Trichur Tourist Complex (P) Ltd. v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **MONDAY, THE 14TH DAY OF AUGUST 2017/23RD SRAVANA, 1939** **WP(C).No. 20312 of 2012 (L) ----------------------------** ## **PETITIONER(S):** **-------------** **TRICHUR TOURIST COMPLEX (P) LTD. KOTTIWALAPPIL, M.G.ROAD, THRISSUR-1, REPRESENTED BY ITS MANAGING DIRECTOR, A.V. SAHADEVAN, AGED 73 YEARS, S/O VASUDEVAN (LATE).** **BY ADVS.SRI.M.G.KARTHIKEYAN SRI.NIREESH MATHEW** ## **RESPONDENT(S):** **--------------** **1. STATE OF KERALA, REPRESENTED BY SECRETARY, TAXES (A) DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM-695001.** **2. THE EXCISE COMMISSIONER, COMMISSIONERATE OF EXCISE, THIRUVANANTHAPURAM-695001.** **3. THE DEPUTY COMMISSIONER OF EXCISE, THRISSUR-680001.** **4. THE CIRCLE INSPECTOR OF EXCISE, THRISSUR-680001.** **BY GOVERNMENT PLEADER SMT. MABLE C. KURIAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02.08.2017, THE COURT ON 14.08.2017 DELIVERED THE FOLLOWING:** **EL** ## **WP(C).No. 20312 of 2012 (L)** ## **----------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** - **-----------------------** - **EXT.P1 PHOTOCOPY OF THE FL-3 LICENSE, (FL-3-TSR59/2012-13)RENEWED TILL 31/3/2013.** - **EXT.P2 PHOTOCOPY OF THE STAR CLASSIFICATION ORDER DATED 28/6/2011 ISSUED BY THE REGIONAL DIRECTOR, INDIATOURISM, CHENNAI.** - **EXT.P3 PHOTOCOPY OF THE RESOLUTION DATED 1/5/2012 TAKEN BY THE DIRECTORS OF THE IST PETITIONER COMPANY.** - **EXT.P4 PHOTOCOPY OF THE APPLICATION DATED 1/5/2012 SUBMITTED BEFORE THE 2ND RESPONDENT.** - **EXT.P5 PHOTOCOPY OF THE ORDER DATED 1/6/2012 IN WPC.11981/2012 PASSED BY THIS HON'BLE COURT.** - **EXT.P6 PHOTOCOPY OF THE ORDER NO.XC6-13840/12 DATED 25/7/2012 PASSED BY THE 2ND RESPONDENT.** - **EXT.P7 PHOTOCOPY OF THE ORDER DATED 23/3/2010 IN WPC.9647/2010 PASSED BY THIS HON'BLE COURT.** ## **RESPONDENT(S)' EXHIBITS** ## **-----------------------** ## **NIL** ## **TRUE COPY** **P.S. TO JUDGE** **EL** ## **SHAJI P. CHALY, J.** ----------------------------------------------- ## **W.P.(C) No.20312 of 2012 ----------------------------------------------Dated this the 14[th] day of August, 2017** ## **J U D G M E N T** This writ petition is filed by a company registered under the Indian Companies Act, 1956 seeking to quash Ext.P6 to the extent it imposes fee/ fine of Rs.4,75,000/under rules 19(iii) and 19(v) of the Foreign Liquor Rules, 1953, hereinafter called “the Rules, 1953”, and section 67(2) of the Abkari Act, hereinafter called “the Act”, respectively and for other consequential reliefs. 2. Material facts for the disposal of the writ petition are as follows; petitioner company is holding Ext.P1 FL-3 licence from 2.4.1986 represented by its then Managing Director late Sri.A.V.Bhaskaran till 1.5.2012. There were 10 Board of Directors including late A.V.Bhaskaran. Consequent to the death of A.V.Bhaskaran, 4[th] respondent closed the bar. All the remaining Directors passed Ext.P3 resolution appointing Sri. A.V.Sahadevan as the Managing Director and nominated one P.K.Sivasankaran, one among W.P.(C) No.20312 of 2012 2 the Directors to represent Ext.P1 licence for and on behalf of the petitioner company. It was also resolved that, all the shares held by late A.V.Bhaskaran shall be transferred to the name of his wife. Accordingly Ext.P4 application was filed seeking to re-constitute the Board of Directors by incorporating A.V.Sahadevan as the Managing Director and to transfer the FL-3 licence in the name of Sri.P.K.Sivasankaran. No decision was taken on Ext.P4 application. Thereupon, petitioner filed W.P.(C) No.11981/2012 before this court and secured Ext.P5 judgment, directing 2[nd] respondent to pass orders on Ext.P4 within four weeks and in the meanwhile petitioner company is permitted to run the bar and continue the business by the Managing Director and P.K.Sivasankaran, who were 2[nd] and 3[rd] respondents in the said writ petition. 3. Thereupon, 2[nd] respondent passed Ext.P6 order permitting the company to be represented in Ext.P1 licence by P.K.Sivasankaran, however, imposed Rs.4,75,000/- towards the fee under rule 19(iii) and (v) of Rules, 1953 at the rate of Rs.50,000/- and Rs.2,00,000/- W.P.(C) No.20312 of 2012 3 each for re-constitution on death of Director and change of licensee respectively and fine under section 67(2) of the Act, amounting to Rs.25,000/-. 4. According to the petitioner, as per rule 19 of the Rules, 1953, if there is any change of name of licensee, Rs.2,00,000/- can be imposed under clause (v) thereunder. Similarly if there is re-constitution of the partnership firm or Board of Directors, then Rs.50,000/can be imposed, as per clause (iii) of rule 19 of the Rules as it stood then. It is the contention of the petitioner that, petitioner company has not inducted any legal heirs of the deceased directors, hence there is no re-constitution of the Board of Directors. Rule 19(v) of Rules, 1953 is introduced to hotels having two star classification, which was prohibited as per rule 19 amended w.e.f.1.4.2007 till the introduction of rule 19(v) on 10.8.2010. According to the petitioner, a Division Bench of this court in **State of Kerala & others v. Panamoottil Investments & others** [2010(1) KHC 353(DB)] considered the scope of rule 19 and held that, when the licence is issued in the W.P.(C) No.20312 of 2012 4 name of a firm/company/society/corporation etc. the death of a person representing the licensee and the change of the name of the personnel to represent the licence will not amount to change of name of licensee. Therefore, according to the petitioner, Ext.P6 order passed by the 2[nd] respondent is illegal and therefore, liable to be interfered with by this court. 