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IN THE HIGH COURT OF KARNATAKA AT BANGALOREDATED THIS THE 19TH DAY OF JULY, 2012
BEFORE
THE HON’BLE MR.JUSTICE B.S.PATIL
W.P.No.17393/2012C/w
W.P.No.18254/2012, W.P.Nos.22589-593/2012,W.P.No.22412/2012, W.P.No.22414/2012,W.P.No.22415/2012, W.P.No.22416/2012,
W.P.No.22422/2012 (Excise)
IN W.P.No.17393/2012:
BETWEEN:
Sri S.A.SureshS/o AnjanappaAged about 41 yearsC.L.2 Licenseee,Anand Reddy Building,Whitefield, Bangalore. … PETITIONER
(By Sri G.K.Bhat, Adv.)
AND:
The Deputy Commissioner,Bangalore Urban District,Bangalore. … RESPONDENT
(By Sri S.Vijay Shankar, Adv.General, A/w Sri P.V.Ravindranathan, AGA and Sri H.Venkatesh Dodderi, AGA)
IN W.P.No.18254/2012:
BETWEEN:
M/s.Ranganatha Wines,C.L-2 Licensee,
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No.192/203, B.H.Road,Arasikere, Hassan District,Regd.Partnership Firm,Rep.by Partner J.P.SuhakarS/o J.P.Narayana Swamy,Aged 39 years,R/at 12/6, 9th Main,Sadashivanagar, Bangalore. … PETITIONER
(By Sri G.K.Bhat, Adv.)
AND:
1. State of Karnataka,Rep.by its Principal Secretary,Finance Department,Vidhana Soudha,Bangalore-01.
2. The Excise Commissioner in Karnataka,Vokkaligara Bhavan,Rani Chennamma Circle,Bangalore.
3. The Deputy Commissioner,Hassan District,Hassan.
4. The Deputy Commissioner of Excise,Hassan District,Hassan. … RESPONDENTS
(By Sri S.Vijay Shankar, Adv.General, A/w Sri P.V.Ravindranathan, AGA and Sri H.Venkatesh Dodderi, AGA)
IN W.P.Nos.22589-593/2012:
BETWEEN:
1. M/s.Aditya Entertainment Inc.A registered Partnership,Rep.by Managing Partner,
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D.V.Ragunath S/o D.K.Venkatachalapathy,Aged about 49 years, CL-9 Licensee,Bull & Bush, 4th floor, Garuda Mall,Magrath Road, Bangalore.
2. M/s.Aditya Entertainment Inc.,A registered Partnership,Rep.by Managing Partner,D.V.Ragunath S/o D.K.Venkatachalapathy,Aged about 49 years, CL-9 Licensee,Sy.No.90/3, 1,2,3 & Terrace Floor,Marhthahalli Ring Road,Bangalore.
3. M/s.Aditya Entertainment Inc.,A registered Partnership,Rep.by Managing Partner,D.V.Ragunath S/o D.K.Venkatachalapathy,Aged about 49 years, CL-9 Licensee,Retail Vendor of Beer, 100ft. Road,Indiranagar, Bangalore.
4. M/s.Fine Foods & HotelsA registered Partnership,Rep.by Managing Partner,D.V.Ragunath S/o D.K.Venkatachalapathy,Aged about 49 years, CL-9 Licensee,M/s.Fine Foods & Hotels,No.65, 5th Block, JNC Road,Koramangala Industrial Layout,Bangalore.
5. M/s.Aditya Entertainment Inc.,A registered Partnership,Rep.by Managing Partner,D.V.Ragunath S/o D.K.Venkatachalapathy,Aged about 49 years, CL-9 Licensee,No.129/130, Purple Haze,H.T.Road, 2nd Stage, Vijayanagar,Mysore. … PETITIONERS
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AND:
