Authority Cannot Act As 'Judge In Own Cause'; Himachal Pradesh High Court Quashes Distillery License Cancellation Over Procedural Impropriety

"The Collector (Excise) not only became Judge in his own cause but was allowed to influence the proceedings before the Commissioner (Excise)." Himachal Pradesh High Court, in a significant ruling, held that an adjudicating authority cannot cancel a liquor license based on a subordinate officer's inquiry when that subordinate acted as a judge in his own cause.

A single-judge bench of Justice Jyotsna Rewal Dua quashed the cancellation of a distillery's licenses, observing that the final cancellation order was severely prejudiced and could not be said to have been passed in exercise of an independent and unbiased mind.

The petitioner, M/s Tiloksons Brewery & Distillery, challenged the cancellation of its manufacturing licenses following a 2:00 a.m. surprise inspection by excise and police officials on May 4, 2025, which allegedly uncovered unauthorized liquor manufacturing. Parallel adjudicatory proceedings were initiated by both the Collector (Excise) and his superior, the Commissioner State Taxes & Excise. The Collector conducted an initial administrative inquiry, recorded statements of officers, and subsequently issued an order recommending the cancellation of the petitioner's licenses to the Commissioner.

The primary question before the court was whether the Commissioner could legally cancel the petitioner's licenses based on the recommendatory order of the Collector who had previously investigated the very same allegations. The court was also called upon to determine whether the surprise inspection team was constituted in mandatory compliance with Section 8 of the Himachal Pradesh Excise Act, 2011, read with the 2024 Amendment and the State's 2025 Notification.

Statutory Mandate For Inspection Teams

The court first examined the legality of the inspection team's composition under Section 8 of the Himachal Pradesh Excise Act, 2011, read with Section 6 as amended in 2024. The bench noted that a government notification dated April 26, 2025, requires the inspection powers to be exercised by an Executive Magistrate not below the rank of Tehsildar, accompanied by specified Excise and Police officers. The court emphasized that a harmonious construction of the provisions meant that the presence of all three designated classes of officers is mandatory to safeguard the license holder's interests.

Inspection Conducted Without Magistrate And Specified Police Officer

Applying the legal standard to the facts, the court observed that the team constituted to raid the petitioner's distillery completely lacked an Executive Magistrate of the First Class. Furthermore, the court noted that the inspection report failed to clearly establish the presence of a Police Officer of the rank specified in the Act and the accompanying notification. The bench definitively held that the constitution of the team was not in consonance with the statutory mandate.

Reliance On Landmark Precedent

In analyzing the procedural lapse, the court recognized the foundational legal principle cited by the petitioner from the landmark case of Nazir Ahmad vs. King Emperor. The court acknowledged the proposition that where a power is given to do a certain thing in a certain way, it must be done in that way or not at all. However, because an FIR had already been registered and the petitioner failed to demonstrate specific prejudice, the court declined to quash the entire inspection edifice on this procedural ground alone.

Procedural Impropriety And Parallel Proceedings

Turning to the adjudicatory process, the court expressed deep concern over the parallel show-cause notices issued by both the Collector (Excise) and the Commissioner (Excise) on the exact same day. The bench noted that instead of deciding the matter independently, the Commissioner kept his own proceedings in abeyance while waiting for the Collector to finish his inquiry. The court observed that the procedure followed was neither contemplated under the applicable statute nor in furtherance of justice.

"Judge In His Own Cause"

The court strongly deprecated the conduct of the Collector (Excise) for assuming the dual roles of investigator and adjudicator. The bench noted that the Collector relied heavily on his own prior inquiry report and the statements he had recorded to recommend the cancellation of the parent licenses. The court pointed out that the procedural impropriety was further compounded when the Collector filed a rejoinder before the Commissioner to aggressively support his own inquiry report and recommendations.

Impugned Order Lacked Independent Application Of Mind

Concluding its analysis on the adjudicatory process, the court ruled that the Commissioner was improperly swayed by the flawed recommendations of the subordinate Collector. The bench declared that the Commissioner's final order of cancellation was fundamentally tainted by the biased inputs provided by the Collector, which entirely stripped the petitioner of a fair hearing and the statutory right to appeal.

"The impugned order passed by the Financial Commissioner (Excise), therefore, cannot be said to have been passed in exercise of an independent & unbiased mind."

The High Court partly allowed the writ petition and quashed the impugned order dated July 4, 2025, which had cancelled the petitioner's distillery licenses in Forms D-2 and L-11. The court remanded the matter back to the Commissioner State Taxes & Excise for fresh adjudication within two months, strictly directing the authority to ignore the tainted recommendations and pleadings of the Collector.

Date of Decision: 02 April 2026