Kerala High Court
Smt. C.P.Maggie vs State Of Kerala on 21 August, 2017
Author: P.V.Asha
Bench: P.V.Asha
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE SMT. JUSTICE P.V.ASHA
THURSDAY, THE 16TH DAY OF NOVEMBER 2017/25TH KARTHIKA, 1939
WP(C).No. 36009 of 2017 (A)
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PETITIONER(S)/PETITIONERS:
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1. SMT. C.P.MAGGIE
AGED 56 YEARS, W/O. E.J. DAVIS,
EDASSERY HOUSE, ANGAMALY, ERNAKULAM.
2. E.J. DAVIS,
AGED 60 YEARS, S/O. E.M. JOSEPH (LATE),
EDASSERY HOUSE, ANGAMALY, ERNAKULAM.
3. M/S. MOOKANNOOR TOURIST HOME,
MOOKANNOOR, ERNAKULAM DISTRICT,
REPRESENTED BY ITS MANAGING PARTNER,
SMT. MAGGIE DAVIS.
4. SMT. MAGGIE DAVIS,
PROPRIETOR, PRINCE PALACE,
THIRUVANANTHAPURAM.
5. M/S. HOTEL DONA CASTLE,
KOLLAM, REPRESENTED BY ITS
MANAGING DIRECTOR, SRI. E.J. DAVIS.
6. M/S. EDASSERY KAYAL RESORTS,
KOTTAYAM, REPRESENTED BY ITS
PARTNER SRI. E.J. DAVIS.
7. M/S. VEMBANAD TOURIST HOME,
VAIKOM, KOTTAYAM DISTRICT,
REPRESENTED BY ITS
MANAGING PARTNER, SRI. E.J. DAVIS.
8. M/S. EDASSERY RESORTS,
KATTAPPANA P.O., IDUKKI DISTRICT,
REPRESENTED BY ITS
MANAGING PARTNER, SRI. E.J. DAVIS.
9. M/S. EDASSERY MANSION,
KATHRIKKADAVU, ERNAKULAM,
REPRESENTED BY ITS
PARTNER, MRS. MAGGIE DAVIS.
10. M/S. EDASSERY MANSION,
KATHRIKKADAVU, ERNAKULAM,
REPRESENTED BY ITS
PARTNER, MRS. MAGGIE DAVIS.
WP(C).No. 36009 of 2017 (A) : 2 :
11. E.J. DAVIS,
PROPRIETOR, MALABAR ILLAM,
CHALIKKAVATTOM P.O., NATIONAL HIGHWAY,
ERNAKULAM.
12. E.J. DAVIS,
PROPRIETOR, KALAMASSERY TOURIST HOME,
KALAMASSERY, ERNAKULAM DISTRICT.
13. M/S. KATHRIKADAVU TROURIST HOME,
MARKET ROAD, ERNAKULAM,
REPRESENTED BY ITS PARTNER,
MR. E.J. DAVIS.
BY ADVS.SRI.C.C.THOMAS (SR.)
SRI.NIREESH MATHEW
SRI.M.G.KARTHIKEYAN
RESPONDENT(S)/RESPONDENTS:
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1. STATE OF KERALA
REPRESENTED BY SECRETARY,
TAXES (A) DEPARTMENT, GOVT. SECRETARIAT,
THIRUVANANTHAPURAM - 695 001.
2. THE EXCISE COMMISSIONER,
COMMISSIONERATE OF EXCISE,
THIRUVANANTHAPURAM - 695 033.
3. THE DEPUTY COMMISSIONER OF EXCISE,
ERNAKULAM - 682 018.
4. THE DEPUTY COMMISSIONER OF EXCISE,
THIRUVANANTHAPURAM - 695 033.
5. THE DEPUTY COMMISSIONER OF EXCISE,
KOLLAM - 691 001.
6. THE DEPUTY COMMISSIONER OF EXCISE,
KOTTAYAM - 686 001.
7. THE DEPUTY COMMISSIONER OF EXCISE,
IDUKKI, OFFICE AT THODUPUZHA - 685 585.
