Karnataka High Court
S A Suresh vs The Deputy Commissioner on 19 July, 2012
Author: B.S.Patil
Bench: B.S.Patil
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 19TH DAY OF JULY, 2012
BEFORE
THE HON'BLE MR.JUSTICE B.S.PATIL
W.P.No.17393/2012
C/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.Suresh
S/o Anjanappa
Aged about 41 years
C.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,
2
No.192/203, B.H.Road,
Arasikere, Hassan District,
Regd.Partnership Firm,
Rep.by Partner J.P.Suhakar
S/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,
3
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 & Hotels
A 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
4
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,
5
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,
6
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
7
(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.)
8
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,
9
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 impugned
order dated 23.5.2012 passed by the respondent vide
Annexure-F and etc.
Writ Petition No.18254/2012 is filed under Articles 226 &
227 of the Constitution of India, praying to quash the order
dated 28.3.2012 passed by the respondent No.4 vide Annexure-
G and etc.
Writ Petition Nos.22589-593/2012 are filed under
Articles 226 & 227 of the Constitution of India, praying to direct
the respondents 3 to 7 to renew the license of the petitioners as
sought 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 order
dated 15.6.2012, vide Annexure-C passed by the respondent
No.4 and etc.
Writ Petition Nos.22414/2012 is filed under Articles 226
& 227 of the Constitution of India, praying to quash the order
10
dated 30.3.2012, vide Annexure-C passed by the respondent
No.4 and etc.
Writ Petition Nos.22415/2012 is filed under Articles 226
& 227 of the Constitution of India, praying to quash the order
dated 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 order
dated 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 order
dated 15.6.2012, passed by the respondent and etc.
These petitions coming on for preliminary hearing-B
group 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 11 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 12 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 13 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 14 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 15 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 16 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. 17
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 18 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 19 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. 20
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 21 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 22 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, 23 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 24 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 26 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. 27 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 28 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