattisgarh

--- Respondent(s)

WPC No. 1583 of 2023

1 - Legend Distilleries Pvt Ltd (Through Authorized Representative/signatory) 97-C,

Sector-A, Industrial Area, Sirgitti, Bilaspur, Chhattisgarh

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department) G.S.T. Bhawan, Sector-19,

Atal Nagar, Raipur - 492002, Chhattisgarh.

2 - Collector (Excise) Raipur, District : Raipur, Chhattisgarh

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director)

Labhandi, Chokra Nala, Raipur, Chhattisgarh

--- Respondent(s)

WPC No. 1832 of 2023

1 - Scottmen Alco Bev Fillers Pvt Ltd (Through Authorized

Representative/signatory)448/2/5, Village Khapri Tehsil Dhamdha, District : Durg,

Chhattisgarh

---Petitioner(s)

Versus

1 - State Of Chhattisgarh Through Excise Department Gst Bhawan, Sector 19, Atal

Nagar, Raipur 492002, Chhattisgarh.

2 - Collector (Excise), Raipur District Raipur Chhattisgarh.

3 - Chhattisgarh State Beverages Corporation Ltd, Through Managing Director

Labhandi, Chokra Nala, Raipur Chhattisgarh.

--- Respondent(s)

WPC No. 1833 of 2023

1 - Scottmen Alco Bev Fillers Pvt. Ltd. (Through Authorized

Representative/signatory) 448/2/5, Village Khapri Tehsil Dhamdha, District : Durg,

Chhattisgarh

---Petitioner(s)

Versus

1 - State Of Chhattisgarh (Through Excise Department) Gst Bhawan, Sector-19,

Atal Nagar, Raipur - 492002, Chhattisgarh.

2 - Collector (Excise) Bilaspur, District : Bilaspur, Chhattisgarh.

6

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director)

Labhandi Chokra Nala, Raipur (Chhattisgarh)

--- Respondent(s)

WPC No. 2933 of 2023

1 - Legend Distilleries Pvt. Ltd. (Through Authorized Representative/signatory) 97-

C, Sector-A, Industrial Area, Sirgitti, Bilaspur, Chhattisgarh.

---Petitioner(s)

Versus

1 - State Of Chhattisgarh Through Excise Department Gst Bhawan, Sector 19, Atal

Nagar, Raipur, 492002, Chhattisgarh.

2 - Collector (Excise) Raipur, District Raipur, Chhattisgarh.

3 - Chhattisgarh State Beverages Corporation Ltd. (Through Managing Director)

Labhandi, Chokra Nala, Raipur (Chhattisgarh)

--- Respondent(s)

For Petitioner(s) :Shri Kishore Bhaduri, Senior Advocate along

with Shri Harsh Dave, Advocate.

For State/Respondent :Shri Anand Dadariya, Deputy Advocate

General.

For Respondent- Chhattisgarh

State Beverages Corporation

Limited, in respective cases

:Shri Syed Majid Ali, Advocate.

For Respondent- Chhattisgarh

State Beverages Corporation

Limited, in respective cases

:Ms. Kajal Chandra appears on behalf of Shri

Malay Shrivastava, Advocates.

Hon’ble Mr. Justice Amitendra Kishore Prasad

C A V Order

1.Since in all these writ petitions, grievance of the petitioners/Companies is

one and the same, they have been clubbed together and are being disposed

of by this common order and the result would govern all the writ petitions.

2.In all these writ petitions, the petitioners have challenged the legality and

propriety of recovery order (Annexure P/1 collectively), in all the writ

petitions, passed against them by invoking powers conferred under Rules

17 (2) of the Chhattisgarh Foreign Liquour Rules, 1996 by the Collector

imposing penalty of Rs.6,24,785/- for alleged loss/ breakage of different

7

quantities of foreign liquor during the course of its transmission to retail

shops from the concerned depot of Chhattisgarh State Beverage

Corporation Limited.

3.For the purposes of disposal, facts pleaded in WPC No.1216 of 2021 are

being referred to. The Petitioner is a leading integrated Alco Bev player and

is duly registered with Respondent No. 3/Beverages Corporation for supply

of foreign liquor. The Petitioner has entered into a valid rate contract with

Respondent No. 3/Beverages Corporation and has at all material times

complied with the terms, conditions and mandates prescribed by the said

Respondent. Pursuant to and in terms of the agreement/rate contract

entered into with Respondent No. 3/Beverages Corporation, the Petitioner

was required to supply foreign liquor to the depot of Respondent No.

3/Beverages Corporation situated at Village Lingiyadih, Bilaspur. Under the

terms and conditions governing the aforesaid supply arrangement, the

Petitioner is liable for any loss or breakage of stock supplied to Respondent

No. 3/Beverages Corporation only where such loss or breakage is

attributable to old, defective or improper packing or to a manufacturing

defect. The contractual liability of the Petitioner does not extend to loss or

damage occurring in circumstances other than those specifically

contemplated under the agreement. The Petitioner is further mandated

under the contractual arrangement to undertake the supply by following the

prescribed “Track & Trace System”, which is a mechanism intended to

ensure proper verification and maintenance of the quality and quantity of the

stock at the stage of packaging and loading. Compliance with the Track &

Trace System is mandatory and is a prerequisite for generation of the

8

requisite transport permit in favour of the Petitioner. Thus, the stock supplied

by the Petitioner is subject to a prescribed system of checks and verification

even before its transportation to the concerned depot. Upon the stock

reaching the concerned depot of Respondent No. 3/Beverages Corporation,

the same is subjected to inspection by the officials of Respondent No.

