Allowed

Sharada Bai W/O. Narayansa Baddi v. the Excise Commissioner

Karnataka HC14 Jun 2022WP/80383/2013

Case brief

AI extract

What is this about?

A liquor licence transferred to a deceased licensee's wife alone and subsequently to a firm was held invalid. Both petitions were allowed; the Tribunal's order was quashed, suspension restored, and joint transfer to the wife and children directed. The transferees' deposit was forfeited to the Excise Department.

What did the court decide?

Tribunal order quashed; licence suspension restored; joint transfer to wife and children directed; transferees barred from operating the licence; deposit forfeited to Excise Department.

Sharada Bai W/O. Narayansa Baddi Vs the Excise… — Customs and Excise | Karnataka HC (2022)

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IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH

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DATED THIS THE 14^TH DAY OF JUNE, 2022

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BEFORE

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THE HON’BLE MR. JUSTICE N.S. SANJAY GOWDA

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W.P.No.85500/2013(EXCISE) C/W W.P.No.80383/2013(EXCISE)

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IN W.P.No.85500/2013

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BETWEEN:

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SHARADA BAI

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W/O NARAYANSA BADDI,

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Digitally signed by J MAMATHA Location: High Court of JMAMATHA Karnataka,Dharwad BenchDharwad. Date: 2022.06.21 13:29:43 +0530

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AGE 64 YEARS, OCC:HOUSEHOLD WORK, R/O 20, BANASAVADI, 2^ND STAGE, KESHAVAPUR, HUBLI, DIST:DHARWAD.

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ANIL, S/O NARAYANSA BADDI, AGE 45 YEARS, OCC:BUSINESS, R/O 20, BANASAVADI, 2^ND STAGE, KESHAVAPUR, HUBLI, DIST:DHARWAD.

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SMT. GEETA, W/O GANAPATSA BAKALE, AGE 43 YEARS, OCC: HOUSEHOLD WORK R/O 20, BANASAVADI, 2^ND STAGE, KESHAVAPUR, HUBLI, DIST:DHARWAD.

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SMT. ANITA, W/O PREMANATHSA BANDAGE, AGE 40 YEARS, OCC: HOUSEHOLD WORK, R/O 20, BANASAVADI, 2^ND STAGE, KESHAVAPUR, HUBLI, DIST:DHARWAD.

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SMT. SUNITA, W/O ANIL JADI,

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AGE 35 YEARS, OCC: HOUSEHOLD WORK,

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R/O 20, BANASAVADI, 2^ND STAGE, KESHAVAPUR, HUBLI, DIST:DHARWAD. PETITIONER No.5 REPRESENTED BY G.P. HOLDER PETITIONER No.2.

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… PETITIONERS

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(BY SRI.V.M. SHEELVANT, ADV.)

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AND:

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THE EXCISE COMMISSIONER

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EXCISE COMMISSIONER OFFICE, KRC CIRCLE, VAKKALIGARA BHAVAN, BANGALORE.

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THE DEPUTY COMMISSIONER, DHARWAD DISTRICT, DHARWAD.

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THE DEPUTY COMMISSIONER OF EXCISE, DHARWAD DISTRICT, DHARWAD.

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M/s SRI NIDHI ENTERPRISES, AN UNREGISTERED PARTNERSHIP FIRM, REPRESENTED BY ITS PARTNERS RESPONDENTS 5 AND 6, C.L.No.2 LICENSES, HDMC STALL No.8, MYADAR ONI, HUBLI.

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SRI. NAGESH, S/O SOMAPPA KALAL, AGE MAJOR, OCC:BUSINESS, R/O 52/1A, JAYANAGAR, VIDYANAGAR, HUBLI, DHARWAD.

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SRI. SAMBAJI, S/O SOMAPPA KALAL, AGE MAJOR, OCC:BUSINESS, R/O 52/1A, JAYANAGAR, VIDYANAGAR, HUBLI DHARWAD.

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… RESPONDENTS (BY SRI.V.S. KALASURMATH, HCGP FOR R-2 AND R-3; SRI. J.S. SHETTY, ADV., FOR C/R-4 AND R-6; SMT. BHAGYASHREE.N. BIKKANNAVAR, ADV., FOR R-5 AND R-6; R-1 SERVED AND UNREPRESENTED)

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THIS PETITION IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER DATED 13.11.2013 PASSED BY THE KARNATAKA APPELLATE TRIBUNAL, BANGALORE, IN APPEAL No.706/2013, PRODUCED AT ANNEXURE-I, ETC.

