Writ Petition No.4308 of 2001

23rd October, 2001

Petitioner Counsel: Shri. S. T. SHELKE, Mr. A. Y. PANDULE
Respondent Counsel: Shri. M. L. DHARASHIVE, Mrs. A. S. RASAL

Cases Cited:
Ramesh s/o Shrikrishna Dhore Vs. The Commissioner of State Excise, 1997(1) ALL MR 272 [Para 4]
Shamlal Jaglal Jaiswal Vs. The State of Maharashtra, 1997(3) ALL MR 481 [Para 4]
Uttam s/o Shamlal Jaiswal Vs. State of Maharashtra, 1998 (1) Mh.L.J.333 [Para 4]
State of Maharashtra Vs. Shri. Majeetsingh Bachher, Appeal No.1147 of 1991 in Writ Petition No.2916/91 [Para 7]

JUDGMENT

JUDGMENT :- Heard the learned Counsel for the parties.

Rule, made returnable forthwith and heard finally by consent of the learned Counsel for the parties.

2. This writ petition is filed by the petitioner Prabhakar Wable being aggrieved by order dated 30.06.2001 passed by the State Minister, Excise & Drugs Department, in the revision application filed by the Respondent No.5 herein i.e. Vithal Phadke.

In the impugned order, the Minister of State, Excise & Drugs Department observed that there was a partnership dispute between the petitioner and Respondent No.5 and the liquor license could not be kept in suspended position till the said dispute was resolved, inasmuch as, it was causing loss to the State Revenue and, therefore, till the time the Court of Law resolved the said dispute between the petitioner and the Respondent No.5, who was the petitioner before the Minister, the said liquor license be grated in favour Respondent No.5.

3. Factual matrix of the matter can be stated as follows :

Petitioner Prabhakar Wable was granted FL - II license to sell foreign liquor by the Respondent No.4 herein i.e. the Collector, State Excise, Ahmednagar. This was on 31.12.1973. Thereafter on 21.11.1984, the petitioner, who was the original license holder, entered into partnership agreement with Respondent No.5 and it was decided amongst themselves that they would carry on the business of selling foreign liquor. Accordingly partnership agreement came to be executed. Thereafter in the year 1992, Respondent No.4 granted CL - III license in favour of the petitioner for retail sale of country liquor in sealed bottles subject to the provisions of Bombay Prohibition Act, 1949 and Maharashtra Country Liquor Rules, 1973. On 28.05.1992, partnership agreement was entered into between the petitioner and the Respondent No.5 to carry on business of selling foreign liquor and country liquor. The partnership was at will. Thereafter disputes arose between the petitioner and Respondent No.5. Therefore, the petitioner issued legal notice to Respondent No.5 terminating the partnership agreement. A publication was also made in the local news paper declaring that no one should enter into or deal with Respondent No.5 with regard to the business of the partnership firm.

The Collector, State Excise, Ahmednagar Respondent No.4, called upon the petitioner and the Respondent No.5 to settle their disputes. However, the disputes could not be settled. Therefore, the Collector - Respondent No.4 passed order of suspension of FL - II and CL - III licenses until the disputes between the petitioner and Respondent No.4 were resolved. Respondent No.4 further directed on 11.09.2000 that the petitioner and Respondent No.5 shall not carry on the partnership business on the basis of FL - II license and CL - III license. Respondent No.5 preferred Appeal bearing No.141/2000 under Section 137(2) of the Bombay Prohibition Act, 1949 (hereinafter called as "the Act" for the sake of brevity) before the Respondent No.3 the Commissioner, State Excise, Mumbai, challenging the order dated 27.03.2000 passed by the Respondent No.4.

The petitioner appeared before the Respondent No.3 and pointed out that he was the original licensee and that on the dissolution of the partnership agreement, the authorities were bound to renew the license in his favour, he being the original grantee, by deleting the name of the other partner from the license. The Respondent No.3, however, did not consider the submissions of the petitioner favourable and upheld the view taken by the Collector - Respondent No.4 to the effect that till the dispute between the petitioner and Respondent No.5 was not decided by the Civil Court, it would not be appropriate to renew the license and allow any one of them to carry on the business of selling liquor. Thereafter Respondent No.5 preferred revision before the State Government in September 2000 and State Minister for Excise & Drugs Department, heard both the parties and ultimately decided the revision by his impugned order dated 30.06.2001. It is this order which is impugned by the petitioner in the present writ petition, whereby the order passed by the State Minister permitting the Respondent No.5 to carry on business of partnership firm till dispute regarding partnership was finally decided by the Civil Court, has been challenged.