R1-R7 BY GOVERNMENT PLEADER SRI V.MANU
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 16-11-2017, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
WP(C).No. 36009 of 2017 (A)
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APPENDIX
PETITIONER(S)' EXHIBITS
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EXHIBIT P1. PHOTOCOPY OF THE JUDGMENT DATED 21.8.2017 IN CC
NO.17/2006 PASSED BY THE SPECIAL JUDGE (SPE/CBI)-II, ERNAKULAM.
EXHIBIT P2. PHOTOCOPY OF THE ORDER DATED 25.8.2017 IN CRL.
M.A.NO.4583/2017 IN CRL.A.NO.781/2017 PASSED BY THIS HON'BLE COURT.
EXHIBIT P3. PHOTOCOPY OF THE PETITION, CRL.M.A.NO.4779/2017 IN
CRL.A.NO.781/2017 FILED BEFORE THIS HON'BLE COURT.
EXHIBIT P4. PHOTOCOPY OF THE ORDER DATED 13.10.2017 IN
CRL.M.A.NO.4779/2017 IN CRL.A.NO.781/2017 PASSED BY THIS HON'BLE
COURT.
EXHIBIT P5. PHOTOCOPY OF THE ORDER NO.EXC/4079/2017/XC6 DATED
27.9.2017 PASSED BY THE 2ND RESPONDENT.
EXHIBIT P6. PHOTOCOPY OF THE ORDER NO.EXC/4079/2017/XC6 DATED
12.10.2017 PASSED BY THE 2ND RESPONDENT.
EXHIBIT P7. PHOTOCOPY OF THE APPLICATION DATED 13.10.2017
SUBMITTED BEFORE THE 2ND RESPONDENT.
RESPONDENT(S)' EXHIBITS
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NIL.
/TRUE COPY/
P.S TO JUDGE
P.V.ASHA, J.
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W.P(C) No.36009 of 2017-A
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Dated this the 16th day of November, 2017
JUDGMENT
The petitioners, who are engaged in hotel and tourism business, in several places in Kerala, have filed this writ petition aggrieved by the refusal to withdraw the orders suspending the license issued to them under the Foreign Liquor Rules, 1953 (hereinafter referred to as 'the Rules').
2. A crime was registered against petitioners 1 and 2 and the Manager of a Bank in connection with certain transactions with the bank. Petitioners 1 and 2, who are accused 2 and 3 in C.C. No. 17/2006 on the file of Special Judge (SPE/CBI) II, Ernakulam, were convicted as per Ext.P1 judgment dated 21.08.207, for offences punishable under Section 420 and 120B read with 420 of IPC and sentenced to undergo simple imprisonment for a period of 2 years and to pay a fine of Rs.50,000/- or else to undergo S.I for a period of one year under Section 420 IPC. They are also sentenced to undergo S.I for a period of 2 years for the offence punishable under Section 120 B r/w 420 IPC. According to the petitioners, the crime was registered W.P(C) No.36009 of 2017-A 2 against them on the basis of an audit objection raised against the sanctioning of a housing loan, which was already paid back within one year and the case was registered by the CBI on account of the disbursement of a commercial loan as a housing loan alleging that the bank sustained a loss of nearly Rs.50,000/-. The Branch Manager was also convicted as per Ext.P1 judgment. The petitioners filed Crl.Appeal No.781/2017 before this Court. As per Ext.P2 order dated 25.8.2017 in Crl.M.Appl.No.4583/2017, this Court suspended the execution of sentence against the petitioners. Thereafter, they filed Ext.P3 Crl.M.Appl.4779/2017 praying for suspending the execution of conviction. The Crl.M.Appl. was filed pointing out the disqualification incurred by them under Rule 13 A (4) of the Rules on account of the conviction and stating that suspending of sentence alone will not be sufficient for removing their disqualification. Thereupon this Court as per Ext.P4 order dt.13.10.2017 passed a detailed order suspending the conviction of the petitioners.
