2024 Supreme(Ker) 577

IN THE HIGH COURT OF KERALA AT ERNAKULAM
M.A. Abdul Hakhim, J.
M/s. KSR Alankar Hotels and Resorts Pvt. Ltd. – Petitioner
Versus
State of Kerala Rep. by Secretary, Taxes (A) Department and Ors. – Respondents
W.P(C) Nos. 29520, 4768, 8291, 12475 of 2019
Decided On : 11-06-2024

IMPORTANT POINT
The main legal point established in the judgment is that the demands for payment of certain fees as per the Second Proviso to Rule 19(4) of the Foreign Liquor Rules in the impugned orders were declared unsustainable and set aside. The court also upheld the imposition of a fine of Rs.3 lakh under Section 67(2) of the Abkari Act with respect to each of the licenses of the company and held that the petitioners are liable to pay the fee of Rs.1,00,000 provided under Rule 19(iii) of the Foreign Liquor Rules for the reconstitution on 31.08.2017 with respect to each of the licenses.

Headnote:

Abkari Act - Payments for Regularization of Board of Directors - Section 67(2) of the Abkari Act, 1077 and Rule 19 of the Foreign Liquor Rules, 1953 - The court discussed the payments to be made by the Petitioners/Private Limited Companies holding FL 11 license towards fine under Section 67(2) of the Abkari Act and fees under Rule 19 of the Foreign Liquor Rules for regularization of the reconstitution of their Board of Directors. The court held that the demands for payment of certain fees as per the Second Proviso to Rule 19(4) of the Foreign Liquor Rules in the impugned orders were unsustainable and set aside the impugned orders to that extent. The court upheld the imposition of a fine of Rs.3 lakh under Section 67(2) of the Abkari Act with respect to each of the licenses of the company and held that the petitioners are liable to pay the fee of Rs.1,00,000 provided under Rule 19(iii) of the Foreign Liquor Rules for the reconstitution on 31.08.2017 with respect to each of the licenses. The court also set aside the demand for a fee of Rs.2,00,000 provided under Rule 19(iv) of the Foreign Liquor Rules for the reconstitution on 31.08.2017 in one of the cases. Additionally, the court held that one of the petitioners was not liable for a fine under Section 67(2) of the Abkari Act with respect to the reconstitution dated 31.08.2017 and set aside the impugned order to that extent. The court also directed the competent authorities to make revised calculations as to the amounts payable by the petitioners and communicate the same to the petitioners within a specified period.

Fact of the Case:

The petitioners, private limited companies holding FL 11 licenses, reconstituted their Board of Directors without obtaining prior permission from the Commissioner. The impugned orders imposed fines and demanded fees for regularization of the unauthorized reconstitution. The petitioners challenged the orders, arguing that they are liable to pay only a fine of Rs.3,00,000 as per Section 67(2) and a fee of Rs.1,00,000 for regularization.

Finding of the Court:

The court found that the demands for payment of certain fees as per the Second Proviso to Rule 19(4) of the Foreign Liquor Rules in the impugned orders were unsustainable and set aside the impugned orders to that extent. The court upheld the imposition of a fine of Rs.3 lakh under Section 67(2) of the Abkari Act with respect to each of the licenses of the company and held that the petitioners are liable to pay the fee of Rs.1,00,000 provided under Rule 19(iii) of the Foreign Liquor Rules for the reconstitution on 31.08.2017 with respect to each of the licenses. The court also set aside the demand for a fee of Rs.2,00,000 provided under Rule 19(iv) of the Foreign Liquor Rules for the reconstitution on 31.08.2017 in one of the cases. Additionally, the court held that one of the petitioners was not liable for a fine under Section 67(2) of the Abkari Act with respect to the reconstitution dated 31.08.2017 and set aside the impugned order to that extent. The court also directed the competent authorities to make revised calculations as to the amounts payable by the petitioners and communicate the same to the petitioners within a specified period.

Issues: ['The relevant law to be applied for payment of fee for regularization of unauthorized reconstitution of Board of Directors', 'Applicability of the Second Proviso to Rule 19(iv) of the FL Rules to hotels having FL 3 License', 'Imposition of fine under S.67(2) on each of the licenses of the Licensee', 'Liability to pay Rs.2,00,000 provided in Rule 19(iv) for change of name', 'Liability to pay fine for a hotel without a license as on the date of reconstitution', 'Imposition of fine on each of the joint licensees']

Ratio Decidendi: The demands for payment of certain fees as per the Second Proviso to Rule 19(4) of the Foreign Liquor Rules in the impugned orders were unsustainable and set aside. The imposition of a fine of Rs.3 lakh under Section 67(2) of the Abkari Act with respect to each of the licenses of the company was upheld. The petitioners were held liable to pay the fee of Rs.1,00,000 provided under Rule 19(iii) of the Foreign Liquor Rules for the reconstitution on 31.08.2017 with respect to each of the licenses. The demand for a fee of Rs.2,00,000 provided under Rule 19(iv) of the Foreign Liquor Rules for the reconstitution on 31.08.2017 in one of the cases was set aside. Additionally, one of the petitioners was held not liable for a fine under Section 67(2) of the Abkari Act with respect to the reconstitution dated 31.08.2017 and the impugned order was set aside to that extent. The court also directed the competent authorities to make revised calculations as to the amounts payable by the petitioners and communicate the same to the petitioners within a specified period.

Final Decision: The Writ Petitions were allowed in part. The demands for payment of certain fees as per the Second Proviso to Rule 19(4) of the Foreign Liquor Rules in the impugned orders were declared unsustainable and set aside. The imposition of a fine of Rs.3 lakh under Section 67(2) of the Abkari Act with respect to each of the licenses of the company was upheld. The petitioners were held liable to pay the fee of Rs.1,00,000 provided under Rule 19(iii) of the Foreign Liquor Rules for the reconstitution on 31.08.2017 with respect to each of the licenses. The demand for a fee of Rs.2,00,000 provided under Rule 19(iv) of the Foreign Liquor Rules for the reconstitution on 31.08.2017 in one of the cases was set aside. Additionally, one of the petitioners was held not liable for a fine under Section 67(2) of the Abkari Act with respect to the reconstitution dated 31.08.2017 and the impugned order was set aside to that extent. The court also directed the competent authorities to make revised calculations as to the amounts payable by the petitioners and communicate the same to the petitioners within a specified period.