Foreign Liquor Rules; State Vs. Cochin Gymkhana Club [Kerala High Court, 07-06-2016]

Foreign Liquor Rules – Rule 13 (4A) & 19 (iv) – change of name of a licensee – Whether substitution of the names of new functionaries would attract the fee – Held, in the case of an organization like a Club, it has necessarily to be a society which is governed by the provisions of its bylaws which provide for an organisational set up, as also the election of its functionaries and for their terms of office. The changes that are necessitated upon expiry of the term of office of its respective functionaries, cannot be said to amount to a change in the identity of the licensee, attracting the fee that is stipulated by Rule 19(iv) of the Rules.

Change of name of a licensee


IN THE HIGH COURT OF KERALA AT ERNAKULAM

K.SURENDRA MOHAN & P.V.ASHA, JJ.

W.A.Nos.398 &676 of 2016

Dated this the 7th day of April, 2016

AGAINST THE JUDGMENT IN WP(C) 22387/2012 of HIGH COURT OF KERALA DATED 9.10.2015

APPELLANTS/RESPONDENTS 1 TO 4 IN WPC

1. STATE OF KERALA REPRESENTED BY THE SECRETARY, TAXES (A) DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM – 695 001.

2. THE EXCISE COMMISSIONER COMMISSIONERATE OF EXCISE, THIRUVANANTHAPURAM – 695 001.

3. THE DEPUTY COMMISSIONER OF EXCISE ERNAKULAM -682 018.

4. THE CIRCLE INSPECTOR OF EXCISE ERNAKULAM -682 018.

SRI.K.C.VINCENT, SR. GOVERNMENT PLEADER

RESPONDENT/PETITIONER IN WPC

COCHIN GYMKHANA CLUB TOC-H NAGAR, VYTTILA, COCHIN -19

R BY SRI.M.G.KARTHIKEYAN

JUDGMENT

Surendra Mohan, J.

Both these writ appeals challenge separate judgments of the learned single Judge in two writ petitions filed in identical circumstances. Since the question that arises for decision is common, both these appeals are considered together and disposed of by this common judgment.

2. The respondents in both these cases are Clubs. Licenses have been issued to them by the 2 nd respondent under

Rule 13 (4A) of the Foreign Liquor Rules

(hereinafter referred to as “the Rules” for short). The licenses entitle the Clubs to vent liquor to the members of the Clubs, for consumption within their respective premises. In both the cases, requests were made for change of name of the functionaries of the respective Clubs in whose names the licenses had been issued. The change was necessitated by virtue of the change in the functionaries that had taken place at the organisational level of the Clubs. The dispute arose when the 2 nd respondent insisted on payment of the fee that is stipulated by rule 19(iv) of the Rules. According to the respondents in both these appeals, substitution of the names of new functionaries who had taken charge, would not attract the fee that is stipulated by rule 19(iv) of the Rules. Therefore, they challenged the action of the 2 nd respondent in two separate writ petitions. By separate judgments of the same date, the learned single Judge has held in favour of the respondents and quashed the impugned order of the 2 nd respondent. The State is in appeal before us challenging the said judgments, in these writ appeals.

3. We have heard the learned Government Pleader as well as the learned Senior Counsel Sri.C.C.Thomas, who appears for the respondents in both these cases.

4. According to the learned Government Pleader, Rule 19 (iv) stipulates payment of an amount of Rs.2,00,000/- (Rupees Two lakhs only) where change of name of a licensee is permitted. It is pointed out by the learned Government Pleader that, a license obtained under the rules was not liable to be sold, transferred or sub let without the previous sanction of the Excise Commissioner. It was for giving sanction and permitting the change of name that the fee was charged. It is contended that, the Rules do not permit transfer of the license to a person who is convicted of an Abkari offence or to a person who is otherwise disqualified from holding a license. The said conditions apply in the case of the functionary of a Club also. According to the learned Government Pleader, the license issued to a Club is under sub rule (4A) of Rule 13 of the Rules. The license has to be issued in the form that is prescribed by the Rules. As per the form, the license is to be issued in the name of the functionary of the Club, who is authorised to represent the same. Since there has been a change in the identity of the said person, for incorporating such change in the license, the fee under Rule 19 (iv) is necessary to be paid. It is in view of the said mandate that, insistence on remitting the said fee has been stipulated by the 2 nd respondent, Excise Commissioner. The learned Government Pleader therefore contends that, the learned Single Judge went wrong in setting aside the order of the Excise Commissioner.