5. Third respondent has filed a statement and 1[st] respondent has filed a counter affidavit basically contending that, Sri. A.V.Bhaskaran was the Managing Director and licensee, Sri.M.V.Satheesan was the Chairman of the company. The license was renewed upto 31.3.2013 accordingly. It is further submitted that, out of 11 Directors of the company, Sri.T.Gopinathan died on 17.1.2011. But the matter was not disclosed by the company till 1.5.2012. Hiding the said fact, licensee renewed the licence for the year 2011-2012. The licensee was bound to report the matter to the Excise Department and Director Board of the company ought to have reconstituted and get approved by the 2[nd] respondent W.P.(C) No.20312 of 2012 5 immediately on the death of one of its members. That apart it is stated that, the application dated 1.5.2012 was submitted by P.K.Sivasankaran to the 2[nd] respondent through the 4[th] respondent requesting to grant sanction for the changes done in the Director Board of the company and to change the name of FL-3 licence from the name of late A.V.Bhaskaran to the name of P.K.Sivasankaran. In his application, he expressed his willingness to pay the fees for the changes. In the statement recorded by the 4[th] respondent on 6.5.2012 , P.K.Sivasankaran stated that, the death of Sri.T.Gopinathan was not intimated to the Excise Department by the then Managing Director, A.V.Bhaskaran. During the period of processing the application for the transfer of licence in the name of P.K.Sivasankaran from the name of deceased A.V.Bhaskaran, Smt.Sasikala, wife of A.V.Bhaskaran filed W.P.(C) No.11424/2012 against the issuance of FL-3 licence in the name of P.K.Sivasankaran. Later, the petitioner company represented by A.V.Sahadevan and W.P.(C) No.20312 of 2012 6 another filed W.P.(C) No.11981/2012 with a plea for issuing FL-3 licence in the name of P.K.Sivasankaran. W.P.(C) No.11424/2012 was dismissed as not pressed. However, in W.P.(C) No.11981/2012, petitioner was permitted to run the bar hotel until a decision is taken on Ext.P4 application by realizing a fee of Rs.2,00,000/under rule 19(v) of Foreign Liquor Rules and fine of Rs.25,000/- under rule 67(2) of the Abkari Act. It was thereupon a chalan of Rs.4,75,000/- has issued to the petitioner. Therefore, according to the respondents, Ext.P6 order passed by the 2[nd] respondent is in order and no manner of interference is warranted to the same. 6. Heard learned counsel for the petitioner, learned Senior Government Pleader and perused the pleadings and the documents on record. 7. Learned counsel for petitioner formidably contended that, since the petitioner is a company, mere change of Board of Directors of the company or change of the name of the licensee is not contemplated under rule 19 since the licensee was holding the licence for and on W.P.(C) No.20312 of 2012 7 behalf of petitioner company. So also merely because the Board of Directors or the Managing Director was changed, there is no manner of alteration to the constitution of the company. Learned counsel has also relied on the judgment of this court referred to supra in **Panamoottil Investments** . However, in my considered opinion, the proposition of law laid down in **Panamoottil Investments** has no bearing to the facts and circumstances of this case since the issue involved in **Panamoottil Investments** was induction of a partner as the Joint Managing Partner of the partnership firm. So also learned counsel invited my attention to the judgment of this court in **George Joseph v. Commissioner of Excise** [2015(4) KLT SN 135 (C.No.62), therein also the issue was in respect of induction of one more partner as the Managing Partner representing the firm. 8. On the other hand, learned Senior Government Pleader submitted that, situation on hand is one contemplated under rule 19 of Rules, 1953. It is clear from the facts and circumstances of the case that, W.P.(C) No.20312 of 2012 8 Managing Director and one of the Directors died and the Director Board was re-constituted, the name of the licensee was changed in the name of P.K.Sivasankaran. The said situations are comprehended under rule 19. Therefore, according to the learned Government Pleader, Ext.P6 order is passed by the 2[nd] respondent in accordance with law. 9. Having evaluated the rival submissions made across the Bar and reckoning the law involved in the subject matter, I am of the considered opinion that, in the facts and circumstances involved in this writ petition, there was change of Board of Directors consequent to the death of a Managing Partner and one more Director, and the circumstances show that, the same was not intimated to the Excise Department. Therefore, section 67(2) of the Act will come into play and the petitioner is liable to pay the fine amount contemplated thereunder especially due to the fact that, section 67(3) prohibits re-constitution without the previous permission of the 2[nd] respondent. Accordingly only a fine of Rs.25,000/- was imposed as the W.P.(C) No.20312 of 2012 9 law stood then. Therefore, in my considered opinion, there are no legal infirmities, arbitrariness or any other illegality justifying interference in Ext.P6 order exercising the power of judicial review under Article 226 of the Constitution of India. Writ petition fails and accordingly it is dismissed. Sd/- **SHAJI P. CHALY JUDGE** smv 09.08.2017