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IN W.P.No.80383/2013

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BETWEEN:

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SHARADA BAI W/O NARAYANSA BADDI, AGE 62 YEARS, OCC:HOUSEHOLD WORK, R/O 20, PARASWADI, 2^ND STAGE, KESHAVAPUR, HUBLI.

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… PETITIONER

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(BY SRI.V.M. SHEELVANT, ADV.)

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AND:

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THE EXCISE COMMISSIONER EXCISE COMMISSIONER OFFICE, KRC CIRCLE, VAKKALIGARA BHAVAN, BANGALORE.

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THE DEPUTY COMMISSIONER, DHARWAD DISTRICT, DHARWAD.

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THE DEPUTY COMMISSIONER OF EXCISE, DHARWAD DISTRICT, DHARWAD.

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SRI. NIDHI ENTERPRISES, AN UNREGISTERED PARTNERSHIP FIRM, REPRESENTED BY ITS PARTNERS RESPONDENTS 4 AND 5.

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SRI. NAGESH, S/O SOMAPPA KALAL, AGE MAJOR, OCC:BUSINESS, C.L.No.2 LICENSES, HDMC STALL No.8, MYADAR ONI, HUBLI.

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SRI. SAMBAJI, S/O SOMAPPA KALAL, AGE MAJOR, OCC:BUSINESS,

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C.L.No.2 LICENSES,

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HDMC STALL No.8, MYADAR ONI, HUBLI.

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… RESPONDENTS

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(BY SRI.V.S. KALASURMATH, HCGP FOR R-1 AND R-3; SRI. J.S. SHETTY, ADV., FOR R-4 AND R-5; SMT. BHAGYASHREE.N. BIKKANNAVAR, ADV., FOR R-4 AND R-5)

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THIS PETITION IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO DIRECT THE RESPONDENT No.3 TO IMPLEMENT THE ORDER DATED:30.05.2013 AT ANNEXURE-C BY TRANSFERRING CL-2 LICENSE ON THE NAME OF PETITIONER.

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THESE PETITIONS HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 19.04.2022, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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Narayansa Tukaramsa Baddi (N.T.Baddi) was

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granted a CL-II licence in the year 1981-82. He passed away on 29.02.1996. However, despite his death, the CL-II licence was renewed periodically till the year 2004.

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On 09.08.2004, the licence was transferred in favour of his wife Sharada Bai N.Baddi (petitioner herein). This licence was transferred on the ground that N.T.Baddi, the original licensee passed away on 23.06.2004. In fact, to secure the transfer of the licence,

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a death certificate indicating that he had passed away on 23.06.2004 had been furnished to the licensing authority.

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Thereafter, for the years 2004-05 and 2005-06, the CL-II licence was also renewed ostensibly at the request

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of the petitioner.

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On 03.08.2006, this CL-II licence was transferred to M/s.Sri Nidhi Enterprises, a partnership firm comprising of two partners Nagesh and Sambaji i.e., respondents 4 and 5 respectively.

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In the year 2010, the petitioner filed W.P.No.67096/2010 seeking for a direction to the Deputy Commissioner, Dharwad, and the Deputy Commissioner of Excise, Dharwad, to conduct an inquiry as regards the genuineness or otherwise of the applications made for renewal of the licence right from 29.02.1996 i.e., the date of death of N.T.Baddi, till 30.06.2010.

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On 23.11.2011, this Court disposed of the aforesaid writ petition recording the statement made by the Deputy Commissioner in his statement of objections, wherein it had been stated that cognizance of the representation had been taken and proceedings had also been initiated. This Court directed the Deputy Commissioner to conclude the proceedings by taking it to its logical end, as expeditiously as possible, and to take appropriate action in accordance with law against all concerned who had played fraud including the petitioner.

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Subsequently, one more writ petition was filed in W.P.No.71361/2012 seeking for a direction to the Deputy Commissioner of Excise to conduct an inquiry regarding the genuineness of the renewal of licence and transfer as directed in W.P.No.67096/2010.