1. State of Karnataka,Rep.by its Principal Secretary,Finance Department,Vidhana Soudha,Bangalore-01.
2. The Excise Commissioner in Karnataka,Vokkaligara Bhavan,Rani Chennamma Circle,Bangalore.
3. The Deputy Commissioner,Bangalore Urban District,Bangalore.
4. The Deputy Commissioner of Excise,Bangalore Urban District (East),J.C.Road, Bangalore.
5. The Deputy Commissioner of Excise,Bangalore Urban District (South),J.C.Road, Bangalore.
6. The Deputy Commissioner,Mysore District,Mysore.
7. The Deputy Commissioner of Excise,Mysore District,Mysore. … RESPONDENTS
(By Sri S.Vijay Shankar, Adv.General, A/w Sri P.V.Ravindranathan, AGA and Sri H.Venkatesh Dodderi, AGA)
IN W.P.No.22412/2012:
BETWEEN:
M/s.Vinayaka Enterprises,By its Partner,M Narayana Gowda,
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Aged about 60 years,S/o late Muniswamy,M.G.Road, Chintamani,Chikkaballapur District,Chikkaballapur. … PETITIONER
(By Sri G.K.Bhat, Adv.)
AND:
1. State of Karnataka,Rep.by its Principal Secretary,Finance Department,Vidhana Soudha,Bangalore-01.
2. The Excise Commissioner in Karnataka,Vokkaligara Bhavan,Rani Chennamma Circle,Bangalore.
3. The Deputy Commissioner,Chikkaballapur District,Chikkaballpur.
4. The Deputy Commissioner of Excise,Chikkaballapur District,Chikkaballapur … RESPONDENTS
(By Sri S.Vijay Shankar, Adv.General, A/w Sri P.V.Ravindranathan, AGA and Sri H.Venkatesh Dodderi, AGA)
IN W.P.No.22414/2012:
BETWEEN:
M/s. Vani Enterprises,By its Partner,M Narayana Gowda,Aged about 60 years,S/o late Muniswamy,M.G.Road, Chintamani,
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Chikkaballapur District,Chikkaballapur. … PETITIONER
(By Sri G.K.Bhat, Adv.)
AND:
1. State of Karnataka,Rep.by its Principal Secretary,Finance Department,Vidhana Soudha,Bangalore-01.
2. The Excise Commissioner in Karnataka,Vokkaligara Bhavan,Rani Chennamma Circle,Bangalore.
3. The Deputy Commissioner,Chikkaballapur District,Chikkaballpur.
4. The Deputy Commissioner of Excise,Chikkaballapur District,Chikkaballapur … RESPONDENTS
(By Sri S.Vijay Shankar, Adv.General, A/w Sri P.V.Ravindranathan, AGA and Sri H.Venkatesh Dodderi, AGA)
IN W.P.No.22415/2012:
BETWEEN:
M/s.Gurukrupa Enterprises,By its Partner,M Narayana Gowda,Aged about 60 years,S/o late Muniswamy,CL-2 Licensee, H.Cross,Sidlaghatta Taluk,Chikkaballapur District,Chikkaballapur. … PETITIONER
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(By Sri G.K.Bhat, Adv.)
AND:
1. State of Karnataka,Rep.by its Principal Secretary,Finance Department,Vidhana Soudha,Bangalore-01.
2. The Excise Commissioner in Karnataka,Vokkaligara Bhavan,Rani Chennamma Circle,Bangalore.
3. The Deputy Commissioner,Chikkaballapur District,Chikkaballpur.
4. The Deputy Commissioner of Excise,Chikkaballapur District,Chikkaballapur … RESPONDENTS
(By Sri S.Vijay Shankar, Adv.General, A/w Sri P.V.Ravindranathan, AGA and Sri H.Venkatesh Dodderi, AGA)
IN W.P.No.22416/2012:
BETWEEN:
M/s.Guru Prasanna Enterprises,By its Partner,M Narayana Gowda,Aged about 60 years,S/o late Muniswamy,CL-2 Licensee, H.Cross,Sidlaghatta Taluk,Chikkaballapur District,Chikkaballapur. … PETITIONER
(By Sri G.K.Bhat, Adv.)
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AND:
1. State of Karnataka,Rep.by its Principal Secretary,Finance Department,Vidhana Soudha,Bangalore-01.
2. The Excise Commissioner in Karnataka,Vokkaligara Bhavan,Rani Chennamma Circle,Bangalore.
3. The Deputy Commissioner,Chikkaballapur District,Chikkaballpur.
4. The Deputy Commissioner of Excise,Chikkaballapur District,Chikkaballapur … RESPONDENTS
(By Sri S.Vijay Shankar, Adv.General, A/w Sri P.V.Ravindranathan, AGA and Sri H.Venkatesh Dodderi, AGA)
IN W.P.No.22422/2012:
BETWEEN:
M/s.Anurag Bar & Restaurent,By its Partner,Sri C.Gopinath S/o Muniswamy,Aged about 45 years,M.G.Road, Chintamani,Chikkaballapur District,Chikkaballapur. … PETITIONER
(By Sri G.K.Bhat, Adv.)
