A Division Bench of Chief Justice R Subhash Reddy and Justice V M Pancholi reserved the order after hearing submissions made by the two parties.
The government insisted that the question of compensation does not arise because as per the prohibition law, consuming liquor is a punishable act and providing financial help to the victims will tantamount to encouraging the offence.
The government said it has already taken action against those responsible for the tragedy and suspended police personnel for negligence of duty and transferred some other officials. Also, seven accused were arrested.
As many as 26 people had died after consuming adulterated liquor in September last year in Surat.
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