3/Beverages Corporation. Any loss or damage occasioned to the stock

during the course of transportation, prior to its acceptance at the depot, is

borne by the Petitioner in accordance with the applicable contractual terms.

However, once the stock is duly received and enters the depot of

Respondent No. 3/Beverages Corporation, the same comes under the

exclusive handling, custody and management of the officials of Respondent

No. 3/Beverages Corporation. Further, the subsequent transportation of the

stock from the depot to the respective retail shops is also undertaken by

Respondent No. 3/Beverages Corporation and its agencies/officials.

Consequently, any loss, shortage or damage occurring after the stock has

entered the depot and during its subsequent handling or transportation

cannot be attributed to the Petitioner, unless it is specifically established that

such loss or damage was occasioned on account of defective/improper

packing or a manufacturing defect attributable to the Petitioner. Despite the

aforesaid contractual position, Respondent No. 2/Collector has proceeded to

fasten the entire liability in respect of the alleged loss/damage upon the

Petitioner and has imposed a penalty upon the Petitioner. Significantly,

neither has Respondent No. 2 established nor has any cogent material been

demonstrated to show that the alleged loss or damage was occasioned on

account of any defective or improper packing or manufacturing defect

9

attributable to the Petitioner. The impugned action of Respondent No.

2/Collector is therefore contrary to the express terms and conditions

governing the contractual relationship between the parties. The Respondent

authorities have failed to appreciate the distinction between the period

during which the stock remained the responsibility of the Petitioner and the

period subsequent to its receipt at the depot, when the stock came under the

custody, control and management of Respondent No. 3/Beverages

Corporation. The Petitioner has discharged its contractual obligations by

complying with the prescribed Track & Trace System, supplying the stock in

accordance with the stipulated requirements and delivering the same to the

designated depot. In the absence of any finding or material establishing that

the alleged loss was attributable to defective/improper packing or

manufacturing defect, fastening liability upon the Petitioner is wholly

arbitrary, unreasonable and contrary to the governing contractual terms. The

action of Respondent No. 2/Collector in imposing the penalty upon the

Petitioner, without establishing the contractual conditions necessary for

fastening such liability, is manifestly arbitrary, illegal and unsustainable in

law. The Petitioner is consequently constrained to invoke the extraordinary

jurisdiction of this Court under Article 226 of the Constitution of India and

seek appropriate relief against the arbitrary and illegal action of the

Respondent authorities.

4.Learned Senior counsel submits that the common question arising in the

batch is not whether some quantity of bottled liquor was physically broken.

The controversy is much narrower and essentially legal, whether breakage

occurring after the stock had reached the CSBCL godown and while the

10

stock was thereafter being handled/moved by or within the CSBCL

establishment can automatically be fastened upon the manufacturer/seller

without any allegation or finding that the breakage was caused by defective

or improper packing or by a manufacturing defect attributable to the

Petitioner. The facts of the lead petition demonstrate the issue clearly. The

Petitioner manufactured sealed bottled foreign liquor at its unit at Sirgitti,

Bilaspur and transported the same to the CSBCL Lingiyadih Godown,

Bilaspur. The impugned order itself records that the stock had already been

transported from the Petitioner's unit to the CSBCL godown. It thereafter

records that between 01.04.2019 and 31.03.2020 and during May 2020,

breakage equivalent to 1724.02 proof litres occurred while the liquor was

being taken out and moved from one place to another. Thus, the

Department's own factual case is that the goods had already reached the

CSBCL godown and the breakage occurred thereafter, not during

manufacture and not before delivery, but during subsequent

handling/movement of the stock. The order also records that the

Panchanamas regarding such breakage were prepared by the officer in-

charge of the CSBCL godown. The show-cause notice dated 04.12.2020 is

particularly significant and is equally specific. It states that the officer in-

charge of the CSBCL Lingiyadih godown reported that breakage of 1724.02

proof litres occurred. The notice therefore itself fixes the stage and location

of the alleged loss after receipt in the CSBCL godown and during handling

therein. What is equally important is what the show-cause notice does not

allege. It does not allege that the bottles were found broken when delivered

by the Petitioner. It does not allege that the consignment was delivered in

11

defective condition. It does not allege that the cartons or packing were

defective or improper. It does not identify a single manufacturing defect. It

does not allege that any inspection at the stage of receipt disclosed

defective packaging. It does not allege that the breakage occurring during

subsequent handling was causally attributable to any act, omission or defect

on the part of the Petitioner. Nevertheless, the show-cause notice invokes

Rule 17(2) of the Chhattisgarh Foreign Liquor Rules, 1996, reproduces

Clauses 2.3 and 3.10 of the CSBCL Terms and Conditions and straightaway

proposes recovery of 16,24,785/-. Further, the show-cause notice therefore

suffers from a fundamental disconnect between the factual allegation and

the contractual provision relied upon. The factual allegation is handling

breakage after the goods had reached the CSBCL godown. However, the

contractual provision relied upon to shift liability to the seller, namely Clause

3.10, applies to a materially different circumstance, namely breakage caused

"on account of defective and improper packing" or "on account of any

manufacturing defect." Not one of these foundational facts is alleged in the

show-cause notice. Clause 2.3 expressly records that, till resale by the

purchaser to third parties, "the risk and property in the stock lies with the

purchaser", subject to godown breakages occurring on account of the

provisions specified in Clause 3.10. The purchaser is CSBCL and the

Petitioner is the seller. Therefore, the plain contractual position is that risk

and property in the stock lie with CSBCL as purchaser, while a limited and

specific category of breakage contemplated by Clause 3.10 is placed upon

the seller. Curiously, both the show-cause notice and the impugned order

reproduce the substance of Clause 2.3 recognising that risk and property lie

12

with the purchaser, but immediately thereafter proceed upon the contrary

premise that the entire risk continues to remain with the seller till resale.

