Unlawful closure of licensed manufacturing units justified refund of licence charges and departmental examination of compensation claims.

Licensed manufacturing premises cannot be sealed or closed without authority of law and fair procedure. Where the licences were neither suspended nor cancelled in accordance with law, and closure was effected through administrative directions without proper show-cause process, the State could not retain licence fee or differential amounts for the period the units were unlawfully prevented from operating; refund was directed. A separate claim for the value of finished goods, raw materials and packing materials rendered unusable by the closure was not finally quantified, but the competent departmental authority was directed to examine and decide it in accordance with law.

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Issues: (i) Whether the repeated sealing and closure of the licensed manufacturing premises, without lawful authority and without due opportunity, entitled the petitioners to refund of licence fee and differential amount for the period during which they could not operate; (ii) Whether the petitioners were entitled to consideration of compensation for the value of finished goods, raw materials and packing materials rendered unusable because of such closure.

Issue (i): Whether the repeated sealing and closure of the licensed manufacturing premises, without lawful authority and without due opportunity, entitled the petitioners to refund of licence fee and differential amount for the period during which they could not operate.

Analysis: The premises of the petitioners were sealed on multiple occasions although, on the admitted and uncontroverted pleadings, the relevant licences were not suspended or cancelled in accordance with law. The record showed that the sealing was effected on administrative directions, sometimes orally, and without a proper show-cause process. The Court treated such sealing and closure as illegal and unjustified, with the consequence that the petitioners were prevented from operating their licensed units for the relevant periods. For those periods, the State could not retain licence fee or differential amounts as if the units had been allowed to function.

Conclusion: This issue is decided in favour of the petitioners, and they are entitled to refund of the excess licence fee and differential amount for the period of unlawful closure.

Issue (ii): Whether the petitioners were entitled to consideration of compensation for the value of finished goods, raw materials and packing materials rendered unusable because of such closure.

Analysis: The claim for compensation was linked to materials and stock allegedly rendered unusable because the manufacturing premises remained closed during the relevant period. The Court held that such claim required examination by the competent departmental authorities on the basis of materials produced by the petitioners and a decision in accordance with law.

Conclusion: This issue is decided in favour of the petitioners to the extent that their compensation claim must be examined and decided by the competent authority in accordance with law.

Final Conclusion: The writ applications were allowed in substance, with directions for refund of the recovered amounts attributable to the unlawful closure and for administrative consideration of the ancillary compensation claims.

Ratio Decidendi: A licensed manufacturing unit cannot be deprived of operation by sealing or closure without authority of law and adherence to fair procedure, and no licence fee or differential charge can be retained for a period when the unit was unlawfully prevented from functioning.

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