S.Shamsul Hasan, J.

1. Entirely an illegal demand by the Excise Department of the Government of Bihar from the petitioner of a huge amount of Rs. 9,00,592/- as loss of revenue has given rise to this application. The stand of the Government being entirely specious is without legal justification.

2. The petitioners carry on business of manufacturing sugar at the factory situated at Narkatiaganj. They have also a distillery manufacturing rectified spirit. Petitioner No. 1, which is a Company, had been granted a licence under Sec.13 of the Bihar and Orissa Excise Act, 1915 (hereinafter referred to as the Act) in Form No. 28A for the manufacture of spirit in its distillery for use in the manufacture of chemical and for Industrial, Scientific and other purposes. It may be stated here that petitioner No. 1 is not a licensee for manufacturing and dealing in wholesale trade of country spirit.

3. According to condition No. 1 of the licence, the licensee shall be bound to supply out of his total production of spirit such quantity or quantities to such person or concerns as the Excise Commissioner may from time to time direct. Under condition No. 7 the licensee shall have to make deposit with the Collector a fixed sum of Rs. 53.000.00 either in Government promissory notes or in such other approved form or to execute a mortgage in the prescribed form of the distillery premises etc, as security for the fulfilment of the conditions and for the payment of all sums of money which may become due and owing by the licensee to the Government by way of penalty or otherwise.

4. Petitioner No. 1, it is stated in the writ petition, used to supply rectified spirit to the warehouses in the districts in accordance with the requisitions and/or directions of the Excise authorities. The Excise Superintendent Incharge of the Distillery orders for supply of rectified spirit to the warehouses for which requisition is made by the concerned Excise Officer and the same is supplied to the driver of the truck under cover of appropriate transport pass. The driver concerned transports the goods to the warehouse and after receipt of the goods at the warehouse duplicate copies of the transport pass, duly received at the warehouse concerned indicating the receipt of the rectified spirit, are sent to the Distillery Excise Officer.

5. The transaction that has given rise to the present distillery dispute is based on three pisses, which are Annexures A, A/1 and A/2 to the counter affidavit filed on behalf of the respondents. Three trucks loaded with rectified spirit were sent from the factory of the petitioner No 1 at Narkatiaganj to various places mentioned in those passes, Annexures A and A/1 relate to despatch of rectified spirit to Hazaribagh Sadar and Annexure A/2 relates to Chas in the district of Dhanbad. It is said that these goods so despatched did not reach their destination. The goods under Annexure A were despatched on 18.11.1977: under Annexure A/1 on 5.12.1977 and under Annexure A/2, on 14.2.78. In October, 1978, the petitioner No. 1 received a notice dated the 20th October, 1978, from the Commissioner of Excise (respondent No. 2) which states that rectified spirit despatched on the basis of the transport passes Nos 480 dated 18.11.77, No 2 dated 5.12.77 to Hazaribagh Warehouse and No. 21 dated 14,2.78 to Chas Warehouse had not reached their destination, resulting in the loss of Rs. 8,62.697/- to the Government by way of duty. This has been revealed by a reference made by the Accountant General, Bihar. It is further stated that Sec.10 of the Act has been violated since no spirit could be manufactured, sold or despatched without paying duty or executing a bond. Quoting the relevant provision it was also stated that the country spirit could not be transported without a transport pass issued by the Excise Officer posted at the Distillery, which could be issued after duty was paid or bond was executed. It was further stated that condition No. 7 of the lice