Trichur Tourist Complex Private Limited Vs Excise Commissioner (Kerala High Court)
The Kerala High Court decided two writ petitions challenging fines and fees imposed under the Abkari Act, 1077 and Foreign Liquor Rules, 1953.
In W.P.(C) No.16156 of 2022, the petitioner company operated under an FL-3 licence until 31.03.2014. The authorities found that its Board of Directors had been reconstituted without prior permission and imposed a conditional licence requirement of ₹26.5 lakh under Section 67(2) of the Act. The Court held that, in the absence of an actual change of ownership, Section 67 was not attracted. It relied on United Breweries Limited v. State of Kerala & Ors. [2024 (7) KHC 593], which had also been confirmed by the Division Bench. The Court allowed the petition, set aside the Section 67(2) demand concerning the reconstitution and directed refund of any excess payment within three months.
In W.P.(C) No.19829 of 2023, a partnership firm had undergone six reconstitutions without prior sanction, which it stated were family arrangements without change of ownership. An order demanded ₹63 lakh under various provisions. The Court set aside the Section 67(2) fines because there was no actual change of ownership.
The Court also considered a ₹20 lakh fee under Rule 19(iv). Since the relevant proviso to Rule 19(iv) had been deleted with effect from 01.04.2018, the Court held that the fee could not be demanded when the regularisation order was issued on 02.06.2023. Relying on KSR Alankar Hotels and Resort Pvt. Ltd. v. State of Kerala [2024 (4) KLT 47], it held that the law existing when the regularisation application was considered applied.
Further, the ₹2 lakh fee under Rule 19(iv) for replacing the partner representing the licence was set aside because the licence remained with the partnership firm and the change did not constitute a transfer of licence. Excess payments were directed to be refunded within three months. The writ petitions were disposed of accordingly.
Cases Discussed
- United Breweries Limited v. State of Kerala & Ors. (Kerala High Court), [2024 (7) KHC 593]
- KSR Alankar Hotels and Resort Pvt. Ltd. v. State of Kerala (Kerala High Court), [2024 (4) KLT 47]
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Heard Sri. M.G.Karthikeyan, the learned counsel for the petitioner as well as Sri. Balaprasannan, the learned Government Pleader for the respondents.
2. These two writ petitions have been presented, seeking to challenge the imposition of fine/fee with reference to the provisions of the Abkari Act, 1077 (for short, the ‘Act’).
3. In W.P.(C) No.16156 of 2022, the petitioner, a company, had been operating on the basis of an FL-3 licence till 31.03.2014, represented by the 2nd respondent herein. The respondents found that there was reconstitution of the Board of Directors without obtaining permission from the statutory authorities. On that basis, Ext.P1 is issued by the 1st respondent, granting a licence to the petitioner conditionally on satisfying Rs.26.5 lakhs. It is seeking to challenge the afore, the captioned writ petition has been presented. The question arising for consideration is as to whether the reconstitution effected as noticed by the respondents could be a reason for demanding fine as above. It has been decided by this Court in United Breweries Limited v. State of Kerala & Ors. [2024 (7) KHC 593] that, without there being an actual change of ownership, the provisions of Section 67 of the Act are not attracted. The afore judgment has also been confirmed by the Division Bench of this Court in W.A. No.285 of 2025 and connected cases.
4. In the light of the afore, I am of the opinion that the petitioner in W.P.(C) No.16156 of 2022 is entitled to succeed. Therefore, this writ petition would stand allowed, setting aside Ext.P1, to the extent the provisions of Section 67(2) of the Act are invoked against the petitioner with respect to the reconstitution noted as above. Any excess payment collected from the petitioner should be refunded to the petitioner, as expeditiously as possible, in any event, within three months from the date of receipt of a certified copy of this judgment.
5. As regards W.P.(C) No.19829 of 2023, the petitioner is a partnership firm. As many as six reconstitutions in the partnership were carried out without prior sanction from the Excise Commissioner. The petitioner states that there are no change of ownership and the reconstitutions were purely a family arrangement. The petitioner sought for regularization of the reconstitutions as above. By Ext.P15 order, the petitioner is directed to pay Rs.63,00,000/- as under:
i. Rs. 1,00,000/- each under Rule 19(iii) of the Foreign Liquor Rules, 1953 (for short, the Rules) for each of the five reconstitutions and Rs.3,00,000/- each from two licensees under Section 67(2) of the Act representing fine for each of the five reconstitutions.
ii. For inclusion of T.P.Jinidev as a partner, an amount of Rs.20,00,000/- as fees under Rule 19(iv) of the Rules along with fine of Rs.3,00,000/- each from two licensees under Section 67(2) of the Act (total Rs.26,00,000/-).
iii. Fees of Rs.2,00,000/- for including Jinidev as licensee as against T.P.Vasudevan under Rule 19(iv) of the Rules.
As regards the imposition of fine under Section 67(2) of the Act, since as noticed earlier, there is no actual change of ownership, provisions of Section 67 of the Act are not attracted, with reference to the judgment of this Court in United Breweries (supra). Therefore, the said imposition is set aside.
6. As regards the imposition of Rs.20,00,000/- as fees under Rule 19(iv) of the Rules, the petitioner has specifically contended that the afore Rule was deleted with effect from 01.04.2018 and hence when Ext.P15 was issued on 02.06.2023, fees under Rule 19(iv) could not have been demanded. This issue has been considered by a learned Single Judge of this Court in KSR Alankar Hotels and Resort Pvt. Ltd. v. State of Kerala [2024 (4) KLT 47], holding that in view of the deletion of proviso to Rule 19(iv) with effect from 01.04.2018, subsequently the said fee cannot be demanded. It is held by this Court that it is the law that existed on the date of consideration on the regularization prayer that is required to be considered. This Court also found that the fee “as per the law existing on the date of sanction is applicable” and not the fee as on the date of reconstitution. Thus, the liability is only to pay the fee under Rule 19(iii).
7. In the light of the above, I am of the opinion that when Ext.P15 was issued on 02.06.2023, there was no justification for demand of the fee under deleted proviso to Rule 19(iv) of the Rules.
8. Furthermore, a fee of Rs.2,00,000/- under Rule 19(iv) of the Rules for deletion of name of the one person as representing the licensee is imposed. This Court notices that the licensee is the partnership firm. There is no change with respect to the licence. The petitioner only wanted to omit the name of one of the partners as the partner representing the licence and to include the name of another partner. This can also not to be termed as a transferor of licence as has been decided in a catena of decisions of this Court including the judgment in United Breweries (supra). Therefore, the demand of the afore fees under Rule 19(iv) would also stand set aside. Any excess payment collected from the petitioner should be refunded to the petitioner, as expeditiously as possible, in any event, within three months from the date of receipt of a certified copy of this judgment.
These writ petitions would stand disposed of as above.