3. In the meanwhile, Ext.P5 order was passed on 27.9.2017 suspending the FL11 licence issued in the name of the firm represented by the Managing Director Smt.Maggie Davis, the 3rd petitioner. It was also W.P(C) No.36009 of 2017-A 3 informed that she will not be eligible to get refund of the proportionate licence fee. In that order it was stated that the 3rd petitioner is not eligible to hold any licence under sub rule 4 Rule 13(A) of the Rules. The licence was suspended in exercise of the powers under Section 27(c) of the Abkari Act. On 12.10.2017, Ext.P6 order was issued to petitioners 4 to 13, suspending their licences. Ext.P4 order was passed by this Court on 13.10.2017. The petitioner submit that they had sent a copy of the order by e-mail on 13.10.2017 itself and produced the order on 16.10.2017. But the 2nd respondent did not pass any orders on their request to withdraw the orders of suspension even then. The petitioners submit that there was never an occasion when such an attitude is adopted by the respondents even after conviction is suspended by this Court. It is under the above circumstances that the petitioners have approached this Court challenging the orders Exts.P5 and P6. They have also prayed for a direction to the respondent to refund the licence fee in respect of petitioners 3 to 13.
4. A statement is filed on behalf of the 3rd respondent. According to the 3rd respondent, a licencee is disqualified to hold any foreign liquor licence, under Rule 13 A(4) of the Rules, in case he is convicted of any W.P(C) No.36009 of 2017-A 4 cognizable offences. It is stated that petitioners 1 and 2 have FL11 licences issued in their name. They were charged with offences punishable under Section 120B and 420 IPC and Section 13(2) r/w 13(1)(b) of the Prevention of Corruption Act and they are found guilty and sentenced for offences punishable under Section 120B and 420 IPC. According to the respondents, the suspension of the conviction does not wipe out the conviction and hence the disqualification will continue. Relying on the judgment in Sri Chamundi Mopeds Ltd. v. M/s.South India Trust Association Madras [(1992) 3 SCC 1], it is stated that an interim order staying the operation of the order would only mean that the order which is stayed could not be operated from the date of passing of the stay order but the order is not wiped out. Relying on the judgment of the Division Bench of this Court in State of Kerala & Ors. v. Komalan [2010 (2) KHC 10], it is stated that grant of stay of prosecution would not have the effect of exoneration of the persons against whom crimes were registered and they are not entitled to preference under Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules. Therefore, it is stated that the disqualification incurred on the petitioners under Rule 13A (4) of the Rules continue to be there as long as the judgment convicting W.P(C) No.36009 of 2017-A 5 them is in force.
5. The learned Senior Counsel Sri C.C.Thomas appearing for the petitioners argued that the cases in which petitioners are involved are relating to offences under the Indian Penal Code. Those cases cannot be compared with corruption cases. According to him, the factual circumstances leading to the crime are not at all serious matters by which they should be disqualified. Pointing out the loss being incurred to the petitioners day to day and the loss of employment to several persons, the learned Counsel argued that the license is liable to be restored to the petitioners.
6. Having considered the contentions raised on either side, I find that a learned Judge of this court has passed Ext.P4 order, suspending the conviction, taking note of the admitted fact that the order of conviction if not suspended, the petitioners would not be able to conduct their business because of the disqualification created by the provisions in the Foreign Liquor Rules. Repelling the objections raised by the learned Standing Counsel for the CBI relying on the judgments in CBI, New Delhi v. Roshan Lal Saini [(2012) 2 SCC 390] and K.C.Sareen v. CBI, Chandigarh W.P(C) No.36009 of 2017-A 6 [(2001) 6 SCC 584] this Court allowed the application pointing out that different standards should be applied for public servants and convicts other than public servants. Therefore, taking into consideration that the petitioners are convicted of the offences under the IPC and that they are private persons, this Court observed the contention of the petitioners that their business would be ruined in case the conviction is not suspended.