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In this petition, a submission was made that in compliance with the order passed in W.P.No.67096/2010, the Deputy Commissioner of Excise had initiated proceedings, recorded the testimony of a

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few witnesses and the recording of testimony of the remaining witnesses would also be concluded, if a month’s time was granted. This submission was recorded and the writ petition was disposed of.

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Pursuant to the said order, the Deputy

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Commissioner of Excise conducted an inquiry. The Deputy Commissioner of Excise, after assessing the evidence, concluded that the original licensee - N.T. Baddi had passed away on 29.02.1996, as evidenced by the death certificate which had been produced before him as Ex.P-3. He also took note of the fact that the licensee had died on 29.02.1996 in the Cooperative Hospital, Hubli and the same had also been registered on 05.03.1996 vide Registration No.1/1996/4277. He also concluded that the death certificate issued stating that N.T.Baddi had died on 23.06.2004 at Cooperative Hospital, Hubli, and which was registered on 05.07.2004

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vide Registration No.686 was incorrect since that registration related to the death of one Mohan, son of

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Vasappa, a resident of Navalgund, who had passed away at his house.

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In the light of his finding that N.T.Baddi had passed away in 1996, he proceeded to pass the following order on 30.05.2013:

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“F ªÉÄÃ¯É «ªÀj¹zÀ PÁgÀtUÀ¼À ªÀÄÆ®PÀ F ¥Áæ¢üPÁgÀªÀÅ DzÉÃ±À ªÀiÁqÀÄªÀÅzÉÃ£ÉAzÀgÉ ¸ÀzÀj ¹J¯ï-2 ¸À£ÀßzÀÄ PÀÄjvÀÄ C§PÁj PÁAiÉÄÝ ¤AiÀÄªÀÄ 17(J) ¥ÀæPÁgÀ ¢£ÁAPÀ 04-01-2005gÀ°è CzÀ DzÉÃ±ÀªÀ£ÀÄß ¸ÀªÀÄAd¸À C®è JAzÀÄ wÃªÀiÁð¤¹ ¥ÉÆÃw J£ï.n.§¢Ý EªÀgÀ ªÁgÀ¸ÀÄzÁgÀgÁzÀ ²æÃªÀÄw ±ÁgÀzÁ¨Á¬Ä J£ï §¢Ý, C¤Ã® J£ï §¢Ý, ²æÃªÀÄw VÃvÁ PÉÆÃA UÀt¥ÀvÀ¸Á ¨ÁPÀ¼É, ²æÃªÀÄw C¤ÃvÁ PÉÆÃA ¥ÉæÃªÀÄ£ÁxÀ¸Á ¨sÀAqÀUÉ, ²æÃªÀÄw ¸ÀÄ¤ÃvÁ PÉÆÃA C¤Ã® dr EªÀgÉÃ ¢£ÁAPÀ 29-02-1996 jAzÀ 30-06-2004gÀªÀgÉUÉ ¹J¯ï-2 ¸À¤ß¢üUÉ ºÀPÀÄÌzÁgÀgÁVzÀÄÝ zÁR¯ÉAiÀÄ DzsÁgÀzÀ ªÉÄÃ¯É ¤tð¬Ä¹zÉ.

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CzÉÃ jÃw C.PÁAiÉÄÝ ºÁUÀÆ ¤AiÀÄªÀÄ 17(J) ªÀÄvÀÄÛ 17(©) ¥ÀæPÁgÀ »A¢¤AzÀ FªÀgÉUÉ ¸Àz À j ¸À£ÀßzÀÄ £À«ÃPÀgÀtUÉÆ½¹ EzÀPÉÌ ¸ÀA§AzsÀ¥ÀlÖAvÉ zÁR¯É ºÁdgÀ¥Àr¹zÀ ªÀåQÛUÀ¼À PÀÆ®APÀÄµÀªÁV vÀ¤SÉUÁV DzÉÃ±ÀzÀ ¥ÀæwAiÀÄ£ÀÄß £ÀªÀ£ÀUÀgÀ oÁuÉAiÀÄ ¦.L.oÁuÁ¢üPÁjUÀ½UÉ ºÁUÀÆ ¸ÀA§AzsÀ¥ÀlÖ UËgÀªÁ¤évÀ

