LexSTATE OF MAHARASHTRA AND ORS. versus NAGPUR DISTILLERS, NAGPUR AND ANR.
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.- STATE OF MAHARASHTRA AND ORS. A v. NAGPUR DISTILLERS, NAGPUR AND ANR. MAY I, 2006 [S.B. SINHA AND P.K. BALASUBRAMANYAN, JJ.] B Constitution of India; Article 47-Bombay Rectified Spirit (Transport in Bond) Rules, 1951-Rule 5(2)-Levy of fees by State for transport of rectified spirit purchased from other distilleries to manufacturer's premises C for manufacture of Indian made foreign liquor-Writ Petition challenging levy of fees under the Rules-High count granted interim order of stay of demand upon an undertaking by the manufacturer till the disposal of the Writ Petition-Correctness of-Held, State cannot run the Government on undertakings-High Court was not justified in passing an unconditional interim order of stay-Hence, balancing the interests of the State and the D manufacturer, the manufaturer is directed to pay 50 per cent of license fee payable to the State and give an undertaking to pay the balance if the Writ Petition is dismissed-Bombay Prohibition Act, 1949-Bombay Rectified Spirit Rules, 1951-Maharashtra Distillation of Spirit and Manufacture of Potable Liqour Rules, 1966. E Respondent no. 1, which is engaged in the business of manufacture and sale of Indian made foreign liqour (IMFL), purchases rectified spirit and extra neutral alcohol from other distilleries for manufacture of IMFL. The respondent is a licencee for possession of the rectified spirit and extra neutral alcohol under the Bombay Rectified Spirit Rules, 1951. Appellant State issued F demand notice for payment of fee under Rule 5(2) of the Bombay Rectified Spirit (Transport in Bond) Rules, 1951. Respondents filed a Writ Petition before High Court challenging the demand of fee made under Rule 5 of the Bombay Rectified Spirit (Transport in Bo.nd) Rules, 1951. The respondents sought interim order of stay of the G demand pending disposal of the Writ Petition on the ground that the High Court has granted stay of similar demand in earlier years; that the High Court quashed similar demand in a Writ Petition filed by another company Vam Organic Chemicals Ltd. and that the Supreme Court, in the appeal filed by 603 H 604 SUPREME COURT REPORTS [20061 SUPP. I S.C.R. A the State has granted interim stay on an undertaking given by the company. The State contended before the High Court that the case of the respondents are different from the case of the Varn Organic Chemicals ltd.; that the accumulated liability to pay the fee would be huge and that the interests of the State would remain unprotected if unconditional interim order of stay is granted. The High Court rejected the contention of the State and granted an B interim order staying the recovery of fee on an undertaking by the respondents. In appeal to this Court, the appellant contended that the in Varn Organic Chemicals Ltd case, the company was a manufacturer of rectified spirit and it was used by the manufacturer himself; that respondent no. 1 is not a C licensee to manufacture rectified spirit and hence the respondent is bound to pay the fees under the Bombay Rectified Spirit (Transport in Bond) Rules, 1951 of transport of rectified spirit purchased from other distilleries to its own premises; that the right to trade in IMFL is a mere privilege granted to the licensee by the State; that the respondents have not made out any prima facie case for the grant of an unconditional order of stay of recovery of fees D by the State; that the State cannot run on securities and undertakings and hence it was not proper for the High Court to grant the impugned interim order. The respondents contended that its case is squarely covered by the decision in Varn Organic Chemicals Ltd.; that there is no justification in E interfering with the interim order of the High Court as it had given an undertaking which was adequate to protect the interests of the State; that the State has no competence to impose such a levy; and that there is no justification in filing an appeal against the interim order of the High Court since similar orders were passed in various Writ Petitions which are pending. F Allowing the appeal, the Court HELD: 1.1. The decision in Varn Organic Chemicals Limited. case is distinguishable from cases where the licensee himself does not manufacture the rectified spirit. The rectified spirit is not manufactured by the first G respondent and such spirit is not being used captively irt its own premises form manufacture of IMFL. Respo
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