Mr. Kobad Dorabji Davierwalla v. Mrs. Perin Hoshang Davierwalla and Another

Bombay HC1 Sept 2014CAR/19/2014

Case brief

AI extract

What is this about?

This court rejected an application seeking directions against a Court Receiver for running a hotel business without a valid licence. The court held that pending renewal applications maintained the validity of the licence and there was no merit in stopping business operations under the Bombay Police Act and Food Safety and Standards Act.

What did the court decide?

The civil application was rejected with no order as to costs.

Mr. Kobad Dorabji Davierwalla Vs Mrs. Perin… — Civil Procedure and Limitation | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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CIVIL APPELLATE JURISDICTION

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CIVIL APPLICATION NO. 19 OF 2014 IN ARBITRATION APPEAL NO. 42 OF 2013

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Mr.Kobad Dorabji Davierwalla

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...Applicant / Orig.Respondent No.1

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In the matter between

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Mrs.Perin Hoshang Davierwalla & Anr. ...Appellants vs.

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Mr.Kobad Dorabji Davierwalla & Ors. ...Respondents

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Mr.A.V. Anturkar, Senior Advocate with Mr.Prathamesh Bhargav i/b. Mr.S.B. Deshmukh for Applicant (Original Respondent No.1).

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Mr.Darius Khambata, Senior Advocate with Mr.J.B. Sen, Senior Advocate, Mr.Akshay Patil i/b. M/s.Federal & Rashmikant for Appellants.

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Mr.Priyanka Vegad for Respondent No.2 in Arb.Appeal No.42/2013, Respondent No.3 in CA 19/2014.

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Mr.B.K. Bali i/b. M/s.Bali Associates for Respondent No.3.

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CORAM : S.C. GUPTE, J.

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01 SEPTEMBER 2014

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P.C. :

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This application is taken out by original Respondent No.1 for directions against the Court Receiver not carry on the business of running of the hotel, which is the subject matter of the arbitration appeal, without obtaining a valid licence under the provisions of the Bombay Police Act and Food Safety and Standards Act. Secondly, it is prayed that the Court Receiver be directed to handover possession of the property bearing no.196 back to Respondent No.1 since that property is not covered under the licence granted for the purpose of running the hotel under the provisions of Bombay Police Act, 1951 or the Food Safety and Standards Act, 2006.

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At the hearing of the application, learned Counsel for the Applicant –

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Respondent No.1 – does not press his prayer for handing over the possession of the property bearing no.196, reserving liberty to Respondent No.1 to adjudicate this issue and seek the prayer before the District Judge in the interim application pending before him or in the arbitral reference that may be taken up by the arbitral forum, appointment of which is presently under consideration.

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3 The Appellants and the Respondents are partners in a partnership firm carrying on business of boarding and lodging house known as “IL Palazzo Hotel”. The present disputes arise out of dissolution of this partnership firm.

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4 There was an application made in these disputes under Section 9 of the Arbitration and Conciliation Act, 1996 before the District Judge, Satara. The Appellants' ad-interim application for appointment of Court Receiver was rejected by the learned District Judge, whereupon the matter was carried in appeal before this Court. By an order dated 7 May 2014, this Court disposed of the appeal inter alia by appointing Court Receiver, High Court, Bombay, as a receiver of the assets and business of the partnership firm IL Palazzo Hotel constituted under the Partnership Deed dated 6 March 1992. The Court Receiver was directed to take symbolic possession of the assets and business and appoint the Appellants as agents of the Court Receiver on payment of an annual royalty of Rs.70 lakhs payable in quarterly instalments.

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5 It is the case of Respondent No.1 in the present application that the hotel business requires licences under the Bombay Police Act and the Food Safety and Standards Act; that the licence under the Bombay Police Act was in the name of the predecessors in title of the parties herein and that the licence period has expired; that the existing licence under the Food Safety and Standards Act is in the name of Respondent No.1 as proprietor of IL Palazzo Hotel and the period of the licence has since expired; that the applications for modification of these licences as well as renewal of the licenses made by the firm IL Palazzo Hotel have been pending consideration before the authorities under the Bombay Police Act and Food Safety and Standards Act; and till the licences are modified and issued in the name of the partnership firm and renewed by the authorities,

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the Appellants, as agents of the Court Receiver, ought not to be permitted to carry on the business of the partnership firm IL Palazzo Hotel.

