M/S. BACK WATER RIPPLES PVT. LTD & ALEX MATHEW VELLAPPALLY v STATE OF KERALA & others

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR.JUSTICE N.NAGARESH`** ``` THURSDAY, THE 25[TH] DAY OF JANUARY 2024 / 5TH MAGHA, 1945 WP(C) NO. 279 OF 2024 ``` ## **`PETITIONERS:`** - **`1 M/S. BACK WATER RIPPLES PVT. LTD KUMARAKOM P.O, KOTTAYAM DISTRICT, PIN-686 563 REPRESENTED BY ITS MANAGING DIRECTOR, ALEX MATHEW VELLAPPALLY, AGED 30 YEARS, S/O.MATHEW ALEX VELLAPPALLY (LATE), RESIDING AT VELLAPPALLY HOUSE, PEROOR P.O, KOTTAYAM DISTRICT, PIN – 686 637.`** - **`2 ALEX MATHEW VELLAPPALLY AGED 30 YEARS, S/O.MATHEW ALEX VELLAPPALLY (LATE), MANAGING DIRECTOR, M/S. BACK WATER RIPPLES PVT. LTD., KUMARAKOM P.O, KOTTAYAM DISTRICT, PIN-686 563, RESIDING AT VELLAPPALLY HOUSE, PEROOR P.O, KOTTAYAM DISTRICT., PIN – 686 637.`** ## **`BY ADVS. M.G.KARTHIKEYAN NIREESH MATHEW`** ## **`RESPONDENTS:`** - **`1 STATE OF KERALA REPRESENTED BY SECRETARY,`** - **`TAXES (A) DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM., PIN – 695 001.`** - **`2 THE EXCISE COMMISSIONER COMMISSIONERATE OF EXCISE, EXCISE HEAD QUARTERS, NANDAVANAM, THIRUVANANTHAPURAM., PIN – 695 033.`** W.P.(C) No.279 of 2024 : 2 : - **`3 THE DEPUTY COMMISSIONER OF EXCISE EXCISE DIVISION OFFICE, COLLECTORATE P.O, KOTTAYAM, PIN – 686 002.`** - **`4 THE CIRCLE INSPECTOR OF EXCISE EXCISE CIRCLE OFFICE, MINI CIVIL STATION P.O, KOTTAYAM., PIN – 686 001.`** ## **`BY`** ## **`SREEJITH V.S, GOVERNMENT PLEADER`** ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` W.P.(C) No.279 of 2024 : 3 : ## **JUDGMENT** _Dated this the 25[th] day of January, 2024_ The 1[st] petitioner-Company was holding Ext.P1 FL-11 licence issued under Rule 13(11) of the Foreign Liquor Rules on 10.07.2014. The licence was issued on the strength of classification of the restaurant by the Kerala Tourism Department and also since Kumarakom is a prime tourist centre. Ext.P1 licence was represented by the then Managing Director, Mathew Alex Vellappally, the father of the 2[nd] petitioner. The Board of Directors was reconstituted on 09.03.2017 including the 2[nd] petitioner. The reconstitution was done without prior sanction of the Excise Commissioner. Ext.P1 licence was renewed upto 31.03.2020 and was not renewed from 01.04.2020 due to Covid-19 pandemic and also due to illness of the then Managing Director. 2. When the petitioners approached the Department for renewing the FL-11 licence represented by the 2[nd] petitioner herein due to the death of his father on 02.07.2022, the W.P.(C) No.279 of 2024 : 4 : respondents advised to file application for a fresh licence. They also advised to file an application for regularising the reconstitution done on 09.03.2017. The Excise Commissioner passed Ext.P4 order imposing 23 lakhs allegedly for violation₹ of the 2[nd] proviso to Rule 19(iv) of the Foreign Liquor Rules, which provision is omitted from 01.04.2018. The petitioners challenged Ext.P4 order filing WP(C) No.26868/2023 and this Court passed Ext.P5 interim order staying the operation and Implementation of Ext.P6 (Ext.P4 herein) for a period of one month. Thereafter, the interim order is extended for four months as per Ext.P6 order. Exts.P5 and P6 are intimated to the 2[nd] respondent by a covering letter. 3. The petitioners state that this Court as per Ext.P7 judgment, directed respondents 1 and 2 to consider the application for fresh licence within one month from the date of receipt of a copy of the judgment. Since no orders are passed even after getting extension of time, the petitioners filed Contempt Case No.2299/2023. During the pendency of the contempt case, the 1[st] respondent passed Ext.P8 recommending the 2[nd] respondent to reject the application on the ground that W.P.(C) No.279 of 2024 : 5 : ₹23 lakhs imposed as per Ext.P4 is a liability and the licence cannot be granted. 4. Following this, the 2[nd] respondent passed Ext.P9 order rejecting the application. Exts.P8 and P9 are unsustainable because by Ext. P5, this Court has stayed the operation and implementation of Ext.P4. As per 'Note' in Rule 19 of the Foreign Liquor Rules, FL-11 licences are not included and the hotels conducting FL-3 licences/bar licences alone are included. Hence, the petitioners have filed this writ petition to quash Exts.P8 and P9 and for consequential directions. 