AND:
1. State of Karnataka,Rep.by its Principal Secretary,Finance Department,
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Vidhana Soudha,Bangalore-01.
2. The Excise Commissioner in Karnataka,Vokkaligara Bhavan,Rani Chennamma Circle,Bangalore.
3. The Deputy Commissioner,Chikkaballapur District,Chikkaballpur.
4. The Deputy Commissioner of Excise,Chikkaballapur District,Chikkaballapur … RESPONDENTS
(By Sri S.Vijay Shankar, Adv.General, A/w Sri P.V.Ravindranathan, AGA and Sri H.Venkatesh Dodderi, AGA)
Writ Petition No.17393/2012 is filed under Articles 226 &227 of the Constitution of India, praying to quash the impugnedorder dated 23.5.2012 passed by the respondent videAnnexure-F and etc.
Writ Petition No.18254/2012 is filed under Articles 226 &227 of the Constitution of India, praying to quash the orderdated 28.3.2012 passed by the respondent No.4 vide Annexure-G and etc.
Writ Petition Nos.22589-593/2012 are filed underArticles 226 & 227 of the Constitution of India, praying to directthe respondents 3 to 7 to renew the license of the petitioners assought for, for the year 2012-13 and etc.
Writ Petition Nos.22412/2012 is filed under Articles 226& 227 of the Constitution of India, praying to quash the orderdated 15.6.2012, vide Annexure-C passed by the respondentNo.4 and etc.
Writ Petition Nos.22414/2012 is filed under Articles 226& 227 of the Constitution of India, praying to quash the order
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dated 30.3.2012, vide Annexure-C passed by the respondentNo.4 and etc.
Writ Petition Nos.22415/2012 is filed under Articles 226& 227 of the Constitution of India, praying to quash the orderdated 30.3.2012, passed by the respondent and etc.
Writ Petition Nos.22416/2012 is filed under Articles 226& 227 of the Constitution of India, praying to quash the orderdated 30.3.2012, passed by the respondent and etc.
Writ Petition No.22422/2012 is filed under Articles 226 &227 of the Constitution of India, praying to quash the orderdated 15.6.2012, passed by the respondent and etc.
These petitions coming on for preliminary hearing-Bgroup this day, the Court made the following:
ORDER
1. The main question that falls for consideration in these
cases is whether the action of the respondent-authorities in
demanding transfer fee equivalent to one year licence fee in
terms of Rule 17-B of the Karnataka Excise Licences (General
Conditions) Rules, 1967 (for short, ‘the Rules’), is legally
justifiable?
2. The demand is made in the background of the allegation
that the petitioner-partnership firm had without the prior
approval of the Commissioner of Excise and in violation of Rule
17-B of the Rules, effected change in the composition and
constitution of partnership firms, thereby impliedly effecting
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transfer of licence granted in favour of the earlier partners and
the firm in favour of the newly inducted partners or the re-
constituted firm.
3. For the purpose of convenience, the facts in
W.P.No.18254/2012 are referred to, as it is in this case that the
arguments are addressed by the learned Counsel for the
petitioner Mr. G.K.Bhat and the learned Advocate General.
4. By an agreement entered into between two persons by
name Rajegowda and his wife Pushpalatha – a partnership firm
was constituted on 03.07.2006. It applied for grant of CL-2
licence to vend liquor. The licence was granted to the said firm
consisting of the said two partners. The firm admitted two
more partners and a second deed of partnership was entered
into on 30.07.2007. The newly admitted partners by name
Puttaswamaiah and J.P.Sudhakar became the full-fledged
partners along with the erstwhile two other partners.
Subsequently, on 01.10.2007, by the third deed, first two
partners retired and the other two partners viz., Puttaswamaiah
and J.P.Sudhakar continued as partners in the firm. The
demand is made for transfer fee alleging that the reconstitution
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of the firm tantamounts to transfer of license from one firm to
another.
