Substituted penalty rule applies to pending excise proceedings where amended law reduced the liability and no saving clause continued the old rule.

Substituted Rule 19 governed penalty for excess liquor loss because substitution ordinarily replaces the earlier rule, and the amended provision reduced the penalty to an amount not exceeding the duty payable. The court held that, in the absence of any express saving clause continuing the harsher pre-amendment rule for pending matters, the substituted provision applied to proceedings initiated after substitution. It further held that the Madhya Pradesh General Clauses Act did not preserve the repealed rule to sustain the higher penalty, since applying the amended rule to pending proceedings was consistent with the legislative intent to rationalise penalty and was not barred by Article 20(1).

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Issues: (i) Whether the penalty for excess loss of liquor was to be determined under the rule in force during the 2009-10 licence period or under the substituted Rule 19 that came into force on 29.03.2011; (ii) whether the general savings principles under the Madhya Pradesh General Clauses Act, 1957 permitted recovery of penalty under the repealed rule in pending proceedings.

Issue (i): Whether the penalty for excess loss of liquor was to be determined under the rule in force during the 2009-10 licence period or under the substituted Rule 19 that came into force on 29.03.2011.

Analysis: Substitution of a rule ordinarily deletes the earlier provision and brings the new provision into force in its place. Rule 19, as substituted, materially reduced the penalty from up to four times the duty to an amount not exceeding the duty payable. The scheme of the excise rules, the regulatory object of controlling diversion and unlawful sale, and the absence of any express provision continuing the old harsher penalty for pending matters supported application of the substituted rule to proceedings initiated after the substitution.

Conclusion: The substituted Rule 19 governs the penalty, and the appellant is entitled to have penalty assessed under the substituted provision.

Issue (ii): Whether the general savings principles under the Madhya Pradesh General Clauses Act, 1957 permitted recovery of penalty under the repealed rule in pending proceedings.

Analysis: The savings clause in Section 10 applies to repeal of enactments, while the dispute concerned subordinate legislation. Section 31 extends interpretive principles to rules, but only where the subject and context are not repugnant. Here, the purpose of the amendment was to reduce and rationalise penalty for effective regulation, and allowing the old rule to survive for pending proceedings would defeat that legislative choice. The penalty reduction was treated as a retroactive application to pending proceedings, not as an impermissible retrospective enhancement or reduction barred by Article 20(1).

Conclusion: The old Rule 19 could not be invoked through the General Clauses Act to sustain the higher penalty.

Final Conclusion: The appeals succeeded, the High Court's contrary view was set aside, and penalty is to be recomputed under Rule 19 as substituted on 29.03.2011.

Ratio Decidendi: Where subordinate legislation is substituted with a reduced penalty structure and the statute does not expressly continue the repealed rule for pending matters, the substituted provision applies to pending proceedings unless the subject, context, or an express saving clause requires otherwise.

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