5. Per contra, the learned Senior Counsel Sri.C.C.Thomas, contends that rule 19(iv) contemplates a situation where a change of name of the licensee is sought for. In the present case, there is no change in the identity of the licensee. Since the license under rule 13(4A) could be issued only to a Club that satisfies the requirements stipulated thereunder, the identity of the licensee continues to remain unchanged. Since the licensee is an organization that is inanimate, it has to be represented by a responsible functionary thereof. The applications in the present case were submitted only to change the names of the functionaries who were competent to represent the Clubs. Since change of the names of the functionaries does not result in a change in the identity of the licensee, it is contended that Rule 19 (iv) has no application to the facts of these cases. It is further pointed out that, a Division Bench of this Court has considered the said issue in the context of a change of name that was sought for with respect to a partnership firm and it has been held that the said provision does not have any application. The dictum in the said case, according to the learned Senior Counsel has been followed by another Division Bench in an unreported judgment dated 19.10.2015 in W.A.No.2272 of 2015 to which one of us (K.Surendramohan, J) was also a party. Therefore, it is contended that, there are no grounds to interfere with the judgments appealed against.

6. Heard. Rule 13(4A) reads as under:

4(A): Foreign Liquor 4A club licence: Licence in this form may be issued to the existing Clubs on payment of an annual rental of Rs.15,00,000/- (Rupees Fifteen lakhs only). Provided they satisfy the following conditions namely:-

i. The Club should have completed 10 years of existence.

ii. It should be registered as a Society.

iii. There should be not less than 100 permanent members.

iv. The land and buildings should be in the name of the Society.

v. There should be at least 5 rooms that can be let out on rent.

vi. There should be facilities for at least two outdoor games such as Tennis, Volley Ball, Ball Badminton etc.

vii. There should be indoor facilities for Shuttle cock and at least two tables for playing Table Tennis/Billiards.

viii.There should be catering facilities.

ix. Food or liquor should be served to guests only when they are accompanied by the members of the Club.

x. The Club should have affiliation with at least five Clubs either inside or outside the State.

xi. xxxxxx

7. A perusal of the above provision shows that, licenses are permitted to be issued to “existing Clubs” on payment of an annual rental of Rs.15,00,000/- (Rupees Fifteen lakhs only). Provided they satisfy the conditions stipulated by the Rule. A perusal of the conditions show that, all the conditions stipulated relate to the Club. In other words, the conditions stipulate that the Club should have completed 10 years of existence, it should be a registered society, the membership should not be less than 100 and so on. Any condition touching upon the eligibility of its functionaries is conspicuously absent in the provision. Therefore, the power of the Excise Commissioner to issue a license under rule 13(4A) is available only in respect of a Club that satisfies the conditions stipulated by the said Rule. Of course as per the form of license appended to the Rules, the license is in fact issued to a responsible functionary of the Club. The said procedure is adopted only for the purpose of ensuring that a competent person is made responsible for discharging the duties that are cast on a licensee by the Abkari Act and the Rules thereunder. The Club which is an organization and an unnatural person is necessary to be represented by a real, natural person so as to be available for being fastened with the liability that may arise under the Act and the Rules. However, the fact remains that the licensee which could only be the Club, would continue to remain the same, though its functionaries may change from time to time. Rule 19(iv) provides as under:

(iv) change of name of licensee may be allowed on payment of Rs.2 lakhs (Rupees two lakhs only)

8. A perusal of the above provision leaves no doubt in our minds that the same applies only to a case where a change of name of the licensee is sought for. In the present case, the licensee being the Club, there is no change in the identity of the licensee. It is only the name of the functionaries that are changed in these cases by being substituted with the person who has been elected as a President or Secretary as the case may be. Such changes cannot and does not attract payment of the fee under Rule 19(iv) of the Rules as rightly held by the learned single Judge. The above issue has been considered by this Court in