5. Rule 17-B of the Rules reads as under:
“17-B. Transfer of licence in other cases.- (1)
Notwithstanding anything contained in Rule 2, licences
issued.-
(i) for sale of Indian Liquor (other than arrack) or
Foreign Liquor or both, in Form No.CL-1 (Wholesale
licence) or CL-2 (retail shop licences) CL-6A (Star Hotel
Licence) or CL-7 (Hotel and Boarding House Licences) or
CL-9 (Refreshment room (Bar) Licence under the
Karnataka Excise (Sale of Indian and Foreign Liquors)
Rules, 1968; or
(ii) for sale or Beer under the Karnataka Excise
(Lease of Right of Retail Vend of Beer) Rules, 1976;
The Deputy Commissioner may on an application
by the licensee and subject to payment of transfer fee
equivalent to the annual licence fee specified in Rule 8 of
Karnataka Excise (Sale of Indian and Foreign Liquors)
Rules, 1968 or Rule 5 of the Karnataka Excise (Lease of
Right of Retail Vend of Beer, Rules, 1976, as the case
may be, and with the prior approval of the Excise
Commissioner, transfer such licence in favour of any
person named by such licence, if such person is eligible
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for grant of a licence under the Karnataka Excise Act,
1965 or the Rules made thereunder.
(2) Nothing in this rule shall apply to transfer of
licence under Rule 17-A.”
6. This rule has been introduced on 23.05.1995 and is
deemed to have come into force on 01.04.1995. The position as
obtained prior to this rule was that the licence to vend liquor
was not transferable. In fact, this position has been made clear
in the decision of the Division Bench in the case of
T.THIMMAPPA AND OTHERS VS THE EXCISE COMMISSIONER IN
KARNATAKA, BANGALORE AND OTHERS – 1992(1) KAR.L.J. 360.
In the said case, the Division Bench has held that licence is
purely personal. It cannot be transferred at all and that is why
Rule 17-A of the Rules clearly laid down that only in the event
of the death of a licensee, the Deputy Commissioner may on an
application by the LRs of the deceased with the previous
sanction of the Excise Commissioner can transfer licence in
favour of the LRs. This Court, therefore, found exception to the
instructions issued by the Excise Commissioner on 02.05.1984
providing for transfer of licence, otherwise than in favour of the
LRs, observing that such circular was contrary to the rules.
The Division Bench has further repelled the contention that
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question of equitable estoppel did not arise as such transfer
was not permitted in law.
7. It is thus clear that the provision enabling transfer of
licence except in favour of the LRs of deceased licensee was for
the first time introduced by inserting Rule 17-B. Rule 17-B as
extracted above provides that the Deputy Commissioner may on
an application by the licensee and subject to payment of
transfer fee equivalent to the annual licence fee and with the
prior approval of the Excise Commissioner, transfer such
licence in favour of any person named by such licencee, provided
such person is eligible for grant of a licence under the
Karnataka Excise Act, 1965 and the Rules made thereunder.
Thus, for the first time by imposing several safeguards,
conditions and restrictions, provision has been made for
transfer of licence in cases other than the one covered under
Section 17-A. Therefore, there cannot be any dispute about the
legal position that without complying with the requirement of
Rule 17-B, there can be no transfer of licence to vend liquor.
8. In the instant case, the licence was given in favour of a
firm by name M/s. Ranganatha Wines. It had two partners.
Those partners inducted two others by re-constituting the firm
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and after inducting two other partners, the original partners
retired.
9. The contention of Sri G.K.Bhat, Counsel for the
petitioners is, in all cases where there is any change in the
partners of the firm, the licensee has been called upon to pay
the transfer fee treating the same as transfer of licence which is
totally illegal. The issue therefore, is whether all changes in the
composition of the firm tantamounts to a new firm coming into
existence and thereby resulting in implied transfer of licence
from one held by the firm and its partners in favour of the re-
constituted firm and the partners who have joined the firm
subsequently. In this background, I have heard the learned
Counsel for the parties. Sri Bhat has strenuously contended
that the firm is different from its partners. Therefore, mere
change in the composition of the firm does not amount to
transfer of license.