These two propositions are mutually inconsistent. The latter proposition

reverses the contractual allocation contained in Clause 2.3. This is not a

factual dispute requiring evidence. It is an error visible from the face of the

documents themselves. Clause 2.3 can simply be compared with the

interpretation adopted in the show-cause notice and in the impugned order.

Clause 3.10 makes the position still clearer. It provides that damages and

breakages to the stock supplied to the purchaser shall be to the seller's

account where they arise on account of defective and improper packing

account of manufacturing defect. Thus, Clause 3.10 does not create

absolute liability upon the seller for every bottle which may break in a

CSBCL godown. The liability is expressly causation based. In other words,

the mere fact of breakage is not sufficient. It must be established that the

breakage occurred because of defective/improper packing or because of a

manufacturing defect. Unless the contractual cause specified in Clause 3.10

is alleged and found, the exception contemplated therein does not operate.

The show-cause notice, as stated above, alleges neither of these

circumstances. The final order also records neither of them. There is

therefore a complete absence, both at the stage of initiation and at the stage

of adjudication, of the foundational fact necessary to shift liability under

Clause 3.10 from CSBCL as purchaser to the Petitioner as seller. 18.

Instead of examining this question, the Collector has proceeded entirely on

the Petitioner's failure to file a reply to the show-cause notice. The impugned

order demonstrates the basic infirmity in the adjudication. The Collector does

13

not record that the packing was defective. He does not find that it was

improper. He does not identify any manufacturing defect. He does not find

that the Petitioner or its employees were handling the stock when the

breakage occurred. He does not determine whose custody and control the

bottles were in when moved from one place to another. He does not

determine what caused the breakage. Instead, the Collector reasons that

because the Petitioner did not file a reply, it must be deemed to have

"agreed with the offence. Non-filing of a reply could at the highest entitle the

authority to proceed ex parte. It could not create facts which had never been

alleged in the show-cause notice and could not dispense with the authority's

obligation to establish the ingredients necessary to impose liability. Silence

on the part of the noticee cannot establish defective packing. It cannot

establish a manufacturing defect. It cannot establish causation. Nor can it

convert every handling breakage occurring after delivery into a breakage

attributable to the manufacturer. The Collector has, moreover, placed the

burden on the wrong party and has framed the wrong inquiry. The order

repeatedly states that the Petitioner failed to produce material demonstrating

that the breakage did not occur during handling or failed to offer a

satisfactory explanation for such handling breakage. But the occurrence of

breakage is not the Petitioner's case. The question is whether that admitted

handling breakage is legally attributable to the Petitioner. The proper inquiry

ought therefore to have been whether the Department's material established

defective or improper packing, whether it established a manufacturing

defect, and whether such defect caused the breakage. Instead, the authority

has proceeded on the reverse proposition that the Petitioner must disprove

14

liability merely because bottles admittedly broke during subsequent

handling. The scheme of the Rules also requires the authority to undertake

a proper determination. Rule 17(2) of the Chhattisgarh Foreign Liquor Rules,

1996 provides, inter alia, that no wastage allowance is permissible in respect

of bottled foreign liquor stored with the specified licensees, including an FL-

10 licensee, and that where deficiency is found during verification, the

prescribed duty and bottle fee are recoverable, apart from any other penalty

imposable under Rule 19. The Petitioners’ contention is that Rule 17(2)

cannot be applied in abstraction without determining the nature and legal

attribution of the alleged deficiency. The statutory provision cannot

automatically convert every bottle broken after manufacture into a deficiency

attributable to the manufacturer regardless of delivery, custody, subsequent

handling and the contractual allocation of risk. This is especially so because

the Excise Authority itself has relied upon Clauses 2.3 and 3.10 to determine

who must bear the financial consequence of the breakage. Once those

clauses are relied upon, they must be applied according to their actual

terms. Clause 2.3 places risk and property with the purchaser. Clause 3.10

provides a specific exception where the breakage is causally attributable to

defective/improper packing or manufacturing defect. The authority cannot

rely upon the agreement while simultaneously ignoring the essential

limitation contained in it. Rule 19, to the extent invoked/read with Rule 17 in

the connected proceedings, provides the penal consequence in respect of

deficiencies falling within the statutory scheme. A penalty or consequential

recovery necessarily presupposes establishment of the facts which attract

the provision. The authority cannot commence from the conclusion that a

15

penalty is recoverable and then call upon the Petitioner to disprove it. The

defects in the show-cause notice are therefore substantive and not cosmetic.

The notice discloses only one factual allegation post-delivery handling

breakage at the CSBCL godown. It does not allege the very factual

predicates upon which Clause 3.10 operates. Yet it reproduces Clause 3.10.

misreads Clause 2.3, fixes the amount proposed to be recovered and calls

upon the Petitioner to explain why recovery should not follow. The final order

merely carries the same assumption forward. The proceedings, viewed from

the show-cause notice through the final order, therefore, suffer from four

connected errors. First, an admitted post-delivery handling loss has been

treated as though liability necessarily remains with the manufacturer.

Secondly, Clause 2.3 has been read in reverse by treating the seller as

bearing the general risk when the clause expressly places risk and property

with the purchaser. Thirdly, the conditions expressly contained in Clause

3.10 defective/improper packing or manufacturing defect-are neither alleged

in the notice nor found in the final order. Fourthly, the failure to submit a

reply has been treated as a substitute for proof of the missing ingredients.