7. Sri. Manu, the Learned Government Pleader, vehemently argued that the conviction is never wiped out on account of any interim order even if the conviction is stayed or suspended, relying on a series of judgments. Pointing out the dictionary meaning of "suspend" referring to Concise Oxford English Dictionary, it was argued that the meaning of "suspend" is only "halt temporarily, debar temporarily from a post, duties, etc. as a punishment, defer or delay an action, event or judgment of a judge or court cause an imposed sentence not to be enforced as long as no further offence is committed within a specified period, hang from somewhere, etc." The judgment in Komalan's case (supra) relates to a case where Rule 5(1)
(a) denied preference to those against whom abkari cases are registered. In this case, the petitioners are not involved in any abkari case. It was a case W.P(C) No.36009 of 2017-A 7 where the writ petitioner had claimed preferential right for allotment of toddy shop under Rule 5(1)(a) of the Kerala Abkari Shops Disposal Rules, 2002 on the ground that the prosecution case was stayed by the Apex Court.
8. Rule 5(1)(a) provides for preference to run shop only if no abkari case is registered against him for any offences other than Section 56 of the Act. Crime was registered against the respondent therein under Section 57(a) of the Abkari Act. Therefore, the Division Bench held that grant of stay of prosecution will not have the effect of exoneration of the persons against whom crime is registered.
9. In the present case even though Rule 13A(4) provides that the licencee is disqualified to hold any foreign liquor licence if he is convicted of any cognizable offences. On an analysis of the circumstances of the case read with interpretation given by this Court in the judgments in Ram Narang's case and Ravikant S.Patil's case (supra), the suspension of the conviction ordered in Ext.P4 cannot stand in the way of the petitioners in carrying out their business on the basis of the licence. Therefore, the judgments in Komalan's case or Sri Chandi Moped's case (supra) will not apply in the facts and circumstances of the case.
W.P(C) No.36009 of 2017-A 8
10. I find that the circumstances of each case has to be considered separately. It is not a case where the petitioners are holding any public offices. They are convicted for any charges relating to corruption. It is pointed out that even in the case in which they are convicted they have paid off the entire debt. The persons convicted even for moral turpitude were allowed to contest election on the strength of suspension of conviction as held by the Apex Court in Ravikant S. Patil v. Sarvabhouma S. Bagali [(2007) 1 SCC 673]. Therefore, I am unable to uphold the impugned orders.
11. As rightly pointed out by Sri. C.C. Thomas, the learned Senior Counsel, Ext.P4 order is passed by this Court in tune with the law laid down by the Apex Court in Rama Narang v. Ramesh Narang [(1995) 2 SCC 513]. In that case the question which arose for consideration was regarding the continuance of appointment of the managing director, who was convicted involving in a case of moral turpitude. The scope of Section 389 (1) of the code and the effect of suspension of conviction was considered in that case. In that case Section 267 of the Companies Act stood in the way of Managing Director to continue in the post. Section 267(c) provided that no company shall appoint or employ or continue the appointment or W.P(C) No.36009 of 2017-A 9 employment of any person as its managing director, who is or has at any time be convicted by a court of an offence involving moral turpitude. In that case the conviction was on 22.12.1986 and the appointment as M.D was in the year 1990. Even though an order of stay was granted by the High Court of Delhi, the Apex Court found that there was absolutely no discussion in the said order and that the consequences of convictions were not even disclosed to the court. In paragraph 11 onwards the effect of the stay of conviction was considered. It was held in paragraph 16 as follows:
"16. In certain situations the order of conviction can be executable, in the sense, it may incur a disqualification as in the instant case. In such a case the power under Section 389(1) of the Code could be invoked. In such situations the attention of the Appellate Court must be specifically invited to the consequence that is likely to fall to enable it to apply its mind to the issue since under Section 389(1) it is under an obligation to support its order "for reasons to be recorded by it in writing. If the attention of the Court is not invited to this specific consequence which is likely to fall upon conviction how can it be expected to assign reasons relevant thereto? No one can be allowed to play hide and seek with the Court; he cannot suppress the precise purpose for which he seeks suspension of the conviction and obtain a general order of stay and then contend that the disqualification has ceased to operate. In the instant case if we turn to the application by which interim `stay' of the operation of the impugned judgment was secured we do not find a single word to the effect that if the operation of the conviction is not stayed the consequence as indicated in Section 267 of the Companies Act will fall on the appellant. How could it then be said that the Delhi High Court had applied its mind to this precise question before granting `stay'? That is why the High Court order granting interim stay does not assign any reason having relevance to the said