10. Learned Advocate General, at the outset, submits that
against the impugned order passed by the Deputy
Commissioner of Excise, an appeal is provided to the
Commissioner of Excise under Section 61(2) of the Excise Act,
and therefore, petitioners who have an alternative efficacious
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remedy cannot rush to this Court invoking the writ jurisdiction.
Reliance is placed in this regard on the judgment in the case of
UNITED BANK OF INDIA VS SATYAWATI TONDON AND OTHERS –
(2010) 8 SCC 110.
11. He has further pointed out that the partnership firm
though registered is not a separate legal entity and that the
partners constitute a compendium of members who have joined
together to pursue their business and it is for this reason that
the licence granted is not exclusively to a legal entity, but in
favour of the partners though it is given in the name of the firm.
He refers to Section 17-A, 13, 14 and 42 of the Indian
Partnership Act and Order 30 of CPC. Reliance is placed on the
judgments of the Apex Court in the case of DULICHAND
LAXMINARAYAN VS COMMR. OF INCOME-TAX, NAGPUR – AIR
1956 SC 354, to emphasize the nature of the legal character of a
partnership firm, particularly on paragraph 15. Judgment of
the Full Bench of the Punjab & Haryana High Court in the case
of M/S. NANDLAL SOHANLAL JULLUNDUR VS THE
COMMISSIONER OF INCOME-TAX, PATIALA – AIR 1977 PUNJAB
AND HARYANA 320 is also relied upon in this regard.
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12. Attention of the Court is also invited to the judgment of
this Court in the case of GEETHA VS STATE OF KARNATAKA
AND OTHERS – 2000(2) KAR.L.J. 383, to contend that State has
exclusive privilege and right of manufacturing and selling
intoxicating liquor and grant of CL-9 licence is a privilege or
permission granted by the State to the licencee to sell liquor in
the manner prescribed in the licence. Therefore, parting with
the possession and control of the business covered by CL-9
licence would amount to transfer of such privilege and such an
act without the permission of the licensing authority will be
illegal and violative of the terms of the licence.
13. In the said judgment, at paragraph 10, it is note worthy
to notice that this Court has stated that if the licensee retains
possession and control, but only authorises a servant or an
Agent to manage the business on his behalf, there is no
illegality or infringement of the conditions of licence. In
paragraph 11, it is further observed in the said judgment that,
a transfer of licence may be either by way of a transfer
simpliciter (that is transfer of the licence alone) or a transfer
implied in, or consequential upon: (a) the transfer of the
business of Bar and Restaurant covered by the CL-9 licence, by
way of sale or mortgage with possession; or (b) the licensee
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parting with the possession and control of the business, by way
of lease, sub-lease or an agreement of transfer and/or a power
of attorney coupled with interest. Useful reference can also be
made to the observations made in paragraph 15 of the said
judgment, wherein it is held that having regard to the nature of
the licence and the obligations attached to a licence, under the
Excise Act and Rules, it would be open to the licensing
authority to consider at the time of granting licence as to
whether the application is merely a camouflage for someone
else running the business as there was no fundamental right to
carry on trade or business in liquor and the State had the
power to effectively regulate the various activities relating to
intoxicants as observed by the Supreme Court in the case of
HAR SHANKAR VS DEPUTY EXCISE AND TAXATION
COMMISSIONER- AIR 1975 SC 1121.
14. In the light of the respective contentions urged, if the
materials on record are perused, it emerges that the action
initiated in demanding transfer fee is traceable to the letter
dated 20.08.2009 issued by the State Government (Principal
Secretary, Finance Department, Bangalore, addressed to the
Excise Commissioner). In the said letter, the judgment
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rendered by this Court in W.P.No.8130/2002 dated 28.10.2006
is referred to state that in the event of induction of new partner
or change in the partnership by re-constituting the same,
transfer fee is liable to be collected. Thereafter, the Excise
Commissioner has addressed letters to all the Deputy
Commissioners of Excise in the State on 04.10.2011 to initiate
action by securing necessary information about the change in
the constitution and composition of the partnership firms and
for collection of licence fee in terms of Rule 17-B of the Rules by
ensuring that applications are submitted by such firms. This
communication is produced at Annexure-K to the writ petition.
