IMPORTANT POINT
Reconstitution of a partnership firm does not trigger transfer provisions under licensing rules if the firm's identity is maintained, especially in joint Hindu family contexts.

JUDGMENT :

(PER: THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT)

1. All these Intra Court Appeals involving substantially similar facts and legal matrix are presented by the State & its officials to call in question a set of six judgments rendered by two learned Single Judges of this Court whereby W.P. Nos. 101180/2021, 100054/2021, 148012/2020, 102413/2021, 101168/2021 & 101184/2021 filed by the respondents Wine Shop Licensees having been favoured, the impugned punitive action taken against them has been invalidated.

2. Learned AGA appearing for the appellant–State vehemently argues that the reconstitution of licencesee partnership firms by induction of others results into the original entities loosing their identity and therefore there is transfer of the lincenses in violation of Rule 17-B of the Karnataka Excise (General Condition of License) Rules, 1967 especially when such reconstitution was not notified to the authorities. He further submits that the learned Single Judges have selectively applied the decision of another learned Single Judge in M/s. Shankar Wines Vs. The Commissioner of Excise, (2017) 6 KLJ 507. He draws attention of the Court about the requirement of licencees taking prior permission of the Commissioner for such reconstitution and informing him the factum of reconstitution of the firm. All these aspects, according to the AGA, having been lost sight of, the impugned judgments suffer form the vice of infirmities and therefore are liable to be voided. Learned advocates appearing for the private respondents who happened to be the writ petitioners resist the appeals by making submission in justification of the reasoning on which the impugned judgments are constructed.

3. Having heard the learned counsel for the parties and having perused the appeal papers we decline indulgence in the matters for the following reasons with some observations as under:

(i) Ordinarily liquor is res extra commerciam since trade in it is inherently harmful to the Society. No person can claim the right to trade in liquor as a matter of right, let alone a fundamental right vide M/s. Khoday Distilleries Ltd. Vs. State of Karnataka, (1995) 1 SCC 574. However, when the statute regulates business in the liquors, the authorities have to act in accordance with the provisions of such a statute; otherwise the actions are liable to be faltered, hardly needs to be stated. Rules 17-A of the 1967 Rules has the following text:

“17-A. Transfer in the event of death.- In the event of death of the licensee or the lessee, the Deputy Commissioner may on an application by the legal heirs of the deceased with the previous sanction of the Excise Commissioner, transfer the licence or the lease as the case may be, in their favour.”

This Rule apparently provides for induction of legal heirs of the deceased person to whom the licence / lease was granted under the extant Rules. However, where the partnership comprises of members of a Joint Hindu Family and if one or two of them would pass away, the estate of the deceased would ordinarily pass on to his L.Rs. such a partnership would not come to an end by way of dissolution or otherwise, unlike other partnership firms.

(ii) The above view gains support from Mulla’s Hindu Law, 22nd Edition, page 353 which reads as under:

“232. Ancestral business and its incidents.-

(1) In Hindu Law, a business is a distinct heritable asset. Where a Hindu dies leaving a business, it descends like other heritable property to his heirs. If he dies leaving a male issue, it descends to him. In the hands of the male issue, it becomes joint family business, and the firm which consists of the male becomes a joint family firm. The joint ownership so created between the male issue is not an ordinary partnership arising out of a contract but a family firm created by the operation of law. Therefore, the rights and liabilities of the coparceners constituting the family firm are not to be determined by exclusive reference to the provisions of the Indian Part