HP High Court Quashes Bulk of Excise FIR Against Bottler, Compounds Two-Box Offence for ₹50,000 Fine

Justice Sandeep Sharma quashed FIR No. 467 of 2020 against Mars Bottlers proprietor Manik Kumar, finding Section 39 prosecution unsustainable for batch-labelling errors, while compounding the two-box permit violation under Section 67 of the HP Excise Act.

The High Court of Himachal Pradesh at Shimla has quashed FIR No. 467 of 2020, registered at Police Station Sadar Una on 27 December 2020, against Manik Kumar, proprietor of Mars Bottlers, for alleged violations under Sections 39(1)(a) and 39(2) of the Himachal Pradesh Excise Act and Sections 420 and 201 of the IPC. Justice Sandeep Sharma, sitting singly, held that the prosecution under Section 39 of the Act was not sustainable in respect of 400 boxes of IMFL transported under a valid permit, where the only discrepancy was wrong batch-number labelling caused by unskilled labour. The court found that such conduct attracted a penalty under Section 43 of the Act, triable by the Excise Department itself, not a criminal prosecution under Section 39. For the two boxes genuinely transported without any permit, the court compounded the offence under Section 67 of the Act and directed Manik Kumar to pay a fine of ₹50,000.

The Interception and the FIR

On 27 December 2020, Sub-Inspector Anita, while on patrolling duty, received information that truck No. HP-64-9387 travelling from Santoshgarh towards Una was carrying liquor without a permit. The truck was stopped and 402 boxes of IMFL branded “Golden Tiger” were found on board. The driver, Ravi Rana, could not produce a permit at the time of interception, and an FIR was lodged against him and against Manik Kumar as proprietor of Mars Bottlers.

Within a short time, Ravi Rana produced the relevant documents. The permit on record authorised transport of 400 boxes of IMFL Golden Tiger under permit No. 12412200132904 dated 24 December 2020 and pass No. 12512200164173 dated 25 December 2020. Two boxes were therefore being transported without any permit. A separate issue also emerged: though the permit was for Batch No. 15, some bottles packed in the 400 boxes bore Batch Nos. 9 and 14.

After completing investigation, the police filed a challan before the Judicial Magistrate First Class, Court No. 3, Una. Before the trial could proceed, Manik Kumar filed Cr.MMO No. 401 of 2023 under Section 482 Cr.P.C. seeking to quash the FIR and all consequential proceedings.

What Section 39 of the HP Excise Act Covers

Section 39 of the Himachal Pradesh Excise Act, 2011 penalises the unauthorised import, export, transport, manufacture, possession, sale or purchase of liquor. The prosecution's case rested on two distinct grounds: first, that two boxes of IMFL were transported without any permit; and second, that bottles of different batch numbers were found mixed within the 400 permitted boxes.

Section 43 of the Act, by contrast, penalises a licence-holder or their servant for wilfully doing or omitting anything in breach of licence conditions not otherwise covered by Section 39, including reducing the strength of liquor below the prescribed limit. The penalty under Section 43 is a fine between ₹15,000 and ₹1,00,000, imposed by the Excise Department itself rather than by a criminal court.

Section 67 of the Act provides that, notwithstanding anything in Section 39, any offence relating to transport of up to forty-five bulk litres of liquor may be compounded — before institution of prosecution by a first-class Excise Officer, and after institution by a Judicial Magistrate First Class — on payment of between ₹5,000 and ₹25,000.

The Excise Department's Own Clarifications

The investigating agency itself, on 31 December 2020, wrote to the Deputy Commissioner, State Taxes and Excise, Una, seeking clarification on the batch-number discrepancy. The Deputy Commissioner replied on 6 January 2021 that the matter had been inquired through the Assistant State Taxes and Excise Officer in-charge of Mars Bottlers. The inquiry found that the licensee had applied for bottling of IMFL Golden Tiger Batch No. 15 on 25 December 2020, which was approved, but the labour engaged in bottling wrongly stamped batch numbers on some bottles. The communication specifically noted that as far as Batch No. 14 was concerned, the labels pasted and the liquor bottled were of Golden Tiger Whisky, but the batch number on the labels was of RUM, happening due to negligence of staff. The Deputy Commissioner confirmed that all duties and levies had been duly paid before dispatch and that there was no loss to the government exchequer. The communication concluded that the offence had been committed under Section 43 of the Act and was being forwarded to the Collector (Excise), Palampur, for penal action.