Article 226 of the Constitution of India confers plenary jurisdiction upon this

Court. Availability of an alternative statutory remedy does not take away that

jurisdiction; it is a consideration governing exercise of judicial discretion.

5.Learned counsel for the petitioner places reliance in the matter of M/s

Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing

Authority & Others, 2023 SCC OnLine SC 95, the Hon'ble Supreme Court

has clearly distinguished between the maintainability of a writ petition and

the question whether the High Court should entertain it. The Supreme Court

16

held that the availability of an alternative remedy does not render the writ

petition non-maintainable. More importantly, in paragraph 8, while dealing

with a statutory fiscal dispute, the Supreme Court held that where the

controversy is purely legal and factual investigation is unnecessary, the High

Court ought to decide the matter instead of requiring the litigant to travel

through the entire "mill of statutory appeals in the hierarchy."

6.Paragraph 8 of M/s Godrej Sara Lee Ltd. (supra) reads as under:-

“8. That apart, we may also usefully refer to the decisions of

this Court reported in (1977) 2 SCC 724 (State of U. P. v.

Indian Hume Pipe Co. Ltd.) and (2000) 10 SCC 482 (Union

of India v. State of Haryana). What appears on a plain

reading of the former decision is that whether a certain item

falls within an entry in a sales tax statute, raises a pure

question of law and if investigation into facts is unnecessary,

the High Court could entertain a writ petition in its discretion

even though the alternative remedy was not availed of; and,

unless exercise of discretion is shown to be unreasonable or

perverse, this Court would not interfere. In the latter

decision, this court found the issue raised by the appellant

to be pristinely legal requiring determination by the High

Court without putting the appellant through the mill of

statutory appeals in the hierarchy. What follows from the

said decisions is that where the controversy is a purely legal

one and it does not involve disputed questions of fact but

only questions of law, then it should be decided by the High

Court instead of dismissing the writ petition on the ground of

an alternative remedy being available.”

7.Learned counsel for the petitioner submits that that the principle of Godrej

Sara Lee (supra) applies directly to the present batch. The principal

questions are whether the plain expression "risk and property... lies with the

17

purchaser" can be construed as placing the general risk upon the seller;

whether the seller can be made liable under Clause 3.10 without allegation

or finding of defective/improper packing or manufacturing defect; and

whether failure to file a reply can supply those missing foundational facts.

These are questions capable of determination on the admitted record

without any elaborate factual investigation.

8.Learned counsel for the petitioner now relies in the matter of State of Uttar

Pradesh & Another v. Ehsan & Another, 2023 INSC 906 , the Hon'ble

Supreme Court in paragraph 28 reiterated that existence of an alternative

remedy is not an absolute bar to the exercise of writ jurisdiction. The Court

further held that where a writ petition has already been entertained, parties

have exchanged pleadings/affidavits and the proceeding has remained

pending, there must be a sincere effort to decide the matter on merits rather

than relegate the writ petitioner to an alternative remedy, unless compelling

reasons exist for doing so. Paragraph 28 reads as under:-

“28. We are conscious of the law that existence of an

alternative remedy is not an absolute bar on exercise of writ

jurisdiction. More so, when a writ petition has been

entertained, parties have exchanged their pleadings/

affidavits and the matter has remained pending for long. In

such a situation there must be a sincere effort to decide the

matter on merits and not relegate the writ petitioner to the

alternative remedy, unless there are compelling reasons for

doing so. One such compelling reason may arise where

there is a serious dispute between the parties on a

materials/evidence(s) question of fact available on record

and are insufficient/inconclusive to enable the Court to come

to a definite conclusion. ”

18

9.Learned counsel for the petitioner submits that the objection of alternative

remedy must also be viewed in the practical context of this case. The

Respondents' approach has resulted in 16 separate proceedings and 16

separate writ petitions involving the same recurring interpretation of Rule

17(2), Rule 19 and Clauses 2.3 and 3.10. The controversy is therefore not

merely an isolated dispute regarding calculation of a particular demand. A

decision by this Court on the common issue would settle the controversy

consistently and avoid multiplicity of parallel appellate proceedings raising

the same point. On merits, the Petitioner respectfully submits that the

recoveries cannot be sustained on the reasoning adopted by the authorities.