5. Government Pleader entered appearance on behalf of the respondents and resisted the writ petition. The Government Pleader pointed out that the petitioners had earlier approached this Court filing W.P.(C) No.25276/2023 and this Court passed Ext.P7 judgment, wherein without expressing any opinion on merits, this Court directed respondents 1 and 2 to consider and pass orders on the application of the petitioners for fresh licence. The application was accordingly considered. A legal opinion was sought for in the matter. The respondents have received a legal opinion that this Court has not cancelled W.P.(C) No.279 of 2024 : 6 : or set aside the demand for 23 lakhs for regualrisation of the₹ reconstitution of the company of the petitioners. The mere grant of an interim order will not wipe out the order of the respondents. 6. The respondents also stated that in _**Shree Chamundi Mopeds Ltd v. Church Of South India Trust Association** [AIR 1992 SC 1439],_ the Hon'ble Apex Court has held that the order staying operation of an order only means that order which has been stayed would not be operative from the date of passing of the stay order and it does not mean that the said order has not been wiped out from existence. 7. In view of the said observation of the Hon'ble Apex Court, the order of the respondents demanding 23 lakhs for₹ regualrisation of the reconstitution of the company is justified. The petitioners can only be treated as defaulters in the matter. The writ petition is therefore liable to be rejected, contented the Government Pleader. 8. I have heard the learned Counsel appearing for the petitioners and the learned Government Pleader representing the respondents. W.P.(C) No.279 of 2024 : 7 : 9. It is evident from the pleadings that the demand of ₹23 lakhs was subjected to challenge by the petitioners in W.P. (C) No.26868/2023. In the said writ petition this Court passed an interim order, staying the operation and implementation of Ext.P6 proceedings therein (Ext.P4 herein). The said interim order dated 16.08.2023 was extended from time to time and it is still current. 10. As this Court has stayed the operation of the proceedings whereunder the petitioners have been demanded to pay 23 lakhs, the respondents will not be justified in treating₹ the petitioners as defaulters. Such stand would defeat the very purpose of the interim order passed by this Court. 11. Furthermore, this Court has been apprised that the very legality of the orders levying such fees on reconstitution of companies, is now pending consideration before the Hon'ble Apex Court in Special Leave Petition No.17238/2021. 12. In view of all the afore facts, I am of the view that the petitioners’ Ext.P3 application should be reconsidered, treating the petitioners as not defaulters, in view of the interim order dated 16.08.2023 in W.P.(C) No.26868/2023. W.P.(C) No.279 of 2024 : 8 : The writ petition is therefore disposed of directing respondents 1 and 2 to reconsider Ext.P3 application submitted by the petitioners in the light of the interim order dated 16.08.2023 passed in W.P.(C) No.26868/2023 and take appropriate decision thereon within a period of one month. Sd/- **N. NAGARESH JUDGE** AMR W.P.(C) No.279 of 2024 : 9 : ## **`APPENDIX OF WP(C) 279/2024`** ## **`PETITIONERS’ EXHIBITS`** ``` Exhibit P1 ``` ``` TRUE PHOTOCOPY OF THE FL-11 LICENSE ORIGINALLY ISSUED ON 10.07.2014 BY THE EXCISE COMMISSIONER. ``` ``` Exhibit P2 ``` ``` TRUEPHOTOCOPYOFTHELATEST RECLASSIFICATIONCERTIFICATEDATED 10.03.2021 ISSUED BY THE DIRECTOR, DEPARTMENT OF TOURISM. ``` ``` Exhibit P3TRUE PHOTOCOPY OF THE APPLICATION ACKNOWLEDGMENT DATED 03.05.2023 ISSUED BY THE DEPUTY COMMISSIONER OF EXCISE, KOTTAYAM. ``` ``` Exhibit P4TRUEPHOTOCOPYOFTHEORDER NO.EXC/3137/2023-XC7 OF THE EXCISE COMMISSIONER DATED 01.08.2023. ``` - **`Exhibit P5 TRUE PHOTOCOPY OF THE INTERIM ORDER DATED 16.08.2023 IN WP(C) NO.26868/2023.`** - **`Exhibit P6`** - **`TRUE PHOTOCOPY OF THE ORDER DATED 15.09.2023 IN WP(C)NO. 26868/2023.`** - **`Exhibit P7`** ``` TRUE PHOTOCOPY OF THE JUDGMENT DATED 09.08.2023 IN WP(C)NO. 25276/2023. ``` - **`Exhibit P8 TRUE PHOTOCOPY OF THE ORDER, GO(MS)NO. 830/2023/TAXES DATED 30.11.2023 PASSED BY THE 1ST RESPONDENT.`** ``` Exhibit P9TRUEPHOTOCOPYOFTHEORDER NO.EXC/3535/2023-XC7OFTHE2ND RESPONDENT DATED 11.12.2023. ```