Shifting of Liquor Shop: Landmark Judgement by Supreme Court

In a significant ruling, the Supreme Court of India has delivered a landmark judgement on the shifting of liquor shops within Puducherry. The case, which involved the Excise Authorities and the License holder, addressed key legal aspects related to the licensing and relocation of such establishments. The decision provides crucial clarity on the interpretation of the Excise Act and Rules, impacting future cases involving similar circumstances.


  • The Appellant, a holder of F.L.- 1 License, sought permission to shift their liquor shop from Mahe to Karaikal.
  • The Deputy Commissioner (Excise), Mahe forwarded the application to the Deputy Commissioner (Excise), Karaikal for inspection.
  • Objections were raised by a resident of Karaikal against the shifting of the liquor shop to Karaikal citing public interest and distance regulations.
  • The Madras High Court’s interpretation restricted the shifting of liquor shops to within a specific local area, panchayat, or commune, not across different regions in the Union Territory.
  • The Licensing Authority’s grant of permission to shift the liquor shop from Mahe to Karaikal was challenged and set aside.
  • Permission was granted by the Deputy Commissioner (Excise), Puducherry to shift the liquor shop to Karaikal, subject to compliance with Excise Rules.
  • The word ‘place’ in the Excise Act and Rules was interpreted restrictively, not allowing for inter-regional shifting of liquor shops.
  • Existing operational liquor shops in Nedunkadu circle, Karaikal, raised concerns about adding another liquor shop to the area.
  • The division bench held that the disposal of the representation by Deputy Commissioner (Excise) Karaikal was not in accordance with the Order dated 26.02.2018.
  • The High Court granted interim stay of the Order dated 15.06.2018 passed by the Deputy Commissioner (Excise) Karaikal.
  • The Excise Authorities supported the case of the License holder in the writ petitions.
  • The division bench of the Madras High Court allowed the writ petitions and quashed the Orders dated 27.03.2018 and 15.06.2018 passed by the Deputy Commissioner (Excise) Karaikal.
  • The Excise Authorities were directed to consider objections and applications for shifting liquor shops according to law, with two additional conditions.
  • The Deputy Commissioner (Excise) Karaikal granted permission for the wholesale vending of IMFL at Karaikal.
  • A writ petition was filed to quash the permission and restrain the Excise Authorities from shifting liquor shops, similar to the grounds of another petition.
  • The objections raised by a party were rejected by the Deputy Commissioner (Excise) Karaikal based on a previous court decision that was overturned by a division bench in 2005.

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  • The word ‘place’ does not specify territorial limits for shifting a licensed shop.
  • The Puducherry Excise Rules, 1970 were enacted under Section 70 powers.
  • Shifting of licensed premises requires prior approval from the Licensing Authority.
  • Rule 209 allows shifting of licensed premises upon payment of one-fourth of the license fee.
  • The definition of ‘place’ in Section 2(22) includes various structures where licensed premises may be situated.
  • Rule 113 covers the grant of an F.L.-1 license for liquor wholesale vending.
  • Chapter XIII applies to all licenses issued under the Excise Act for liquor sales.
  • Rule 189 defines ‘shop’ as the premises where liquor is sold.
  • Section 1(2) extends the Excise Act’s applicability to the entire Union Territory of Puducherry.
  • Section 14 mandates licenses for selling liquor, issued by the Licensing Authority.
  • Rule 191(2) requires applicants to select a site for the license, subject to approval by the licensing authority.
  • Rule 22A(a) defines ‘region’ as any of the 4 regions in the Union Territory of Pondicherry.
  • Section 70 empowers the Government to frame rules for the Excise Act functions.
  • The Excise Act and Rules distinguish between ‘local area’ and ‘place’ when it comes to locating liquor shops.
  • Shifting of liquor shops within the Union Territory of Puducherry is allowed as long as conditions are met.
  • The Licensing Authority has the power to approve shifting of liquor shops from one region to another.
  • Past instances of shifting liquor shops to Karaikal from other regions have been approved.
  • Various authorities like the police have assessed and approved the shifting in the present case.
  • No specific restriction on shifting liquor shops to different regions in the Excise Act or Rules.
  • Appellant was granted permission to shift the licensed premises from Mahe to Karaikal.
  • The Act needs to be interpreted as a whole to understand legislative intent regarding the movement of intoxicants.
  • Application for shifting the liquor shop was made under relevant rules and granted by the Licensing Authority.
  • The demography of Puducherry justifies a broader interpretation of Rule 209 for shifting liquor shops.

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  • Deputy Commissioner (Excise), Mahe permitted shifting of the premises with two additional conditions.
  • Conditions include having one entrance and exit only, and properly protecting the boundary of the building.
  • Both the Appellant and the State confirmed compliance with all conditions under the Excise Act and Rules.
  • Deputy Commissioner (Excise), Karaikal granted permission for running the F.L.-1 business from the designated location in Karaikal.
  • No prohibition in the Excise Act or Rules for shifting F.L.1 licensed premises from one place to another.
  • Civil Appeals allowed, setting aside the Order of the division bench of the Madras High Court.
  • Permission for shifting the licensed shop from Mahe to Karaikal granted on 07.06.2018 is legal and valid.

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Case Number: C.A. No.-009494-009495 / 2019

Click here to read/download original judgement

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