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£ÁåAiÀiÁ®AiÀÄPÉÌ PÀ¼ÀÄ»¸À®Ä DzÉÃ²¹zÉÝÃ£É. ”

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Thus, as directed by this Court, an inquiry was conducted and the Deputy Commissioner of Excise concluded that the transfer of licence in favour of the petitioner (wife of N.T.Baddi) on 04.01.2005 was improper and further held that on the death of N.T.Baddi, the licence was required to be transferred to all his legal heirs Sharada Bai N.Baddi - his wife and his children, namely, Anil S.Baddi, Geeta, Anitha and Sunita. He held that the licence stood transferred to the wife and children of N.T.Baddi right from 29.02.1996 upto 30.06.2004. In other words, by this order, the licensing authority held that the licence was deemed to have been transferred from 1996 itself in favour of all the legal heirs of N.T.Baddi and the transfer only in favour of his wife in the year 2005 was incorrect.

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The Deputy Commissioner also ordered that a copy of his order be sent to the Police for conducting a thorough enquiry regarding the persons who had presented the documents seeking for renewal of the

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licence, since it had been found that the petitioner had filed a complaint to the Magistrate and the same had been referred to investigation by the Police.

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Pursuant to the said order, on 12.07.2013, the Deputy Commissioner passed an order suspending the licence in favour of M/s. Sri Nidhi Enterprises in view of the order dated 30.05.2013 in the following terms:

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“¥Àæ¸ÁÛªÀ£ÉAiÀÄ°è «ªÀj¹gÀÄªÀ PÁgÀtUÀ½AzÁV ²æÃªÀÄw ±ÁgÀzÁ¨Á¬Ä J£ï §¢Ý EªÀgÀÄ vÀ£Àß UÀAqÀ£ÁzÀ ¢ªÀAUÀvÀ ²æÃ £ÁgÁAiÀÄt¸Á vÀÄPÁgÁªÀÄ¸Á §¢Ý EªÀgÀÄ 1980-81£ÉÃ ¸Á°£À°è ºÉÆA¢zÀÝ ¸À£ÀßzÀÄ«£À §UÉÎ £ÀªÀ£ÀUÀgÀoÁuÉAiÀÄ°è zÁR°¹gÀÄªÀ Qæ«Ä£À¯ï ªÉÆPÀzÀÝªÉÄ ºÁUÀÆ ªÀiÁ£Àå GZÀÑ £ÁåAiÀiÁ®AiÀÄ ¸ÀAZÁj ¦ÃoÀzsÁgÀªÁqÀ EªÀgÀ°è ¨ÁQ EgÀÄªÀ ¥ÀæPÀgÀtUÀ¼À°è CAwªÀÄ wÃ¥ÀÄð §gÀÄªÀªÀgÉUÀÆ ¥Àæ²ßvÀ ªÉÄ: ²æÃ¤¢ü JAlgÀ¥ÉÊ¸À¸À EªÀgÀ ¹J¯ï-2 ¸À£ÀßzÀ£ÀÄß 2013-14 £ÉÃ ¸Á°UÉ £À«ÃPÀj¸ÀÄªÀzÀ£ÀÄß F ªÀÄÆ®PÀ vÀqÉ»rAiÀÄ¯ÁVzÉ.

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C§PÁj ¤jÃPÀëPÀgÀÄ, ºÀÄ§â½î ªÀ®AiÀÄ EªÀgÀÄ ¸ÀzÀj ¸À£ÀßzÀ£ÀÄß PÀÆqÀ¯ÉÃ ²Ã®§AzÀ ªÀiÁr ªÀÄzÀå ªÀÄvÀÄÛ ©ÃgÀ zÁ¸ÁÛ£À£ÀÄß vÁ¨ÁPÉÌ vÉUÉzÀÄPÉÆ¼Àî®Ä DzÉÃ²¹zÉ.”

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This order suspending the licence was challenged before the Karnataka Appellate Tribunal in Appeal No.706/2013. The Karnataka Appellate Tribunal,

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however, rejected the application that had been filed seeking for stay of the order suspending the operation of the licence.