15. Thereafter notices came to be issued to the petitioners
calling upon them to make payment of the transfer fee as
provided under Rule 17-B. These notices dated 28.02.2012 and
28.03.2012 are produced at Annexures-E & G, respectively.
Petitioner has submitted a reply on 31.03.1012 vide Annexure-
F. In the reply, it is submitted that the previous partnership
firm which had been granted licence has continued in existence
although new partners have been inducted and earlier partners
have resigned and therefore, the judgment rendered by this
Court in W.P.No.8130/2002 had no application to the facts.
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16. The Deputy Commissioner of Excise, Hassan, has having
considered the reply submitted, come to the conclusion that the
reply could not be accepted as, in terms of the Government
directive and in the light of Rule 17-B, petitioner was required
to make payment of transfer fee.
17. During the course of arguments, learned Advocate
General has pointed out that Annexure-M communication
issued by the Finance Department addressed to the Excise
Commissioner has to be ignored as it is not traceable to any
authority vested with the Finance Department to issue such
communication/direction. He further submits that whether a
change in the partnership firm, by inducting new partner
tantamounts to transfer of licence from the previous firm and
the partners to the re-constituted firm is a matter which the
competent authority has to consider based on the facts and
circumstances of the case and therefore, in the present case, as
the Deputy Commissioner of Excise has found that there is re-
constitution of the firm resulting in implied transfer of licence
in favour of newly inducted partners, transfer fee has to be
paid, he, therefore, submits that the petitioner has to approach
the Appellate Authority, if at all they are aggrieved by the order
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passed by the Deputy Commissioner of Excise. He further
points out that if such an appeal is filed, the Appellate
Authority will examine the mater in accordance with law based
on the facts and circumstances of the case and law applicable.
He, however, asserts that in the instant case, there is indeed
transfer of licence from the previous partners in favour of the
newly inducted partners and therefore the action of the Deputy
Commissioner of Excise is just and legal.
18. In the light of the above submission, it has to be stated
that the communication issued by the State Government
through the Finance Department on 20.08.2009 vide Annexure-
M cannot have any legal effect and the authorities of the Excise
Department who are invested with quasi-judicial powers to
examine the issue regarding the liability of the partnership firm
to pay transfer fee on account of the alleged change in the
composition of the firm have to consider the question without
reference to and without in any manner being influenced by the
said communication dated 20.08.2009 and by ignoring the
same.
19. As regards the effect of change in the composition of the
partnership, there can be different ways of bringing about such
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change. The change in the composition may be such that some
partners may be inducted along with the new partners; some of
the partners may retire out of the existing partners. In both the
cases, there is likelihood of change in the control and
management of the firm and in some cases, it may not result in
material change at all in the management of the firm. A
partnership firm does not have a separate legal entity as
compared to the legal status that a corporate body enjoys. In
DULICHAND LAXMINARAYAN VS COMMR. OF INCOME-TAX,
NAGPUR – AIR 1956 SC 354, the Apex Court dealing with the
nature and legal character of a partnership firm, has held that
the general concept of partnership, firmly established in both
systems of law (English and Indian), still is that a firm is not an
entity or person in law but is merely an association of
individuals and a firm name is only a collective name of those
individuals who constitute the firm. In other words, a firm
name is merely an expression, only a compendious mode of
designating the persons who have agreed to carry on business
in partnership.
20. If this broad legal aspect is kept in mind and the object
and purpose behind insertion of Rule 17-B is examined,
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coupled with the requirements that are to be satisfied while
making an application for grant of licence by a firm, it will be
clear that the State having exclusive privilege and right of
manufacturing and selling intoxicating liquor, can grant licence
as a privilege or permission granted by the State to the licencee
to sell liquor in the manner prescribed in the licence. If that is
so, parting with possession and control of business covered
under such a licence would certainly amount to transfer of
such privilege. Such an act, if resorted to without the
permission of the licensing authority, will be illegal and violative
of the terms of licence. Such a situation can be brought about
by what may be called as transfer simplicitor or by an act that
by implication may tantamount to transfer of such licence.