The Department cannot simultaneously accept in Clause 2.3 that risk and

property lie with CSBCL as purchaser and thereafter hold that the entire risk

remains with the seller. Nor can the Department invoke the limited exception

contained in Clause 3.10 without even alleging or finding the factual

conditions upon which that exception operates. The Department's own

description of the occurrence is crucial, the stock was in the CSBCL. godown

and breakage occurred while it was being moved during "handling". That

circumstance by itself does not prove anything regarding defective packing

or manufacturing defect. Handling breakage may result from numerous

causes. Unless the authority establishes that the handling breakage resulted

from a defect contemplated in Clause 3.10, contractual liability cannot

automatically be transferred to the manufacturer. The show-cause notice is

therefore incapable of supporting the final conclusion for an additional

reason. A person called upon to answer a statutory proceeding must at least

be informed of the factual case which he is required to meet. Here, the

19

Petitioner was never put to notice that any particular packaging was

defective or improper or that any identified manufacturing defect caused the

breakage. Having never alleged these foundational facts, the authority could

not assume their existence merely because no reply was submitted. Even

then, the final order does not purport to find such facts. It takes a shorter

impermissible route, no reply was filed; therefore the Petitioner accepts the

offence. Such a presumption cannot replace statutory adjudication. The

authority was entitled to proceed ex parte, but it remained obliged to satisfy

itself from its own record that the facts necessary to impose liability were

established. Significantly, even the Panchanamas referred to in the

proceedings are described merely as Panchanamas of breakage prepared

at the CSBCL godown. The impugned order does not state that any

Panchanama contains a finding of defective packing, improper packing or

manufacturing defect. If the Department's own contemporaneous material

did not record the contractual cause necessary under Clause 3.10, the

subsequent recovery cannot be sustained simply by shifting the burden upon

the Petitioner. The Petitioner therefore submits that the error is not merely

that another view on the facts was possible. The authorities have proceeded

on a legally erroneous premise regarding the allocation of risk, omitted the

very causal finding necessary under the contractual provision relied upon by

them, and treated absence of reply as proof of liability. The defect is

apparent from the proceedings themselves. In the circumstances, the

present batch is appropriately decided by this Court under Article 226 of the

Constitution of India. The objection of alternative remedy ought to be

rejected in view of the principles laid down in Godrej Sara Lee and State of

20

U.P. v. Ehsan, and the common legal issue ought to be adjudicated on

merits. It is accordingly submitted that the impugned orders, insofar as they

impose recoveries/penal consequences upon the Petitioner under Rule

17(2) read with Rule 19 of the Chhattisgarh Foreign Liquor Rules, 1996

merely on account of breakage occurring during post-delivery handling at

CSBCL godowns and without any allegation or finding satisfying the

conditions of Clauses 2.3 and 3.10, deserve to be quashed along with all

consequential recovery proceedings. In the alternative, and without

prejudice, even if this Court considers that any factual determination remains

necessary in an individual case, the impugned orders cannot survive in their

present form because the adjudicating authorities have not determined the

cause of breakage or the applicability of Clause 3.10. Any such

determination would necessarily have to be made afresh on the correct

interpretation of the contractual provisions and upon material establishing

the statutory and contractual ingredients of liability, rather than upon an

adverse presumption arising merely from non-filing of a reply. The Petitioner

therefore respectfully prays that this Court may be pleased to reject the

preliminary objection regarding alternative remedy; decide the common legal

issue arising in the batch; quash the impugned orders and consequential

demands in the connected writ petitions; and grant such further relief as may

be deemed just and proper in the facts and circumstances of the case.

10.Learned State counsel submits that the impugned order dated 11/01/2021

(Annexure P/1) passed by the District Collector, Bilaspur is an appealable

order under the provisions of the appeal and revision rules framed under

Section 62 of the Chhattisgarh Excise Act, 1915 before the Commissioner

21

Excise, Raipur and the petitioner, without availing the said efficacious,

statutory and alternative remedy, has directly approached this Court by way

of filing the instant petition and therefore, the instant petition is not

maintainable and accordingly is liable to be dismissed on the ground of

availability of efficacious, statutory and alternative remedy.

11.Learned State counsel would further submits that in exercise of the powers

conferred by sub-section (1) and clauses (d), (e), (0), (g) and (h) of sub-

section (2) of Section 62 of the Chhattisgarh Act, 1915 (No. II of 1915), the

State Government has framed the Chhattisgarh Foreign Liquor Rules, 1996.

Rule 17 of Rules, 1996 deals with the storage, racking, reduction losses

which reads as under :-

"17. Storage, racking, reduction losses. (1) Maximum

permissible limit of losses of spirit due to racking, storage,

evaporation, reduction, blending etc., for FL 9 or FL 9-A

licensee shall be the same as given in sub-rule (2) of Rule 6

of the Distillery Rules, 1995.

(2) No wastage allowance on storage of bottled foreign

liquor stocked with [FL 6, FL 10 or FL 10-A] licensee is

permitted. If during verification any deficiency is discovered,

duty and bottle fee at the prescribed rate on the quantity

found deficit shall be recoverable from the licensee in

addition to any other penalty which may be imposed under

Rule 19."

12.Learned State counsel submits that from the aforesaid provisions it is very

much apparent that during the course of verification, if any deficiency is

found, then duty and bottle fee at the prescribed rate on the quantity found

deficit shall be recoverable from the licensee in addition to any other penalty

as per Rule 19. Further, Rule 19 of the Rules, 1996 deals with the penalties

22

which reads as under :-

"19. Penalties. (1) Without prejudice to the provisions of the

Act, or condition No. 4 of licence in Form FL 1, condition No.

7 of licence in Form FL 2, condition No. 4 of licence in Form

FL 3, the Excise Commissioner or the Collector may impose

a penalty not exceeding Rs. 50,000 for contravention of any

of these rules or the provisions of the Act or any other rules

made under the Act or the order issued by the Excise

Commissioner.

(2) On all deficiencies in excess of the limits allowed under

sub-rule (2) of Rule 16 and sub-rule (1) of Rule 17, the FL 9

or FL 9-A licensee shall be liable to pay penalty at a rate not

exceeding Rs. 25 per proof litre in case of spirit and Rs. 65

in case of foreign liquor excluding beer as may be imposed

by the Excise Commissioner or any officer authorised by

him:

Provided that if it be proved to the satisfaction of the Excise

Commissioner or the authorised officer that such excess

deficiency or loss was due to some unavoidable cause, he

may waive the penalty impossible under this sub-rule.

(3) The Excise Commissioner or the Collector may suspend

or cancel the licence under Section 31 of the Act upon a

contravention of any of these rules or provisions of the Act,

or any other rules made under the Act, or the orders issued

by the Excise Commissioner."

13.From the aforesaid provisions it is very much apparent that the Collector is

duly empowered to impose penalty in case, during the course of verification

of the quantity, any deficiency is found.

14.Learned State counsel further submits that on 26/02/2019 a rate contract

/agreement was executed between the petitioner and the respondent no.