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M/s. Sri Nidhi Enterprises filed W.P.Nos.82397398/2013 challenging not only the order of the Karnataka Appellate Tribunal which had negatived the plea for stay of the order of suspension of the licence, but also the order dated 30.05.2013, by which the Deputy Commissioner had held that the licence was deemed to have been transferred to all the legal heirs of N.T.Baddi right from 1996 itself and that the transfer in favour of his wife exclusively was improper.

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Thus, the order holding that the licence was deemed to have been transferred in favour of all the legal heirs of N.T. Baddi was challenged by M/s. Sri Nidhi Enterprises in W.P.Nos.82397-398/2013.

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This Court, after hearing M/s. Sri Nidhi Enterprises and the Government Pleader, passed the following order:

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“2. In these writ petitions, the petitioners have prayed for a writ in the nature of certiorari to quash the order dated 30.05.2013 – Annexure A passed by respondent No.1 – Deputy Commissioner of Excise, Dharwad District and the order dated 30.08.2013 in Appeal No.706/2013 passed by the Karnataka Appellate Tribunal as per Annexure B.

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3. It is seen from the record that this Court in W.P.No.67096/2010 vide order dated 23.11.2011 directed the respondents therein to complete the enquiry already initiated and to take appropriate action in accordance with law. Further this Court in W.P.No.71361/2012 vide order dated 07.11.2012 directed respondent No.1 herein to initiate proceedings, complete the enquiry and to pass appropriate orders within a time frame of one month. Accordingly, the impugned order at Annexure A dated 30.05.2013 is passed.

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4. Learned counsel for the petitioners contend that the impugned order at Annexure A is only an enquiry report and therefore he could not file an appeal. I perused the contents of Annexure A dated 30.05.2013 specifies that the order dated 04.01.2005 is declared a illegal and declared that Smt. Sharada Bai, Smt. Geeta, Smt. Anita and Smt. Sunita as the legal representatives of the deceased N.T.Baddi and they are entitled for Cl.2 License. If any person is

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aggrieved by the impugned order then an appeal is provided under Section 61 of the Karnataka Excise Act. Therefore, I decline to interfere with the impugned order at Annexure A.

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5. The second prayer in the writ petition is to set aside the order dated 30.08.2013 in appeal No.706/2013 passed by the Karnataka Appellate Tribunal rejecting I.A.No.I for grant of stay. Learned counsel for the petitioners submit that the Karnataka Appellate Tribunal has now fixed the hearing date on 30.09.2013 and further requested that a direction may be issued to the Tribunal to expedite the matter. Accordingly, the submission of the learned counsel for the petitioner is placed on record and the Tribunal is hereby directed to expedite Appeal No.706/2013 pending on its file and dispose the same within a time frame of 6 weeks from the date of receipt of copy of this order. Accordingly, the writ petitions are hereby disposed off.”

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It is thus clear that M/s. Sri Nidhi Enterprises challenged the order of the Deputy Commissioner of Excise dated 30.05.2013 which had held that the transfer of the licence in favour of N.T.Baddi’s wife alone was improper and the transfer was deemed to have

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taken place from 1996 in favour of all the legal heirs of N.T.Baddi. It is also clear that this challenge was based on the premise that the order dated 30.05.2013 was only an inquiry report which was not amenable to an appeal. This Court, however, did not accept the said contention and observed that it was an order and if any person was aggrieved by the order 30.05.2013, an appeal would have to be preferred under Section 61 of the Excise Act.

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It is not in dispute that no appeal was preferred against the order dated 30.05.2013 which had held that the transfer of the licence in favour of the deceased licensee’s wife alone was improper and thus the said order dated 30.05.2013 has attained finality.

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Two months thereafter, on 10.07.2013, Sharada Bai, the wife the deceased licensee preferred W.P.No.80383/2013 seeking a direction to the respondents to implement the order dated 30.05.2013.

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During the pendency of W.P.No.80383/2013, the Karnataka Appellate Tribunal, by an order dated 13.11.2013, allowed Appeal No.706/2013, which had been filed by M/s. Sri Nidhi Enterprises challenging the order suspending the operation of the licence.

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Being aggrieved by the said order, Sharada Bai and her children have preferred W.P.No.85500/2013.

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Both these writ petitions i.e., W.P.No.80383/2013 filed by the wife and children of N.T.Baddi for implementation of the order of the Deputy Commissioner dated 30.05.2013 and W.P.No.85500/2013 filed by Sharada Bai challenging the order of the Karnataka Appellate Tribunal in Appeal No.706/2013 have been consolidated and have been heard together.