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6 Section 33 of the Bombay Police Act, 1933, under Chapter IV titled as “Police Regulations”, provides for the power of the Police Commissioner to make rules inter alia for preservation of order in public places. Sub-clause (i) of Clause (w) of Section 33 provides for the power to make rules for licensing or controlling places of public amusement or entertainment. The District Police Superintendent of Satara has made rules regarding such licensing or controlling places of public amusement and entertainment within its jurisdiction. These rules inter alia provide for grant of a licence under the relevant rules. The rules provide that the licence granted thereunder may be renewed by the applicant and that during the pendency of such application, the licensee can carry on the business. The relevant licence under the Bombay Police Act in the present case was issued to IL Palazzo Hotel in the name of the then partners, being licence no.89/62.The same was renewed from time to time. The last of such renewals was valid upto 31 December 2010. Before the expiry of the licence period, admittedly an application for renewal of licence was made by Respondent No.1 himself. On that application, a conditional licence was granted by the competent authority operative till December 2011. Sometime in October 2011, Respondent No.1 filed an application for renewal of the licence in the names of partners of the firm of IL Palazzo Hotel as per Partnership Deed of 1992. The Appellants by their consent letter / affidavit gave consent along with other partners of the firm for such renewal. In terms of Rule 5(3) of the Rules appended to the licence, upon making the application for renewal, the same is deemed to be renewed until such licence is either duly renewed and delivered to the applicant or an intimation of refusal for renewal of such licence was issued. Admittedly, the District Collector, Satara, has neither renewed the licence nor refused such renewal. An application for renewal of licence in the name of the present partners of the firm IL Palazzo Hotel is admittedly pending before the competent authority. In the premises, the hotel was run so far by Respondent No.1 himself till appointment of the Court Receiver by this Court and thereafter is being run by the Appellants, as agents of the Court Receiver, under a valid licence issued under the Bombay Police Act.

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Prima facie, thus, there is no substance in the plea of Respondent No.1 that the hotel is presently being run by the agents of the Court Receiver without a valid licence.

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7 As far as the Food Safety and Standards Act is concerned, the relevant provisions regarding licensing and registration of food business are contained in Section 31 of that Act. Section 31 requires that no person shall commence or carry on any food business except under a licence. The section further provides for an application to be made by a person desirous of commencing or carrying on any food business for grant of a licence to the designated officer under the Food Safety and Standards Act. The section further makes provisions for consideration of such application and issuance of licence in a form and subject to conditions as may be specified by regulations. Section 63 of the Act provides for punishment for carrying on food business without licence under Section 31. The expression “food business’ is defined in Clause (n) of Subsection 1 of Section 3 of the Food Safety and Standards Act, which is as follows :

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"food business" means any undertaking, whether for profit or not and whether public or private, carrying out any of the activities related to any stage of manufacture, processing, packaging, storage, transportation, distribution of food, import and includes food services, catering services, sale of food or food ingredients.”

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8 The Food Safety and Standards Authority of India has made regulations called “The Food Safety and Standards (Licensing and Registration of Food Business) Regulations, 2011” in respect of licensing and registration of food business under Section 31 of the Act. Regulation 2.1.7 of these regulations inter alia provides that a registration or licence granted under these regulations shall be valid and subsisting, unless otherwise specified, for a period of 1 to 5 years as chosen by the Food Business Operator. The regulation further provides for an application for renewal of such registration or licence not later than 30 days prior to the expiry date indicated in the licence. The Regulations further provide that the registration or licence, for which renewal has not been applied for within

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the period mentioned above, shall expire and the Food Business Operator shall stop all business activity at the premises and in such a case, the Food Business Operator will have to apply for a fresh registration or licence as provided in the regulations.

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9 The provisions of registration or licence under the Food Safety and Standards Act read with the definition of “Food Business” and in the light of the regulations made, indicate prima facie that the registration or licence, though issued in the name of the person commencing or carrying on food business, is in respect of an undertaking, whether public or private, carrying out activities related to any business of manufacture, processing etc. of food, or food services and catering services, etc. The particular undertaking, namely, IL Palazzo Hotel, was granted a licence dated 8 May 2012 under the provisions of the Food Safety and Standards Act, though the licence was obtained by Respondent No.1 as a proprietor of IL Palazzo Hotel. This licence was valid upto 31 December 2012. The renewal application, however, has been made by Respondent No.1 in his capacity as partner of the firm IL Palazzo Hotel. Admittedly, it was the firm IL Palazzo hotel which had been carrying on the business of lodging and boarding house at the premises under this particular licence, so far. On the application of Respondent No.1, the licence has been renewed for a period of 5 years from 29 November 2012, Thus, the undertaking IL Palazzo Hotel carrying on business at its premises does have a valid licence under the Food Safety and Standards Act, though the name of the operator is that of Respondent No.1 as proprietor of this undertaking. The partners of IL Palazzo Hotel have addressed a communication to the designated officer, viz. Assistant Commissioner, Food and Drugs Administration, M.S., Satara seeking rectification in the aforesaid licence by changing the name of the operator from Respondent No.1 as a sole proprietor to the names of the partners of the firm IL Palazzo Hotel. This application is pending consideration before the designated authority. The contention of Respondent No.1 in this behalf is that the licence, as on date, though renewed, still stands in the name of Respondent No.1 as proprietor of IL Palazzo Hotel and is not yet issued in the name of the partners of the firm IL Palazzo Hotel. As indicated by me in this order above, the licence, though in the name of the person carrying on