issue. By not making a specific reference to this aspect of the matter, how could the appellant have persuaded the Delhi High Court to stop the coming into operation of Section 267 of the Companies Act? And how could the Court have applied its mind to this question if its pointed attention was not drawn? As we said earlier the application seeking interim stay is wholly silent on this point. That is why we W.P(C) No.36009 of 2017-A 10 feel that this is a case in which the appellant indulged in an exercise of hide and seek in obtaining the interim stay without drawing the pointed attention of the Delhi High Court that stay of conviction was essential to avoid the disqualification under Section 267 of the Companies Act. If such a precise request was made to the Court pointing out the consequences likely to fall on the continuance of the conviction order, the Court would have applied its mind to the specific question and if it thought that case was made out for grant of interim stay of the conviction order, with or without conditions attached thereto, it may have granted an order to that effect. There can be no doubt that the object of Section 267 of the Companies Act is wholesome and that is to ensure that the management of the company is not in soiled hands. As we have pointed out earlier the Managing Director of a company holds a fiduciary position qua the company and its shareholders and, therefore, different considerations would flow if an order is sought from the Appellate Court for staying the operation of the disqualification that would result on the application of Section 267 of the Companies Act. Therefore, even on facts since the appellant had not sought any order from the Delhi High Court for stay of the disqualification he was likely to incur under Section 267 of the Companies Act on account of his conviction, it cannot be inferred that the High Court had applied its mind to this specific aspect of the matter and had thereafter granted a stay of the operation of the impugned judgment. It is for that reason that we do not find in the order of the High Court a single reason relevant to the consequence of the conviction under Section 267 of the Companies Act. The interim stay granted by the Delhi High Court must, therefore, be read in that context and cannot extend to stay the operation of Section 267 of the Companies Act."
The Apex Court found that if a precise request for suspending the conviction was made and the Court had applied its mind to the specific question and on such circumstances an interim stay of conviction was ordered, then such an order could have been granted to that effect seeing that the object of Section 267 is to ensure that the management of the company is not in so into hand. It was observed that different considerations would flow if an order is got from the appellate court for W.P(C) No.36009 of 2017-A 11 staying the operation of disqualification. But in the order passed by the High Court there was no reason which was relevant to the consequence of conviction under Section 267 of the Companies Act was mentioned. In paragraph 19 it was held as follows:
19. That takes us to the question whether the scope of Section 389(1) of the Code extends to conferring power on the Appellate Court to stay the operation of the order of conviction. As stated earlier, if the order of conviction is to result in some disqualification of the type mentioned in Section 267 of the Companies Act, we see no reason why we should give a narrow meaning to Section 389(1) of the Code to debar the court from granting an order to that effect in a fit case. The appeal under Section 374 is essentially against the order of conviction because the order of sentence is merely consequential thereto; albeit even the order of sentence can be independently challenged if it is harsh and disproportionate to the established guilt. Therefore, when an appeal is preferred under Section 374 of the Code the appeal is against both the conviction and sentence and therefore, we see no reason to place a narrow interpretation on Section 389(1) of the Code not to extend it to an order of conviction, although that issue in the instant case recedes to the background because High Courts can exercise inherent jurisdiction under Section 482 of the Code if the power was not to be found in Section 389(1) of the Code. We are, therefore, of the opinion that the Division Bench of the High Court of Bombay was not right in holding that the Delhi High Court could not have exercised jurisdiction under Section 482 of the Code if it was confronted with a situation of there being no other provision in the Code for staying the operation of the order of conviction. In a fit case if the High Court feels satisfied that the order of conviction needs to be suspended or stayed so that the convicted person does not suffer from a certain disqualification provided for in any other statute, it may exercise the power because otherwise the damage done cannot be undone; the disqualification incurred by Section 267 of the Companies Act and given effect to cannot be undone at a subsequent date if the conviction is set aside by the Appellate Court. But while granting a stay of (sic or) suspension of the order of conviction the Court must examine the pros and cons and if it feels satisfied that a case is made out for grant of such an order, it may do so and in so doing it may, if it considers it appropriate, impose such conditions as are considered appropriate to protect the interest of the shareholders and the business of the company."
