Orissa High Court Allows Re-Processing of Expired Liquor Stock, Cites Absence of Legal Bar

In a significant judgment, the Orissa High Court allowed a distillery to re-process its expired stock of liquor stored in a warehouse, rejecting the State Excise Department's contention that such re-processing is barred due to the absence of explicit provisions in the Odisha Excise Act, 2008 and the Odisha Excise Rules, 2017. A division bench comprising Hon’ble Justice Arindam Sinha and Hon’ble Justice M.S. Sahoo directed the Excise Commissioner (Opposite Party No. 2) to grant permission for re-processing within four weeks, holding that the State's reliance on its Supply Chain Management Policy, 2020 was misplaced.

The petitioner, a licensed distillery, had stored its stock of liquor in a warehouse but was unable to transport it to a beverage warehouse within the stipulated six-month period due to disruptions caused by the Covid-19 pandemic. After this initial storage period expired in November 2021, the petitioner sought an extension of time, which was granted on the same day as the expiration date, effectively rendering the permission meaningless.

By the time the total permissible storage period had expired, the petitioner applied for re-processing the stock to make it marketable again. The Excise Department rejected this request on the ground that no specific provisions exist in the Odisha Excise Act, 2008, or its Rules to permit re-processing of expired liquor. The petitioner previously approached the High Court, which restored its application for reconsideration, only for the Excise Department to reject the request again via its order dated June 11, 2024. The petitioner then filed the present writ petition challenging this rejection.

The petitioner, represented by Senior Advocate Mr. P.K. Rath, argued that the rejection of its application for re-processing was arbitrary, as no statutory provision explicitly prohibits re-processing. He emphasized that a chemical examination of the stock, ordered by the Excise Department itself, confirmed that the liquor was still fit for human consumption. Mr. Rath further pointed to past instances where the State allowed re-processing of liquor produced by other distilleries and argued that the reliance on the Supply Chain Management Policy, 2020 was misplaced, as the policy applies only to the Odisha State Beverage Corporation Limited (OSBCL) and not to private distilleries like the petitioner.

The State, represented by Additional Government Advocate Mr. Sanjib Kumar Swain, justified the rejection, citing Clause 13.10 of the Supply Chain Management Policy, 2020, which mandates the destruction of liquor stocks beyond their "best-before" date. It was also argued that Rule 98 of the Odisha Excise Rules, 2017, prohibits the removal of expired liquor stock from a warehouse, making re-processing impermissible.

The Court rejected the State’s reliance on both the policy and Rule 98, holding that neither provided a sufficient basis to deny re-processing. Justice Arindam Sinha, delivering the judgment, noted that the Supply Chain Management Policy, 2020 applies specifically to OSBCL and cannot be extended to private entities like the petitioner. Furthermore, the Court observed that Rule 98 of the Odisha Excise Rules merely governs the movement of stock but does not address the issue of re-processing expired liquor.

The Court emphasized that the absence of explicit statutory provisions regarding re-processing cannot be interpreted as a prohibition. It further observed that the Excise Department’s decision to conduct a chemical examination of the expired stock implicitly acknowledged the possibility of re-processing. The chemical report dated March 28, 2024, confirmed that the liquor was fit for human consumption, contradicting the State's assertion that the stock must be destroyed.

The Court also noted that the petitioner was not at fault for the initial delay in transporting the stock, which was caused by disruptions during the pandemic. It held that rejecting the application for re-processing solely on technical grounds would amount to a misuse of discretionary power by the Excise Department.

The Court allowed the writ petition and directed the Excise Commissioner (Opposite Party No. 2) to grant permission for re-processing the stock. It instructed the petitioner to provide a certified copy of the judgment to the Excise Commissioner, who must comply with the order within four weeks.

The judgment emphasized that denying permission for re-processing based on an absence of specific provisions in the Odisha Excise Act or Rules was unjustified and arbitrary, particularly when the stock had been certified as fit for human consumption.

This ruling underscores the importance of interpreting administrative policies and statutory provisions in a manner that promotes fairness and prevents arbitrary actions by authorities. The Court’s decision protects the petitioner from financial loss while ensuring compliance with safety standards, as evidenced by the chemical examination report. It also clarifies that the absence of explicit statutory provisions cannot be construed as a prohibition unless expressly stated by the law.

Decision Date: December 12, 2024