License Suspension Order Can't Partake Character Of Cancellation, Must Specify Duration Of Suspension: Andhra Pradesh High Court

The Andhra Pradesh High Court has held that an order suspending license can “never partake the character of an order of cancellation” and in the absence of an order of suspension prescribing a definite time period, the same, would make it unsustainable in law.

A Division Bench comprising Chief Justice Dhiraj Singh Thakur and Justice Ravi Cheemalapati further explained that suspension and cancellation are conceptually distinct as “suspension entails temporary debarment, whereas cancellation means to destroy the force, effectiveness, or validity of an order.”

The ruling came in a case concerning the suspension of the licence of the appellant, Smt. Botta Lakshmi Pavani, the licensed operator of M/s Island Bistro Bar & Restaurant, located in Visakhapatnam. The Deputy Commissioner of Prohibition and Excise initiated action against the establishment based on reports indicating that it had allegedly operated beyond the legally permissible hours, thereby violating its licensing conditions.

Following the issuance of a show cause notice, the appellant denied the allegations, asserting that she had no connection to the incident and was not provided access to the reports and proceedings referred to by the District Prohibition and Excise Officer (DPEO) before the decision was made. Despite this, the Deputy Commissioner suspended the appellant's bar licence under Sections 31 and 32 of the Andhra Pradesh Excise Act, 1968, read with Rules 61 and 62 of the Andhra Pradesh Excise (Lease of Right of Selling by Bar, Grant and Conditions of Licence) Rules, 2022.

When the order of the Deputy Commissioner was challenged before a Single Judge of the Court, the Single Judge held that the Deputy Commissioner's suspension order should have specified a duration and allowed the petitioner to present her defence, but ultimately dismissed the writ petition, stating no violation of natural justice occurred. Consequently, the writ petition was dismissed.

In appeal, the Division Bench examined three issues:

1. Whether the suspension order was invalid due to the absence of a specified duration.
2. Whether the petitioner's right to natural justice was violated by the non-disclosure of relevant reports and evidence.
3. Whether the order was a non-speaking order and, if so, whether it was vitiated for violating principles of natural justice.

The Division Bench set aside the Single Judge's order and ruled that the liquor license suspension was invalid due to procedural deficiencies. The order of suspension was without a specified time period and the effect of such an order was equivalent to that of a cancellation order, as both would completely halt the licensee's operations. The Court held the suspension order legally unsustainable, stating that a temporary suspension cannot be equated with cancellation.

The Court further held that the Deputy Commissioner violated the principles of natural justice by failing to disclose critical materials relied upon in the decision-making process. The petitioner had argued that no part of the evidence referenced in the show cause notice was shared with her. The Deputy Commissioner had relied on reports from the DPEO and a police inspector, which included a pendrive and receipts suggesting the establishment had operated beyond permitted hours. However, this material was not furnished to the petitioner.

The Court underscored the petitioner's right to review such evidence, stating: “All these documents were relevant and ought to have been provided to the petitioner, in the absence whereof, the petitioner would certainly be handicapped in setting up an effective defense against the allegations so made in the show cause notice. Non-furnishing of the said material, which was relevant to the allegation made against the petitioner, therefore, did violate the principles of natural justice in the instant case.”

Additionally, the Court found that the Deputy Commissioner's order was a non-speaking order, as it failed to address any of the contentions raised by the petitioner in response to the show cause notice. Since the order did not discuss or counter the appellant's arguments, it was required to be set aside for violating the principles of natural justice.

The Court ruled that the suspension should be treated as temporary and directed the concerned authority to issue final orders specifying the exact duration of any suspension. It further mandated that the appellant be given an opportunity to present her defence in accordance with the principles of natural justice.

Case Details

Case Number: WRIT APPEAL NO: 812 of 2024

Case Name: Botta Lakshmi Pavani v. The State Of Andhra Pradesh and Others

Date of Judgment: 07.03.2023

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