21. If a licence is issued in the name of a firm consisting of
specified persons as its partners on the basis of the details
furnished at the time when the application is filed and if such
firm, later on, undergoes change in its
constitution/composition or control or management, then it
may result in the licence being impliedly transferred in favour of
the re-constituted partnership firm. Merely because some of
the old partners have continued in the re-constituted firm, may
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not be a defence to avoid the rigour of Rule 17-B. It all depends
on the facts and circumstances of each case. If a partner is
newly inducted and he has no real role in the management and
control of the existing firm in whose favour the licence is
granted, and where such induction does not in any manner
bring about major change in the shares held by the partners,
then a defence will be open to the firm to say that there is no
implied transfer. But, where in a given case induction of new
partners has resulted in implied transfer of the management
and control in favour of new partners as well, then the rigour of
Rule 17-B cannot be avoided.
22. Rule 17-B is required to be strictly construed. It has to
be given its full effect. It has to be borne in mind that the
licencee has no right to transfer the licence. He cannot achieve
this object by camouflaging his actions by resorting to re-
constitution of the firm. Whether the action is a camouflage
really intended to transfer the licence is a matter that depends
on the facts and circumstances of each case and the competent
authority has to examine the same.
23. In the case of Surendra Shetty Vs State of Karnataka,
W.P.No.8130/2002 disposed of on 28.10.2006, this Court
25
confirmed the orders passed by the competent authority as
affirmed by the Karnataka Appellate Tribunal, wherein it was
held that in the name of re-constitution of the firm, the
management had been taken over by the petitioner and the
original partner had been reduced to insignificant status,
tantamounting to change of management. In such
circumstances, this Court refused to interfere with the
concurrent findings of fact recorded by the authorities holding
that there was implied transfer of license as a result of the
reconstitution of the firm. Therefore, the issue has to be
determined based on the facts and circumstances of each case
and not by applying a thumb rule.
24. In the light of the conclusion that I have reached, it is
now not appropriate for this Court to embark upon an enquiry
into the nature of the re-constitution and composition and the
change of control and management if any of the petitioner firms
after re-constitution. The same has to be decided by the
competent authority, who, in the instant case, is the Deputy
Commissioner of Excise.
25. However, as the Deputy Commissioner, in the present
case, has proceeded on the basis of the Government Order and
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the clarification issued by the Excise Commissioner based on
the Government Order, the authorities have to ignore the said
Government Order and examine the matter keeping in mind the
principles laid down herein above.
26. The Deputy Commissioner of Excise has passed the
impugned orders referring to the facts and circumstances of
each case, it is not necessary for this Court to undertake re-
examination of the facts involved in these cases as the
petitioners have an alternative efficacious remedy of preferring
a statutory appeal before the Commissioner of Excise under
Section 61(2) of the Act. Petitioners are therefore given 30 days
time from the date of receipt of a copy of this order to prefer
such an appeal before the Commissioner of Excise, whereupon
the Commissioner will examine the matter, keeping in mind the
observations made and the principles laid down in this order.
27. There is already an interim order in W.P.No.18254/2012
and W.P.No.17393/2012 observing that on payment of transfer
fee, the respondent shall take steps to renew the licence which
will be subject to the result of the writ petition. It is also made
clear that if the petitioner succeeds in the writ petition, he will
be entitled for refund of the amount paid towards transfer fee.
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Now that the petitioners are required to prefer an appeal before
the Commissioner of Excise, the payment made by the
petitioners and the renewal of licence effected will be subject to
the result of the appeal to be preferred before the Commissioner
of Excise. If the petitioners succeed, then they will be entitled
for refund of the amount paid towards transfer fee.
28. A grievance is made stating, inspite of the order dated
29.06.2012 passed in W.P.No.18254/2012, the Deputy
Commissioner concerned has not yet renewed the licence
though the transfer fee is paid. It is submitted by the learned
Advocate General, in the course of arguments that immediate
action will be taken to renew the licence.
29. Learned Additional Government Advocate today submits
on instructions from the concerned Deputy Commissioner
(Legal) that steps will be taken to immediately renew the licence
in favour of the petitioner if the transfer fee in terms of the
interim order is already paid.
30. It is also submitted by the learned Additional Government
Advocate that the claim made by the impleading applicant is
considered and disposed of holding that the claim was not
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sustainable in law. In this background, it is unnecessary to
pass any order on the Impleading Application.
31. Writ petitions are accordingly disposed of in terms stated
above.
Sd/-JUDGE
KK