Therefore when an order suspending conviction is granted, having regard to W.P(C) No.36009 of 2017-A 12 the damage already done and on being satisfied that it cannot be undone later, the respondents ought to have withdrawn the orders of suspension of license.
12. In K.C. Sareen v. CBI, (2001) 6 SCC 584, the Apex Court reminded the public policy to keep the corrupt officers under the disability of conviction :
"12.xxxxxxHence it is necessary that the court should not aid the public servant who stands convicted for corruption charges to hold only (sic) public office until he is exonerated after conducting a judicial adjudication at the appellate or revisional level. Xxxxxx
13. The above policy can be acknowledged as necessary for the efficacy and proper functioning of public offices. If so, the legal position can be laid down that when conviction is on a corruption charge against a public servant the appellate court or the revisional court should not suspend the order of conviction during the pendency of the appeal even if the sentence of imprisonment is suspended. It would be a sublime public policy that the convicted public servant is kept under disability of the conviction in spite of keeping the sentence of imprisonment in abeyance till the disposal of the appeal or revision."
In yet another case where the High Court stayed the conviction on the ground that a policeman would lose the stipend, the Apex Court held as follows in State of T.N. v. A. Jaganathan, (1996) 5 SCC 329 , in paragraph 3:
W.P(C) No.36009 of 2017-A 13
"In Rama Narang's case (supra)the conviction and sentences both were suspended on the reasoning that if the conviction and sentences are not suspended, damage would be caused which could not be undone if ultimately the revision of the appellants of that case was allowed. But in the present case, we find that in the event the revisions against their conviction and sentences are allowed by the High Court, the damage, if any, caused to the respondents with regard to payment of stipend etc. can well be revived and made good to the respondents."
13. In this context it is relevant to note that in Ravikant S. Patil v. Sarvabhouma S. Bagali [(2007) 1 SCC 673], the Apex Court while considering the plea as to the disqualification provided under Section 8 (1) and (3) of the Representation of People's Act, where a person convicted for offence punishable under Section 376(1) or (2) of IPC, and sentenced to imprisonment for not less than two years shall be disqualified from the date of such conviction and shall continue to be disqualified for a further period of six years since his release, held as follows:
"15. It deserves to be clarified that an order granting stay of conviction is not the rule but is an exception to be resorted to in rare cases depending upon the facts of a case. Where the execution of the sentence is stayed, the conviction continues to operate. But where the conviction itself is stayed, the effect is that the conviction will not be operative from the date of stay. An order of stay, of course, does not render the conviction non-existent, but only non-operative. Be that as it may. Insofar as the present case is concerned, an application was filed specifically seeking stay of the order of conviction specifying the consequences if conviction was not stayed, that is, the appellant would incur disqualification to contest the election. The High Court after considering the special reason, granted the order staying the conviction. As the conviction itself is stayed in contrast to a stay of execution of the sentence, it is not possible to accept the contention of the respondent that the disqualification arising out of conviction continues to operate even after stay of conviction."W.P(C) No.36009 of 2017-A 14
14. In view of the aforesaid judgments and the circumstances arising in this case, I am unable to uphold the impugned orders. have already found that Ext.P4 order is passed by this Court taking due notice of the pros and cons of the conviction. Therefore, it cannot be said that the petitioners cannot be allowed to carry on their business even when the conviction is stayed after referring to the rival contentions as well as the disqualification provided under Rule 13A of the Rules.
I therefore set aside the orders Exts.P5 and P6. The writ petition is accordingly allowed directing the respondents concerned to pass fresh orders on Ext.P7 application and to restore the respective licenses to the petitioners, forthwith.
As at present I do not think it necessary to consider the claim of the petitioners for refund. Contentions regarding that are left open.
Sd/-
(P.V.ASHA, JUDGE) rtr/