Criminal Case Against Director Would Not Mean Company Is Also Involved: Punjab & Haryana HC Quashes Order Rejecting Liquor License

The Punjab & Haryana High Court has set aside the order rejecting a liquor license (L-1), observing that if a director is involved in a criminal case then it would not mean that the company is also involved.

 L-1 licence is granted for the wholesale supply of Indian liquor. These are granted to a Company or a society, a partnership firm or a proprietorship firm having a licensed manufacturing unit.

The director of the company Bridnco Sales Private Limited was named in the FIR relating to the Excise Policy of Delhi. The company was engaged in wholesale distribution and import of alcoholic beverages across several States in India. The company was holding an L-1 licence for Punjab for the year 2022-23 which was renewed in 2023-24. However, for 2024-25 it was rejected by the Punjab Government.

The State argued that it has taken a policy decision not to grant a licence if the criminal case is registered and the same cannot be said in any manner to be unjustified.

 Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth said, "A criminal case registered against any Director would therefore not automatically treat the company to be involved in criminal activities unless it is also named in the FIR. From the perusal of the FIR, we find that the name is of the Director of the company and it is not an allegation that the company was in any manner involved in the criminal case."

The Court added further that no criminal case is registered against the petitioner – company, and against the Director while an FIR has been registered, charge sheet has not been filed. Thus, the criteria of a criminal case being registered against the applicant to deny him a licence has neither been followed, nor adopted.

It noted, "the criminal case was registered during the pendency, when the petitioner was having L-1 licence. The said licence was renewed for the next year too, during the pendency of the criminal case. No new circumstances can be said to have been made out for denying the petitioner the said benefit of grant of licence and continuing his business. The petitioner also possesses L-1 licence in other States too."

Speaking for the bench Justice Sharma opined that the yardstick adopted for denial of licence to the petitioner is thus, found to be whimsical and based on unjustified principles, with no basis in law.

Considering that almost nine months have elapsed, the Court directed the State authorities to consider the case of the petitioner for awarding L-1 licence during the continuance of the excise policy of 2024-25 until it is replaced by the new policy.

Mr Puneet Rali Senior Advocate with Mr. B.S. Patwalia. Advocate. and for the petitioner.

Mr Saurabh Kapoor, Ad AG.

Title: Brindco Sale Pvt Ltd. v. State of Punjab 

Citation: 2024 LiveLaw (PH) 22

Click here to read/download the order