23

3/Beverages Corporation for supply of foreign liquor to the retail shops of the

respondent no. 3/Beverages Corporation on certain terms and conditions.

and copy of which is already filed by the petitioner as Annexure P/2. It is

respectfully submitted that the petitioner itself, by accepting all the terms and

conditions mentioned in the said rate contract (Annexure P/2) with open

eyes, agreed to supply the foreign liquor to the retail shops of the

respondent no. 3/Beverages Corporation. Thus, the petitioner was under

obligation to strictly and mandatorily adhere to and follow the terms and

conditions of the said rate contract executed between the petitioner and the

respondent no. 3/Beverages Corporation. Annexure -E appended to the said

rate contract executed deals with the agreement for sale of foreign liquor.

Clause 2 of the contract deals with the point of sale among parties to the

contract and clause 2.3 specifically provides that -

"2.3. The Parties further agree that till the re-sale is made by

the purchase to the third parties in terms of the provisions of

this agreement, though the risk and property in the stock lies

with the purchaser, any go-down breakages on account of

provisions specified in Clause 3.10, shall vest with the

seller."

15. Further, clause 3.10 provides that :-

"3.10. All damages and breakage of the stock supplied to

the purchaser on account of defective and improper packing

or on account of any manufacturing defect in the contents

shall be to the account of the Seller."

16.From the aforesaid provisions contained in the said rate contract executed, it

would be evident that on account of defective and improper packing, the loss

/ damage /breakage of the stock supplied shall be recovered from the seller

which in the instant case is the petitioner.

24

17.Learned State counsel also submits that as per the rate contract /agreement

executed, the petitioner supplied the foreign liquor to the retail shop of the

respondent no. 3/Beverages Corporation during the period from 01/04/2019

to 31/03/2020. It is submitted that after supply of the foreign liquor to the go-

down/depot of village Lingiyadih, Bilaspur, the In-charge of the depot/go-

down, after verification of the stock supplied, recorded the loss / damage /

breakage of the bottles in a prescribed panchanama in presence of the

witnesses, go-down keeper and representative of the petitioner in which the

representative of the petitioner has duly put his signature which clearly

establishes the fact that the loss / damage / breakage was caused when the

foreign liquor was supplied by the petitioner to the depot/ go-down and in

support of the above, copies of the panchnamas are collectively filed

herewith as Annexure R/1. A bare perusal of the aforesaid panchnamas

would make it very much apparent that the loss of 1724.02 proof litres of

foreign liquor, was caused while transmitting the foreign liquor to the

depot/go-down of the respondent no. 3/Beverages Corporation which was

assessed to the tune of Rs.6,24,785/- . It is submitted that taking the

aforesaid loss /breakage into consideration on the part of the petitioner while

handling of liquors, the show cause notice dated 04/12/2020 was issued by

the Collector, District Bilaspur to the petitioner asking the reason as to why a

penalty of Rs. 6,24,785/- may not be recovered for loss / damage of 1724.02

proof litre of foreign liquor, within a period of 7 days, failing which ex-parte

order will be passed. It is submitted that no explanation / reply to the

aforesaid show cause notice was ever submitted by the petitioner which

clearly establishes the acceptance of loss / damage /breakage of 1724.02

25

proof litre of foreign liquor by the petitioner itself and therefore, in exercise of

the powers 17(2) of the Rules, 1996, the Collector, District Bilaspur has

rightly imposed the penalty of Rs. 6,24,785/- upon the petitioner which is

just, proper and legal and does not suffer from any illegality or infirmity.

18. Ms Kajal Chandra, counsel for State Beverages Corporation in respective

cases submits that the petitioner has right of alternative remedy provided

under the Chhattisgarh Foreign Rules, 1996, which has not been availed by

the petitioner and the petitioner has directly approached this Court.

Therefore, the instant Writ Petition is not maintainable on account of the

presence of an efficacious alternative remedy. Moreover, the question of the

liability for the breakage under Clause 2.3 and Clause 3.10 of the agreement

is a question of fact which can be resolved only under the statutory remedy

of appeal. The contractual provisions specifically provide the circumstances

in which the liability for godown breakages shall vest with the seller and

further provide that all damages and breakage of the stock supplied to the

purchaser on account of defective and improper packing or on account of

any manufacturing defect in the contents shall be to the account of the

seller. She submits that the question whether Respondent No.2 has the

jurisdiction to impose the penalty or not shall also be decided by the

appellate authority. She further submits that the Petitioner, despite receiving

the Show Cause Notice dated 04.12.2020, did not file any explanation.

Consequently, the proceedings were proceeded with ex-parte and the

impugned order dated 11.01.2021 was passed. The Petitioner, having failed

to file its explanation before the competent authority, has directly

approached this Court instead of availing the statutory remedy provided

26

under the Chhattisgarh Foreign Rules, 1996. Therefore, the issues raised by

the Petitioner regarding the liability for the breakage under Clauses 2.3 and

3.10 of the agreement and the jurisdiction of Respondent No.2 to impose the

penalty are required to be decided by the appellate authority and cannot be

decided in summary proceedings under Article 226 of the Constitution of

India. The maintainability of writ petition under Article 226 in disputes relating

