Licensees Cannot Resile From Contractual Obligations or Evade License Fee on Grounds of Commercial Loss

The petitioner in CWP 9721/2023, M/s Kanda Wine (through partner Arun Kumar), was allotted a liquor retail license for the year 2023-24 for Unit No. 03, Santoshgarh.

Due to non-payment of license fees for September and October 2023, the Collector (Excise) cancelled the license on 18.11.2023 under Section 29 of the H.P. Excise Act, 2011.

The Financial Commissioner (Appellate Authority) dismissed the appeal on 22.11.2023.

The petitioner challenged these orders and the constitutionality of Condition 2.42 of the Excise Announcements, citing business losses due to natural calamities and lower liquor rates in Punjab.

In CWP 115/2024, four individuals challenged a recovery notice dated 30.11.2023 for Rs 2,80,60,881/-, alleging they were never partners in M/s Kanda Wine and that the partnership deed was forged.

1. Whether a licensee, after voluntarily accepting a contract for liquor trade, can resile from contractual obligations or evade payment of license fees due to commercial hardships or business losses.

2. Whether the cancellation of the license and dismissal of the appeal violated principles of natural justice.

3. Whether the High Court can adjudicate seriously disputed questions of fact regarding the validity of a partnership deed under Article 226.

The court applied Section 29 of the Himachal Pradesh Excise Act, 2011, regarding the power to cancel or suspend licenses for non-payment of fees.

It relied on the principle that there is no fundamental right to trade in liquor, but only a privilege granted by the State (Har Shankar v. Deputy Excise and Taxation Commissioner, 1975).

It applied the doctrine of "approbation and reprobation," holding that parties who contract with open eyes must accept the burdens along with benefits (Panna Lal v. State of Rajasthan, 1975).

The court noted that Article 14 does not envisage "negative equality" (State of Orissa v. Mamata Mohanty, 2011) and that commercial difficulty provides no justification for non-performance of statutory contracts (State of Haryana v. Jageram, 1980; Assistant Excise Commissioner v. Issac Peter, 1994).

Regarding CWP 9721/2023, the court found that the petitioner was afforded multiple opportunities for hearing and payment (09.11.2023 to 18.11.2023) before the license was cancelled, satisfying natural justice.

The court reasoned that in executory contracts, the State does not guarantee profit; therefore, the petitioner cannot cite losses from Punjab's liquor rates or natural calamities to wriggle out of the "sanctity of the contract".

Condition 2.42 was held valid as it clearly links the monthly license fee to specific deadlines, and the petitioner’s failure to pay triggered the statutory penalty.

Regarding CWP 115/2024, the court observed that the validity of the partnership deed and the alleged forgery by Arun Kumar involved "seriously disputed questions of facts and law" that require evidence and cannot be decided in a writ petition.

In CWP 115/2024, the court disposed of the petition by directing the alleged partners to file a statutory appeal under Section 68 of the Act within 30 days. The Appellate Authority was directed to decide the forgery and partnership issues on merits by 15.10.2026, during which time coercive action against those petitioners is stayed.