‘Imposition of 100% Penalty Not Justified’: Patna High Court Reduces Fine and Orders Unsealing of Sealed Shop in Excise Case
Safiya Malik
The Patna High Court has reduced the penalty imposed on a shop owner whose premises were sealed under the Bihar Prohibition and Excise Act, 2016. The penalty was initially set at ₹9,16,317 but has been revised to ₹2,00,000. The court also ordered the de-sealing of the property upon payment of the reduced fine within four weeks.
The matter pertains to a property owned by the petitioner, Sumitra Devi, located in Lakhisarai. The property was sealed following the alleged recovery of 36.300 litres of illicit foreign liquor. According to the prosecution, the shop was being operated by one Rahul Kumar, also known as Ramu Kumar, who was apprehended at the site along with Bablu Kumar, the petitioner's son.
Based on these developments, an excise case was registered on August 1, 2023, under Section 30(a) of the Bihar Prohibition and Excise Act, 2016 (as amended in 2018). On the same date, authorities sealed the shop in question, and further legal proceedings commenced regarding its confiscation.
During the confiscation proceedings, officials conducted an assessment of the property’s valuation. The Circle Officer, Lakhisarai, determined the land’s value to be ₹4,74,300, while the Executive Engineer, Building Division, Lakhisarai, estimated the overall valuation of the sealed premises at ₹4,42,017. Based on these findings, the petitioner sought the release of the shop by filing an application under Rule 12-B of the Bihar Prohibition and Excise Rules, 2021.
The Senior Deputy Collector, District Legal Cell, Lakhisarai, issued an order on July 5, 2024, directing the petitioner to pay ₹9,16,317, equivalent to 100% of the estimated property value, as a fine to secure the release of her premises. Contesting this order, the petitioner filed a writ petition, arguing that she was not directly involved in the alleged illicit activities and that the penalty imposed was disproportionately high.
The petitioner asserted that she was neither operating the shop nor aware of the presence of illicit liquor on the premises. She further contended that the authorities had failed to consider her lack of direct involvement in the offense before determining the penalty amount.
The court examined the relevant provisions of the Bihar Prohibition and Excise Rules, 2021, particularly Rule 12-B, which provides for the release of sealed premises upon the payment of a penalty. Under this rule, the Collector or an authorized officer has discretion in determining the penalty, taking into account factors such as the economic condition of the owner, their involvement in the alleged offense, the location of the property, and the quantity of illicit substances recovered.
Upon examining the case, the court noted that the petitioner was not named as an accused in the excise case. It stated: "Petitioner is not named accused in this case and imposition of 100% of the estimated value of the seized premises in question as penalty is not justified." The court further found that the penalty had been imposed without considering the mitigating factors surrounding the petitioner’s involvement.
The court examined Rule 12-B, which specifies the process for releasing seized premises upon payment of a fine. According to the rule:
"If any premises or part thereof has been seized or sealed by any police or excise officer under the Act, then in terms of Section 57B(2) of the Act, the Collector or an officer authorized by him, upon receipt of an application in Form V from the owner of the said premises, may release or unseal the said premises or part thereof upon payment of such penalty as may be ordered by the Collector or the officer authorized by him."
The court observed that the authorities had discretionary power while imposing penalties but noted that the penalty must be proportionate and reasonable. It also pointed out that "the fine shall not be less than Rs. one Lakh in any case" under Rule 12-B, but the quantum of the fine must be assessed based on relevant factors. The court recorded that in this case, the full valuation of the property had been imposed as a fine without due consideration of the petitioner's non-involvement in the alleged offense.
The court further examined whether the principles of natural justice had been followed in the confiscation proceedings. The petitioner argued that she was not given a proper opportunity to present her case before the penalty was determined. The court found merit in this argument, stating that the order imposing the penalty had been passed without affording the petitioner adequate opportunity to contest the allegations against her. It noted: "Respondent no.3 has passed the final order without hearing the petitioner."
In light of the findings, the Patna High Court modified the previous order, reducing the penalty from ₹9,16,317 to ₹2,00,000. The court further directed that upon payment of the revised fine, the concerned authority must unseal the shop within four weeks from the date of receipt of the order.
"Considering the facts and circumstances of the case and to prevent the multiplicity of proceedings in the interest of justice, the concerned authority is hereby directed to de-seal the property in question on deposit of fine of ₹2,00,000 (Rupees Two Lakhs) within four weeks from the date of receipt of this order."
Advocates Representing the Parties
For the Petitioner: Sanjeev Kumar, Advocate.
For the Respondents: Sitaram Yadav, Government Pleader; Rakesh Kumar Shrivastava, Assistant Counsel to GP
Case Title: Sumitra Devi v. The State of Bihar & Ors.
Neutral Citation: NA
Case Number: Civil Writ Jurisdiction Case No.17735 of 2024
Bench: Justice P. B. Bajanthri and Justice Sunil Dutta Mishra
[Read/Download order]