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the undertaking, is prima facie for the purposes of the undertaking to enable it to carry on the food business. Admittedly, all these years, the food business was carried on by IL Palazzo Hotel, the partnership firm. This business was admittedly carried on for all these years by Respondent No.1 as a partner of the firm. The partners, after realizing that the licence was incorrectly obtained in the name of Respondent No.1 as proprietor of the firm, have duly applied for rectification of the licence to the designated authority and such application is pending. In that view of the matter, prima facie the business or undertaking carried on by the Appellants as agents of the Court Receiver is under a valid licence under the Food Safety and Standards Act.

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10 As far as the aspect of renewal of the licence under the Food Safety Regulations is concerned, the regulations require the Operator of the Food Business to stop all business activities at the licensed premises only in the event of renewal of registration or licence not having been applied for within the stipulated time under regulation 2.1.7 (2) or 2.1.7 (4). Admittedly, the application is made within the statutory period and there is no reason why the Food Business Operator, presently the Appellants, as agents of the Court Receiver, should be directed to stop all business activities in the licensed premises.

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11 The Supreme Court in the case of Cheran Transport Co. Ltd. vs. Kanan Lorry Service¹ stated in para 7 as follows :

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No permit or renewal, except to the extent expressly saved by Section 68-F (1D), can be granted by the R.T.A. during the period between the date of publication of any scheme and the date of publication of the approved scheme. (2) If a permit expires after the publication of any draft scheme such permit is eligible for renewal for a limited period as set out in the proviso. This special provision cannot be stretched, on the ground of possible anomalies or unjust consequences, to cover permits expiring even before the publication of the draft scheme. Where the language is plain, interpretation cannot take the shape of addition or interstitial legislation. (3) A rider to proposition 2 has to be added. If a permit holder whose

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1 ( 1977) 1 SCC 604

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permit is about to expire, diligently does, in the normal course, all that he need and all that he can, that is to say, apply for renewal before 120 days, in the manner laid down in Section 58 of the Act, he sets in motion the legal machinery for the grant of renewal which must ordinarily culminate in renewal within 120 days. The fact that a scheme is published before the actual grant of renewal will not intercept or extinguish the process of law set in motion by the application for renewal. In such cases the R.T.A. has to act promptly and if the application for renewal is in conformity with the law it has to consider it and grant or reject according to merit. If, for reasons beyond the control of the applicant, the renewal process gets delayed or prolonged he cannot be penalised. Renewal is a legal process, not the final act. Save in this category of cases, all other permits which have expired before the draft scheme is published, suffer the ban of Section 68-F (1D). However, no permit can enure beyond the time of the publication of the approved scheme. This saves cases of bona fide applications for renewal of permits, not calculated to thwart a scheme, and helps the travelling public during the interregnum when the scheme is under scrutiny. The wider proposition accepted by the High Court that all permits which have expired before the draft scheme is published can be renewed does not appear to be correct and does not have our approval.”

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12 Having regard to the law laid down by the Supreme Court in the case of Cheran Transport Co. Ltd. (supra) read with the relevant regulations in our case, if an application for renewal is made in conformity with the law, the authority is bound to consider and grant or reject the same according to its merits. If, for reasons beyond the control of the applicant, the renewal process gets delayed or prolonged, he cannot be penalized. The renewal is a legal process and not a final act. Thus, having regard to the fact that an application for renewal of licence under the Food Safety and Standards Act is made within the statutory period provided for, there is no warrant for directing the Court Receiver to stop the food business at the licensed premises.

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14 In that view of the matter, there is no merit in the civil application and the same is rejected. There shall be no order as to costs.

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(S.C. Gupte, J.)

Mr. Kobad Dorabji Davierwalla v. Mrs. Perin Hoshang Davierwalla and Another

Case brief

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Mr. Kobad Dorabji Davierwalla v. Mrs. Perin Hoshang Davierwalla and Another

Case brief

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