to terms of contract with a statutory body fell for consideration in the case of

Kerala State Electricity Board and other Vs. Kurien E. Kalathil and others

reported in (2000) 6 SCC 293 and it was held by the Hon'ble Supreme Court

that the writ court would not ordinarily be the proper forum for resolution of

disputes relating to terms of contract with a statutory body and disputes

arising from contractual or commercial activities must be settled according to

ordinary principles of law of contract. The question of maintainability of the

writ petition under Article 226 for enforcement of a contractual right again

came up again in the case of Life Insurance Corporation of India and others

vs. Asha Goel (Smt.) and another reported in (2001) 2 SCC 160, and it was

held that pros and cons of fact-situation should be carefully weighed and the

determination of the question as to when a claim can be enforced in writ

jurisdiction would depend on consideration of several factors like, whether

the writ petitioner is merely attempting to enforce his contractual rights or the

case raises important questions of law and constitutional issues, the nature

of dispute raised; the nature of enquiry necessary for determination of the

dispute etc. It was held that the matter would be required to be considered in

the facts and circumstances of each case. She further submits that the

petitioners till date have failed to provide any satisfactory explanation as to

27

why the reply to the show cause notice has not been submitted by them. The

petitioner cannot take advantage of his own wrongdoing. Even if the reply to

the show cause notice were to be submitted by the Petitioners, the case of

the Respondent No. 3 would still remain the same, as the penalty amount

has been assessed on the basis of the Panchnama prepared, and the

Petitioner has not denied or disputed the said Panchnama till date. Thus, the

entire petition preferred by the Petitioner is devoid of any merit on its face

value. Thus, in view of the facts and circumstances stated hereinabove, it is

prayed that the writ petitions are not maintainable as the Petitioners have an

efficacious alternative statutory remedy of appeal under the Chhattisgarh

Foreign Rules, 1996. The Petitioners have directly approached this Court

without availing the said statutory remedy. The question of liability for the

breakage under Clauses 2.3 and 3.10 of the agreement is a question of fact

which can be resolved under the statutory remedy of appeal. Likewise, the

question whether Respondent No.2 has the jurisdiction to impose the

penalty or not shall also be decided by the appellate authority and the same

is not the subject matter of summary proceedings under Article 226 of the

Constitution of India. It is, therefore, prayed that this Court may be pleased

to dismiss the present Writ Petitions on account of the efficacious alternative

statutory remedy available to the Petitioners and may further be pleased to

pass such other order as this Court may deem fit and proper in the facts and

circumstances of the case.

19.Shri Syed Majid Ali, counsel for respondent Chhattisgarh State Beverages

while supporting the contention of Ms. Chandra that petitioner ought to have

exhausted alternative remedy, would alternatively submit that the petitioner

28

in some petitions has assailed 5 different orders passed by office of

Collector, Raipur, Distt - Raipur on various dates. In this regard, it is

submitted that, as the each case has different 'cause of action' therefore

petitioner is required to challenge each and every order in separate Writ

Petition. As such, petition is not maintainable and the same is liable to be

dismissed on this count itself. It is submitted that, as per the rate contract

executed between the petitioner company and the Respondent, the

petitioner company supplied the foreign liquor to the retail shop through the

Respondent and during the period 2022-23 on verification by the godown in-

charge, the stock recorded loss/damages/breakage of bottle and for which

Panchanama was also prepared. The said Panchanama was prepared in

presence of the representative of the petitioner company, the representative

of the company duly signed the said Panchanama which clearly establishes

the fact that the loss/damage/breakages was caused when the Goods were

supplied to the godown/depot of the Respondent by the petitioner company.

At the cost of repetition, Panchanama proceedings were conducted in the

presence of representative of the company who duly singed the said

Panchanama. The Collector before deciding the application, order of which

has been impugned by the present petitioner duly issued a 'Notice' to the

petitioner company informing and calling an explanation that the

loss/damage/breakages has been caused during the handling of liquor

between the said period and on account of the same sum of Rs. 34,560/-,

12,840/-, 24,720/-, 20,160/- and 23,040/- are to be recovered from the

petitioner company and if they wish to file any explanation/ submission/

counter, they may do so, otherwise an ex-parte proceedings will be initiated

29

against the petitioner company. Despite receiving the notice the petitioner

company willfully chose not to appear in the matter and even they did not

filed any reply to the notice. Therefore, the Collector proceeded ex-parte in

the matter and after completing the proceeding passed the order which has

been impugned by the petitioner's company.

20. I have heard learned counsel for the parties and perused the documents

annexed with the petitions carefully.

21.The preliminary objection regarding availability of an alternative statutory

remedy is required to be considered first. It is no doubt true that ordinarily

the High Court would be slow to entertain a writ petition where an efficacious

alternative statutory remedy is available. However, the rule requiring

exhaustion of an alternative remedy is a rule of discretion and not one of

absolute compulsion.

22.In the matter of Harbanslal Sahnia And Another vs. Indian Oil Corporation

Ltd. And Others {(2003) 2 SCC 107}, the Hon’ble Supreme Court held in

paragraph 7, which reads as under:-

“7. So far as the view taken by the High Court that the

remedy by way of recourse to arbitration clause was

available to the appellants and therefore the writ petition

filed by the appellants was liable to be dismissed is

concerned, suffice it to observe that the rule of exclusion of

writ jurisdiction by availability of an alternative remedy is a

rule of discretion and not one of compulsion. In an

appropriate case, in spite of availability of the alternative

remedy, the High Court may still exercise its writ jurisdiction

in at least three contingencies: (i) where the writ petition

seeks enforcement of any of the fundamental rights; (ii)

30

where there is failure of principles of natural justice; or (iii)

where the orders or proceedings are wholly without

jurisdiction or the vires of an Act is challenged. (See

Whirlpool Corpn. v. Registrar of Trade Marks (1998} 8 SCC

1). The present case attracts applicability of the first two

contingencies. Moreover, as noted, the petitioners'

dealership, which is their bread and butter, came to be

terminated for an irrelevant and non-existent cause. In such

circumstances, we feel that the appellants should have been

allowed relief by the High Court itself instead of driving them

to the need of initiating arbitration proceedings.”