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It may also be pertinent to state here that pursuant to the order of the Deputy Commissioner of Excise dated 30.05.2013, a police investigation was conducted and the police have submitted a ‘B’ report.

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It may also be pertinent to note that on 19.04.2018, an interim order was granted in these writ petitions directing M/s. Sri Nidhi Enterprises to deposit a sum of 15,00,000/-, out of which, a sum of 10,00,000/- was permitted to be withdrawn by Sharada

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Bai and her children subject to furnishing of security. This Court had permitted M/s. Sri Nidhi Enterprises, to make an application seeking for renewal of CL-II licence and had also ordered that it was open for the Department to consider the application of renewal.

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Based on the said order, the Department has accepted the request for renewal of M/s. Sri Nidhi Enterprises and has also thereafter been renewing the licence in favour of M/s. Sri Nidhi Enterprises periodically and on the strength of the said licence, M/s. Sri Nidhi Enterprises have been carrying on the business. It may also be necessary to state here that this Court while passing the said interim order observed as follows:

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“(v) This interim arrangement is made in the peculiar facts and circumstances of the case and with the specific rider that neither of the parties shall trade the plea of equity to defeat the rights that have accrued them.”

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It is submitted by the counsel for the petitioners that the petitioners have not withdrawn the sum of

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10,00,000/- as permitted by this Court and the entire amount of 15,00,0000/- continues to be on deposit before this Court.

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Learned Counsel for the petitioners Sri V.M. Sheelavant contended that N.T. Baddi had passed away in the year 1996 itself and by practicing fraud, the licence was renewed on the premise that he was still alive. He submitted that thereafter in the year 2004, a fake death certificate was produced and the licence was transferred in the name of his wife Smt.Sharada Bai and this was also by way of impersonation. He submitted that Smt.Sharada Bai brought the fraud played to the notice of the Department and since no action was taken,

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she had been constrained to approach this Court and upon a direction issued by this Court, an inquiry had been conducted holding that the transfer made in the year 2004 exclusively in her favour was improper and that the transfer of licence was deemed to have been made in the year 1996 not only in favour of Sharada Bai, but also in favour of her children jointly.

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He submitted that in view of the fact that the order dated 30.05.2013 holding that the licence was deemed to have been transferred in favour of all the legal heirs of N.T.Baddi was not challenged, the subsequent transfer claimed by M/s. Sri Nidhi enterprises on the basis that Sharada Bai alone was the licensee was an obvious nullity. He submitted that since it was already held that the transfer in favour of Sharada Bai in the year 2004 was improper, the consequential transfer by Sharada Bai in favour of M/s. Sri Nidhi Enterprises would also be of absolutely no consequence. He submitted that since the order dated 30.05.2013 held that the licence was

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deemed to have been transferred in favour of the wife and children of N.T.Baddi jointly, the licence granted and renewed in favour of M/s. Sri Nidhi Enterprises, was liable to be ignored and the authorities were bound to give effect to the order dated 30.05.2013.

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Sri J.S.Shetty, learned counsel for the respondents, on the other hand, contended that the transfer of licence in favour of Sharada Bai was not fraudulent. He submitted that the children of Sharada Bai had given their consent for transferring the licence in favour of Sharada Bai and the police, after investigation, had found that the allegations of fraud had not been established and they had, in fact, filed a ‘B’ report which indicated no wrongdoing. He submitted that as a consequence, the transfer in favour of Sharada Bai was valid and the subsequent transfer of licence by Sharada Bai in favour of M/s. Sri Nidhi Enterprises was also valid.

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He also submitted that this order of transfer made in favour of M/s. Sri Nidhi Enterprises had not at all been

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challenged, and therefore, the writ petitions deserved to be rejected. He submitted that the order dated 30.05.2013 was of no consequence since that order was only passed subject to the conduct of a police investigation and since the police had investigated the matter and had concluded that there was no wrongdoing, the order dated 30.05.2013 had lost its significance. He submitted that since the order dated 30.05.2013 did not determine any rights at all, there was no need to challenge the said order, and the challenge even if made in the writ petition would also be a superfluous exercise since it would be ultimately subject to the result of the police investigation.

