Court’s Decision
The Bombay High Court at Aurangabad quashed the impugned order passed by the Minister, Excise and Drugs Department, that had directed the deletion of the petitioner’s name from the liquor license and continuation of the same in the name of the respondent. The Court held that the license was never granted in the name of the partnership firm, and therefore the respondent could not claim rights over it post-dissolution of the firm. The Court ruled:
“The license was granted only in the name of the petitioner and at no point of time was it transferred to the firm or respondent. The Minister’s order is thus legally unsustainable.”
Facts
The matter revolved around an FL-II and CL-III liquor license initially granted in 1973 solely to the petitioner. Although a partnership was entered into in 1984 with the respondent to run the liquor business under “M/s. Kailas Wines,” the license was never formally transferred to the partnership firm. The partnership dissolved in 1993 following disputes, after which a prolonged litigation ensued across various forums — the Collector, Commissioner, Minister, the High Court, and even the Supreme Court. Repeated judicial findings affirmed the petitioner’s sole right over the license, with limited protection granted to the respondent to continue the business only till the end of specific financial years, solely to safeguard government revenue. Despite this, the Minister, by impugned order dated 30 July 2019, directed that the license be continued in the name of the respondent, prompting the present writ petition.
Issues
- Whether the respondent, as an ex-partner, had any right to claim or continue the liquor license in his name?
- Whether the Minister’s order ignoring earlier judicial pronouncements could be sustained in law?
Petitioner’s Arguments
The petitioner contended that the liquor license was granted exclusively in his individual name and was never transferred to the partnership firm. The firm merely existed to operationalize the business, not to hold legal rights in the license. Post-dissolution of the firm, the respondent ceased to have any legal interest. The petitioner relied on earlier High Court and Supreme Court decisions that consistently upheld this view, including an arbitration award in his favour. He argued that the Minister’s order contravened those judicial findings and wrongly attempted to vest ownership in the respondent.
Respondent’s Arguments
The respondent, represented by a senior advocate, contended that he was effectively managing the business since the petitioner was unable to do so. He argued that the partnership firm had become the de facto entity running the business and thus the license, being a critical business asset, belonged to the firm. He further asserted that the petitioner had himself, in 1984, requested addition of his name to the license, thus acknowledging his involvement and entitlements. Pending arbitration appeals were cited to argue that the dispute was not yet conclusively settled.
Analysis of the Law
The Court examined Rule 40(1) of the Bombay Foreign Liquor Rules, 1953, which mandates prior application and entry in the license if a partner is to be recognized officially. The Court held that since the respondent’s name was never added to the license under this rule, he had no claim over it. The Collector and Commissioner had rightly interpreted this provision to hold the petitioner as the sole licensee. The Minister’s decision overlooked this crucial legal requirement and ignored established law.
Precedent Analysis
- Addanki Narayanappa v. Bhaskara Krishnappa (1966) – Held that a partner’s capital becomes the firm’s property. However, this was distinguished as in that case, land was introduced as capital, whereas in the present case, the license itself was never brought into the firm.
- Ramesh Dhore v. Commissioner of State Excise (1997) – Held that a license granted to an individual cannot be claimed by others post partnership dissolution. This directly supported the petitioner’s case.
- Ramchandra Chonde v. State of Maharashtra (2005) – Affirmed that after dissolution of the partnership, the license reverts to the original grantee.
- Pamela Braganza Case – Held that dissolution of a firm due to death of a partner results in sole ownership of license by surviving partner. Distinguished here since license was never granted to the firm.
Court’s Reasoning
The Court held that:
“The license was never issued in the name of the partnership firm or the respondent. Despite the petitioner’s expressed intention to associate the respondent, the formal legal requirement under Rule 40(1) was never satisfied.”
It further noted that previous High Court and Supreme Court rulings had consistently maintained the petitioner’s sole entitlement. The Minister’s disregard for these was impermissible:
“The Minister’s order is in direct conflict with binding judicial pronouncements and statutory rules.”
Conclusion
The High Court allowed the writ petition and quashed the Minister’s order dated 30 July 2019. It reiterated that:
- The respondent has no right to hold the license.
- The petitioner is entitled to apply for and obtain license renewal.
- All pending civil applications were disposed of.
- The order was stayed for four weeks to allow the respondents to challenge it.
Implications
This judgment reinforces that liquor licenses are non-transferable assets and cannot be claimed merely based on informal arrangements or operational management. It draws a clear boundary between legal ownership and business facilitation. The case also reiterates the binding nature of judicial precedent over administrative discretion and ensures that government departments do not act contrary to settled law.
FAQs
1. Can a liquor license be transferred to a partner in a firm without formal inclusion in the license document?
No. As per Rule 40(1) of the Bombay Foreign Liquor Rules, 1953, unless the partner’s name is formally entered into the license with the Collector’s approval, they have no legal claim.
2. Does continuation of business by an ex-partner give him any rights over the license?
No. Even if an ex-partner is permitted to run the business temporarily, such continuance does not confer legal ownership or entitle them to renewal of the license.
3. Can a Minister’s decision override prior High Court or Supreme Court rulings?
Absolutely not. The Minister’s orders must conform to judicial pronouncements. Ignoring binding rulings renders such decisions legally invalid.
Referred Cases and Their Relevance
- Addanki Narayanappa v. Bhaskara Krishnappa – Cited by both sides. Distinguished by Court.
- Ramesh Dhore – Held license granted to individual cannot be claimed by partners post dissolution. Applied.
- Ramchandra Chonde – Supported the petitioner’s exclusive right post-dissolution.
- Sachin Jaiswal – Held capital brought into firm becomes firm’s property. Distinguished.
- Pamela Braganza – Dealt with surviving partner rights. Not applicable here.
- Yunnus Abdulla Shaikh and Laxman Kamble – Held not relevant in current factual context.