4. Mr. Shelke, advocate appearing for the petitioner, vehemently submitted that since the petitioner was the original grantee of the license, the name of subsequent partner had to be deleted after the partnership, which was at will, came to be dissolved. To substantiate his argument, he relied upon three decisions of this Court viz. (1) in the case of Ramesh s/o Shrikrishna Dhore & Others Vs. The Commissioner of State Excise & others, reported in 1997 (1) ALL MR 272, (2) in the case of Shamlal Jaglal Jaiswal Vs. The State of Maharashtra & Others, reported in 1997 (3) ALL MR 481, and (3) in the case of Uttam s/o Shamlal Jaiswal Vs. State of Maharashtra & others, reported in 1998 (1) Mh.L.J.333.

In 1997 (1) ALL MR 272, which was also a case under the Maharashtra Country Liquor Rules, 1973, a license for running retail country liquor shop was granted in the name of one individual, who subsequently entered into partnership with two other persons. The Collector granted permission to include their names in the license and accordingly their names were entered in the license. After some years, the original grantee dissolved the partnership and applied for renewal of license in his name alone. The Collector gave notice to the remaining two partners, who however, remained absent. The license was renewed in the name of the original grantee and the names of other two partners were deleted. When the other partners challenged the order of the Collector, deleting their names from the license, it was held that the deletion of the names of those partners was valid. It was observed that the partnership did not exist on the date when the license was granted to the original grantee, that the license of the original grantee had not been acknowledged as the property of the partnership firm and that the whole partnership deed was absolutely silent in respect of the said license and in fact there was an admission that the license stood in the name of the original grantee. It was held that since the license was in the name of the original grantee, there was nothing wrong if the Collector, as per the policy of the State Government, had allowed the deletion of the names of the partners, who were introduced later on. It was further held that the license was never treated to be a property of the partnership firm and secondly even if it had been so included the inter se right between the partners would not be in a position to create any embargo on the State's power regarding the renewal of the license.

The second decision of this Court relied upon by Mr. Shelke, advocate for the petitioner, is 1997 (3) ALL MR 481 (supra). In this case, the petitioner was issued license in Form FL - II for sale of foreign liquor. The petitioner with a view to have financial assistance as also the assistance in work took respondent as a partner and partnership deed was drawn. Application was filed by the petitioner for entering name of the Respondent in the license, which was refused by the authority. The Respondent died and names of his legal representatives were brought on record. In appeal, the names of the legal representatives were allowed to be entered. This was subject to the condition that the petitioner was to remain a major beneficiary and that the incoming partner was to have no claim to the license in the event of death or retirement of the petitioner. There was also an additional condition in the partnership firm that it was a partnership at will. Thereafter differences arose between the parties and petitioner issued notice of dissolution of partnership. The petitioner also applied for deletion of names of the respondents from the license, which was allowed. The respondent challenged the imposition of conditions in license which were imposed in view of the Government Circular in that regard. The revisional authority directed restoration of names of legal representatives of respondent in the license. This was challenged by the petitioner in the High Court and it was held that the partnership had been validly dissolved and the order of revisional authority passed was on extraneous grounds and had to be quashed. Observing this, writ petition filed by the petitioner came to be allowed.

The facts of the third case relied upon by Mr. Shelke, advocate for the petitioner, (1998(1) Mh.L.J.333 (supra) are identical. Here also, there was grant of country liquor license in the name of the petitioner, who subsequently entered into partnership agreement with another person which was a partnership at will; Differences and disputes arose between the partners and the partnership came to be dissolved. Consequently, the Excise authorities deleted the names of the partners from the license. In the revision, the Secretary to Government, Home Department, set aside the order of the Excise authorities for deletion of name of partner. In the High Court, when the order came to be challenged by the petitioner, it was observed that no justifiable reasons were given by the Secretary and that his order was based on extraneous considerations. Observing this, the writ petition came to be allowed.

5. The ratio laid down in all the aforementioned three decisions of this Court is applicable to the facts of the present case. The petitioner Prabhakar Wable is in fact and admittedly the original grantee of the license; admittedly he entered into partnership with Respondent No.5; admittedly the partnership was at will; admittedly disputes arose leading to the dissolution of the partnership firm. Under these circumstances, the order of the Minister for State that so long as the disputes between the parties were not resolved by the Civil Court, the license will have to be granted in favour of Respondent No.5, whose name was subsequently entered into the license, is an erroneous order.