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The principal issue that needs to be determined in these writ petitions is whether on the death of N.T. Baddi, there was a legal and valid transfer of CL-II licence in favour of his wife and whether the subsequent transfer by his wife alone in favour of M/s. Sri Nidhi Enterprises can be considered as valid.

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The Deputy Commissioner in the order dated 30.05.2013 has categorically recorded a finding that N.T.Baddi had died on 29.02.1996 and this was evidenced by the death certificate that had been produced before the authorities, which was also verified by obtaining a clarification from the Birth and Death registering authority who had stated that an entry had been made in the Death Register that N.T.Baddi had died on 29.02.1996 and this entry had been registered on

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05.03.1996 vide Registration No: 1/1996/4277.

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The Deputy Commissioner has noticed that the death certificate that was produced for obtaining the transfer in favour of Sharada Bai in the year 2004 indicating the date of death of N.T.Baddi as 23.06.2004 was unacceptable since it did not relate to N.T.Baddi. The Deputy Commissioner of Excise has also noticed that as per the death certificate which had been produced to obtain the transfer in favour of Sharada Bai, which indicated that N.T.Baddi had passed away on 23.06.2004

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at the Cooperative Hospital, Hubli and which was stated to have been registered on 05.07.2004 vide Registration No.686 was actually relatable to the death of one Mohan, son of Vasappa, a resident of Navalgund, and therefore, same could not have been accepted as the basis for the transfer.

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It has also been noticed that there was no record indicating that N.T.Baddi had passed away on 23.06.2004 at the Cooperative Hospital, Hubli. Thus, the finding of fact recorded by the licensing authority is that N.T. Baddi had passed away on 29.02.1996.

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If, N.T.Baddi had passed away on 29.02.1996, the licence that he possessed would enure only to the benefit of his legal heirs under the provisions of the Karnataka Excise Act.

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Section 15 of the Karnataka Excise Act prohibits the sale of excisable articles without a licence. This licence is required to be granted by the Deputy Commissioner, if the sale is within the District and by the

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Excise Commissioner, if the sale is in more than one District.

¶138

In exercise of the powers conferred under Section 71 of the Karnataka Excise Act, the Karnataka Excise Licenses (General Conditions) Rules, 1967, (hereinafter referred to as the Rules) have been framed. Rule 3(2) of the said Rules defines a “licensee” as a person to whom a licence to sell liquor is granted. Rule 17 states that the right of retail vend of liquor shall not be transferred by the licensee except with the previous permission of the Deputy Commissioner.

¶139

Rule 17-A of the Rules which would be relevant for this case, reads as follows:

¶140

“17-A. Transfer in the event of death . - In the event of death of the licensee or the lessee during the currency of the licence or lease, 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.”

¶141

(underlining by me)

¶142

¶143

As could be seen from Rule 17-A, on the death of the licensee during the currency of the licence, the Deputy Commissioner is empowered to transfer the licence in favour of the legal heirs, if they were to make an application in that regard. Thus, the law contemplates that on the death of the licensee, the licence is required to be transferred to all the legal heirs and the transfer cannot be made to just one of the legal heirs. Thus, on the death of N.T.Baddi, by operation of law, the licence was required to be transferred to his wife and children jointly and not just to his wife.

¶144

The Rule does not permit the transfer to be made only in the name of only one legal heir even if the other legal heirs give their no objection, though such a practice appears to be adopted by the Department, probably for the sake of convenience.

¶145

In a case of this nature, where the wife of the licensee makes a complaint that the licence was renewed in the name of her husband for four years even though

¶146

¶147

he was dead, the entire process of renewal and the subsequent acts come under a serious cloud which is required to be dispelled beyond all reasonable doubt.

¶148

It is to be borne in mind that there was no impediment for the legal heirs of the licensee to inform the authorities about the death of the licensee and then rightfully seek for transfer of the licence and there was no conceivable reason or logic for them to seek for continuation of the licence in the name of the deceased licence holder. It thus neither stands to reason nor is it conceivable that the legal heirs of the deceased licensee would have sought renewal by suppressing the death of the licensee.

