The court clarified the lawful process for redesignation of company directors under the Companies Act and excise laws.

JUDGMENT

The petitioner is a private limited company incorporated under the Companies Act, 1956. The petitioner carries on business as a Five Star Deluxe Hotel. The hotel has been issued with Ext.P1 License Renewal Certificate, which is valid upto 31.03.2026. Sri.K.C.Eapen was appointed as an ‘Additional Director’ of the company with effect from 08.05.2022 as per Ext.P2 proceedings of the 2^nd respondent by realizing Rs.1 lakh as fees under Rule 19(iii) of the Foreign Liquor Rules. The petitioner states that in order to ensure uninterrupted management continuity and to comply with the provisions of the Companies Act, the shareholders of the petitioner- company passed a resolution regularizing the appointment of Sri.K.C.Eapen as ‘Whole Time Director’ of the company with effect from 30.09.2023. The petitioner also states that such re-designation will not amount to reconstitution of the Board of Directors within the meaning of Rule 19 of the Foreign Liquor Rules, 1953. The petitioner submitted an application, as evidenced by Ext.P3 acknowledgment, seeking sanction for change of licensee in connection with the proposed internal restructuring. However, the 3^rd respondent issued Ext.P4 administrative note addressed to the 2^nd respondent, observing that prior sanction had not been obtained for the change in designation of Sri.K.C.Eapen from “Additional Director” to “Whole Time Director” and suggesting that such change may amount to violation of Section 67 (2) of the Abkari Act , 1077 and that the licensee is liable for a fine of Rs.3 lakhs for the same.

2. The petitioner has filed this writ petition challenging Ext.P4. The petitioner has also prayed for a direction to the 1^st respondent to dispose of the application, as evidenced by Ext.P3 on merits.

3. It is contended by the learned counsel for the petitioner that the change of designation will not amount to reconstitution of the Board of Directors since the said change :

“(i) did not involve the induction of any new or different person as Director;

(ii) did not result in the deletion or removal of any existing Director;

(iii) did not bring about any alteration in the ownership structure of the Petitioner-Company;

(iv) did not cause any change in the shareholding pattern;

and (v) did not occasion any change in the management or effective control of the licensed establishment.”

4. The learned Government Pleader submits that Ext.P4 is only an internal communication addressed to the 2^nd respondent-Deputy Excise Commissioner, seeking certain clarifications. It is further submitted that before passing an order on the application evidenced by Ext.P3, the petitioner will also be heard.

5. In the said circumstances, the writ petition is disposed of, directing the 1^st respondent to consider the application of the petitioner evidenced by Ext.P3 in accordance with law and after affording the petitioner an opportunity of hearing, as expeditiously as possible, at any rate, within a period of two months from the date of receipt of a certified copy of this judgment.

6. It is made clear that it will be open to the petitioner to remit the fine of Rs.3,00,000/- (Rupees Three Lakhs only), as referred to in Ext.P4, for the purpose of renewal of licence before the expiry of the present licence, without prejudice to the contentions raised.