6. It is submitted by Mrs. Rasal, advocate for the Respondent No.5 that it was the Respondent No.5, who had taken steps and took efforts to revalidate the said license taking advantage of the Government's newly introduced scheme for revalidation of the license and invested his own money, etc. All these averments might be true, however, there is also an admission of fact that the original license stood in the name of the petitioner alone in the year 1972-73 and that the name of Respondent No.5 was subsequently added on the license as a partner, whereafter the business was commenced on 12.02.1985. The decisions cited by Mr. Shelke, advocate for the petitioner and the ratio laid down therein is a complete answer to the averments made by Respondent No.5 in his affidavit in reply.

7. Mr. Shelke, advocate for the petitioner, also relied upon unreported Division Bench judgment of this Court dated 06.01.1991 in Appeal No.1147 of 1991 in Writ Petition No.2916/91, in the case of the State of Maharashtra & others Vs. Shri. Majeetsingh Bachher, (Coram : M. L. Pendse & S. H. Kapadia, JJ.). In this case, the facts were as follows :

One C. D. Patel was granted license in form FL - II for sale of Indian made Foreign Liquor under Rule 35 of Bombay Foreign Liquor Rules, 1953. Said C. D. Patel entered into an agreement of partnership dated 10.02.1986 with the original petitioner Majeetsingh Bachher. This agreement was submitted to the Collector, Bombay for his approval and necessary endorsement on the vendor's license. The Collector, by his order dated 11.07.1986, permitted the petitioner to carry on business in partnership with Patel and accordingly necessary endorsement was made on the license. One of the conditions in the license provided that in case of death of C. D. Patel, the partner for carrying on business, shall have no right in the license granted by the Collector. Thereafter Patel died on 03.03.1989, however, the petitioner Majeetsingh Bachher failed to inform this fact to the Collector and continued to run the business under the partnership name without renewing the license. Subsequently, said Majeetsingh filed application for renewal which was turned down by the Collector by relying upon the condition in the license, which condition was given a statutory recognition by amendment of Rules on 02.12.1989. The petitioner Majeetsingh filed an appeal against the order of the Collector and during pendency of the appeal filed Writ Petition No.2916 of 1991 before the learned Single Judge of this Court. The learned Single Judge, by his impugned order dated 04.10.1991, granted interim relief in terms of prayer clause (b) while admitting the said writ petition. Prayer Clause (b) directed the Collector to remove seal on the licensed premises and permitted the petitioner Majeetsingh to continue the business under the vendor's license granted in favour of Patel. Being aggrieved by the order of granting interim relief, the appeal came to be filed before the Division Bench of this Court and the Division Bench, while quoting condition No.4A, held that the learned Single Judge was in error in granting the interim relief and allowed the appeal and the order of the Single Judge was set aside. Condition No.4A can be reproduced as below:

"4A. Any person recognised as a partner by the licensee for the purpose of his license, admitted under Rule 4, as such partner, shall cease to be a partner as soon as the licensee ceases to have any interest in the license, for any purpose whatsoever."

On facts, it was held in the aforementioned decision that even the original license granted to Mr. Patel clearly provided that in case of death of the licensee, any partner, who had been admitted for carrying on business of sale of liquor, shall have no interest in the license. Observing this, the order of the learned Single Judge came to be set aside and the appeal was allowed.

8. In the present case at hand also, there is nothing on record to show that the said license was the property of the partnership firm or that any arrangement was made at the time of entering into the partnership as to what would happen in case of retirement or death of any of the partner. In the absence of all this, it has to be held, in keeping with the ratio of the decisions cited above, that the petitioner, who was the original grantee of the license, should have been permitted to carry on business and the license should have been in his name only. It was unfair and erroneous on the part of the State Minister for Excise & Drugs Department to observe that just because civil dispute, which would ultimately resolve the dispute between the parties, would take a long time, the respondent no.5, whose name was subsequently added in the license as a partner of the firm, which was dissolved by the petitioner and who was not the original grantee of the license, should be allowed to run the liquor business.

9. In view of the above discussion, the impugned order dated 30.06.2001 passed by the Minister of State, Excise & Drugs Department, will have to be set aside and the petition will have to be allowed.

10. Hence the following order.

Petition is allowed in terms of prayer clause (B). Rule is made absolute accordingly in aforesaid terms. No order as to costs.

Petition allowed.