The Judicial Magistrate First Class, Court No. 3, Una, also wrote to the Deputy Commissioner on 7 January 2021 seeking clarification. The Deputy Commissioner's reply dated 8 January 2021 confirmed that the 400 cases were being transported under valid permit and pass, clarified that the batch-number discrepancy did not attract Section 39, and stated that as far as the two cases found without pass and permit were concerned, action as warranted by law may be taken.

Despite these repeated communications from the Excise Department, the police presented the challan before the Judicial Magistrate under Section 39, and the Magistrate proceeded with the case.

How the Bench Reasoned

Justice Sandeep Sharma surveyed the settled principles governing Section 482 Cr.P.C. jurisdiction, drawing on the Supreme Court's decisions in State of Karnataka v. L. Muniswamy and others, 1977 (2) SCC 699; State of Haryana and others v. Bhajan Lal and others, 1992 Supp (1) SCC 335; Vineet Kumar and Ors. v. State of U.P. and Anr. (arising from Criminal Appeal No. 577 of 2017); Amish Devgan v. Union of India and Ors., (2021) 1 SCC 1; Kaptan Singh v. State of Uttar Pradesh and Ors., (2021) 9 SCC 35; and Abhishek Singh v. Ajay Kumar and Ors., (2025) SCC OnLine SC 1313. The court noted that the task at the quashing stage is to examine whether, prima facie, the ingredients of the alleged offence are made out, not to conduct a trial or appreciate evidence.

Applying those principles to the facts, the court separated the two strands of the prosecution. On the 400 boxes transported under a valid permit, the court found that the prosecution's case rested entirely on the batch-number discrepancy. It was the admitted position of all parties that the liquor in all bottles was of the same quality, with no allegation of adulteration. The discrepancy arose solely from wrong labelling by unskilled labour. The Excise Department had twice clarified, once to the police and once to the Magistrate, that this conduct attracted Section 43 of the Act and not Section 39. The court agreed: the batch-labelling error was a breach of licence conditions not otherwise covered by Section 39, making Section 43 the applicable provision, with penalty to be imposed by the Collector (Excise).

On the two boxes transported without any permit, the court found the Section 39 case sustainable. The petitioner's own counsel had conceded that even if two boxes were transported without permit, the offence was compoundable under Sections 66 and 67 of the Act. The State's Additional Advocate General, Mr. Rajan Kahol, had argued that the compounding power under Section 67 lay with the Judicial Magistrate and not with the High Court. The court examined Sections 66 and 67 and found that Section 67 expressly provides that after institution of prosecution, the Judicial Magistrate of the first class may compound the offence. The court held that since the prosecution for the two-box violation was otherwise bound to proceed before the Magistrate, and since continuing the entire FIR would subject the petitioner to a protracted trial that was “otherwise bound to fail” in respect of the 400-box charge, quashing the FIR while simultaneously compounding the two-box offence was the appropriate course.

The court was explicit that it was not persuaded by the State's argument that recovery of bottles of different batches within the 400 permitted boxes independently sustained a Section 39 charge. The prosecution had not alleged that the quality or quantity of liquor in those bottles was different from what the permit authorised; the only issue was the batch number printed on the label.

Outcome

Justice Sandeep Sharma quashed FIR No. 467 of 2020 registered at Police Station Sadar Una and all consequential proceedings pending before the Judicial Magistrate First Class, Court No. 3, Una. The court simultaneously compounded the offence of transporting two boxes of IMFL without a valid permit and directed Manik Kumar to pay a fine of ₹50,000. The court clarified that the order would have no bearing on any proceedings already initiated or to be initiated against the petitioner under Section 43 of the HP Excise Act, which shall be decided in accordance with law. All pending applications in the petition were also disposed of.