23.The Hon'ble Supreme Court in Harbanslal Sahnia and another v. Indian Oil

Corporation Ltd. and others, (2003) 2 SCC 107 , has held that

notwithstanding the availability of an alternative remedy, the High Court may

exercise its writ jurisdiction where, inter alia, there is violation of the

principles of natural justice or where the proceedings are wholly without

jurisdiction or the action impugned is otherwise liable to interference in the

exercise of writ jurisdiction.

24.Similarly, in State of Uttar Pradesh & Another v. Ehsan & Another (supra),

the Supreme Court observed that where a writ petition has already been

entertained, pleadings have been exchanged and the matter has remained

pending, there should ordinarily be an effort to decide the matter on merits

unless compelling reasons exist for relegating the petitioner to the alternative

remedy.

25.In the present case, the controversy is not merely confined to the

quantification of loss. The principal issue is whether, having regard to the

contractual terms governing the parties, the petitioners could at all be

31

saddled with liability for the alleged breakage without a finding that such

breakage was occasioned by defective or improper packing or by a

manufacturing defect attributable to the petitioners.

26.Clause 2.3 of the agreement makes a specific distinction between the risk

and property in the stock and the circumstances in which godown breakage

would remain the responsibility of the seller. Clause 3.10 specifically limits

the seller's liability to damage or breakage arising from defective or improper

packing or from a manufacturing defect in the contents.

27.Thus, merely because breakage or shortage was noticed at the depot, the

same would not, by itself, establish the petitioners' contractual liability. The

competent authority was required to examine and determine whether the

loss was attributable to either defective/improper packing or a manufacturing

defect.

28.From a perusal of the impugned orders, it appears that the alleged

breakage/loss was attributed to mishandling of the liquor while it was being

transported from the concerned godown/depot of the Beverages

Corporation. There is no clear and categorical finding in the impugned

orders that the loss was caused by defective or improper packing or by any

manufacturing defect in the contents.

29.The distinction between loss occurring on account of a defect attributable to

the seller and loss arising due to subsequent handling, custody or

transportation is material in view of the express contractual terms. Once the

goods were received and accepted at the depot, the subsequent custody

and transportation were undertaken by the Beverages Corporation and its

32

agencies. Therefore, the liability could not have been mechanically fastened

upon the petitioners without first determining the cause of the breakage.

30.The mere preparation and signing of the panchnama by the representative

of the petitioner may establish that the breakage was noticed and recorded;

however, such acknowledgment by itself does not establish that the cause of

the breakage was defective or improper packing or a manufacturing defect.

The authority was required to determine the cause of the loss in accordance

with the contractual terms.

31.The respondents have also relied upon the statutory power contained in

Rules 17 and 19 of the Rules of 1996. There can be no dispute that the

competent authority possesses statutory power to recover duty and bottle

fee and, in appropriate circumstances, impose penalty where deficiency is

established. However, the exercise of such statutory power must be based

upon proper consideration of the relevant facts and the applicable

contractual terms, particularly when the liability sought to be imposed arises

out of a contractual arrangement entered into between the parties.

32.The impugned orders do not disclose any meaningful consideration of the

aforesaid contractual stipulations. The orders proceed substantially on the

basis of the existence of shortage/breakage, without determining whether

the conditions stipulated in Clauses 2.3 and 3.10 for fastening liability upon

the seller were satisfied.

33.An order having civil and financial consequences is required to reflect due

consideration of the material facts and the applicable legal and contractual

provisions. The authority cannot impose liability merely on the basis of the

33

existence of a deficiency without determining the legal basis on which such

liability is sought to be fastened.

34.In the facts of the present case, therefore, the objection regarding availability

of an alternative remedy cannot operate as an absolute bar to the exercise

of writ jurisdiction. The impugned orders suffer from failure to consider the

relevant contractual provisions and the basis on which liability could legally

be attributed to the petitioners.

35.So far as the objection regarding clubbing of multiple orders in a single writ

petition is concerned, since the grievance, contractual framework and legal

issue involved in all the matters are substantially common and the petitions

have already been heard together, this Court does not consider it

appropriate to non-suit the petitioners on such a technical ground. The

objection is accordingly rejected.

36.For the reasons discussed hereinabove, this Court is of the considered

opinion that the impugned orders fastening liability upon the petitioners

towards the alleged loss/breakage of foreign liquor cannot be sustained. The

respondents have failed to establish that the loss in question was

occasioned on account of defective or improper packing or any

manufacturing defect attributable to the petitioners, as contemplated under

Clauses 2.3 and 3.10 of the agreement.

37.Consequently, all the writ petitions are allowed. The respective impugned

orders passed by the concerned Collector imposing/recovering penalty from

the petitioners towards the alleged loss/breakage of foreign liquor are hereby

quashed and set aside in all the writ petitions. The petitioners shall stand

34

absolved of the liability imposed under the impugned orders. Any

consequential recovery proceedings initiated pursuant thereto shall also

stand quashed.

38.It is, however, made clear that this order shall not preclude the competent

authority from taking action in accordance with law in respect of any future

deficiency, provided the same is adjudicated strictly in accordance with the

statutory provisions and the applicable contractual terms.

Sd/-

(Amitendra Kishore Prasad)

Judge

Avinash

The date when the

judgment is reserved

The date when the

judgment is

pronounced

The date when the judgment is

uploaded on the website

Operative Full

01.09.2026 06.10.2026 ------ 06.10.2026