¶149

The fact that subsequently a fake death certificate was produced and a transfer was obtained in the name of his wife alone, also neither stands to logic nor to reason. The wife or children of the deceased licensee stood to gain absolutely nothing by making a statement that the licensee had died in 2004 when he had passed

¶150

¶151

away in 1996 and it is, therefore, inconceivable that they would have sought for transfer of the licence by production of a fake death certificate. This singular reason, by itself, is sufficient to come to the conclusion that there was fraud played in the matter of renewal of the licence in favour of N.T.Baddi and also in getting the licence transferred in the name of his wife in 2004, eight years after her husband had passed away in 1996.

¶152

The entire transaction relating to the renewal of licence in favour of N.T.Baddi and the transfer of licence in the name of his wife thus stands vitiated and cannot be accepted as a genuine transfer. If this entire transaction is viewed from the intent of the Rule that the transfer of the licence is to be made in favour of all the legal heirs and not just one of the legal heirs, it would be clear that the transfer of the licence in favour of Sharada Bai wife of N.T.Baddi was wholly illegal and consequently, the subsequent transfer of the licence by

¶153

¶154

Sharada Bai in favour of M/s. Sri Nidhi Enterprises was also a nullity.

¶155

As stated above, though N.T.Baddi had passed away in 1996, very strangely, the licence was periodically renewed till 2004 and only in the year 2004 on the alleged application of his wife Sharada Bai, the licence was transferred on the premise that N.T.Baddi had passed away on 23.06.2004. If, as a matter of fact, N.T.Baddi had not passed away on 23.06.2004, this application seeking for transfer and the resultant order passed on the said application would be of a complete nullity and no consequence.

¶156

This Court, taking note of the complaint of the petitioners, directed the authorities to conduct an investigation and take it to its logical conclusion and if necessary, initiate action against the petitioners if they were also a party to the fraud. The Deputy Commissioner of Excise, pursuant to the said order, conducted an inquiry and has recorded a clear finding of

¶157

¶158

fact that N.T.Baddi had passed away on 29.02.1996, and the death certificate produced which stated that he passed away on 23.06.2004 was fake.

¶159

The Deputy Commissioner has, therefore, taken note of the fraud that had been played and having regard to the circumstances of the licence being renewed periodically from 1996, held that the licence was deemed to have been transferred in favour of the wife and children of N.T.Baddi jointly. He has also held that the transfer made exclusively in favour of the licensee’s wife Sharada Bai was improper. The effect of this order by the licensing authority is that right from 1996 itself, the licence had stood transferred in the name of the wife and children of N.T.Baddi jointly and the transfer made exclusively in favour of Sharada Bai would be of no consequence.

¶160

M/s. Sri Nidhi Enterprises, the transferee from Sharada Bai, having laid a challenge to the said order by filing W.P.Nos.82397-398/2013 and inviting an order

¶161

¶162

relegating it to the remedy of filing an appeal, has accepted the validity of the order dated 30.05.2013 by not availing the remedy of an appeal. In other words, M/s. Sri Nidhi enterprises has accepted the order dated 30.05.2013, to which they were parties, and in which, it had been held that the licence had stood transferred in favour of the wife and children of N.T. Baddi jointly from 1996 itself and the transfer in favour of Sharada Bai alone in 2004 was improper.

¶163

Another important factor which is required to be noticed is that, admittedly, M/s. Sri Nidhi Enterprises claimed to have secured a transfer from Sharada Bai on the premise that Sharada Bai alone was the licensee. However, in the light of the order dated 30.05.2013 of the Deputy Commissioner that the licence stood transferred to the wife of N.T.Baddi and his children jointly, the entire claim of M/s. Sri Nidhi Enterprises would have to fall to the ground. If Sharada Bai is not the sole licensee and she is only entitled to be one of the

¶164

¶165

licensees along with her children, the transfer made by her, assuming it is genuine, would not result in a valid transfer of the license in favour of M/s. Sri Nidhi Enterprises. This is essentially because in order to effect a valid transfer, all the licensees are required to agree for the transfer. Since, admittedly, the children have not agreed to transfer the licence in favour of M/s. Sri Nidhi Enterprises, the transfer claimed by M/s. Sri Nidhi Enterprises only from Sharada Bai would be of no consequence at all.

¶166

The argument of Sri J.S.Shetty that the children had given their no objection for the transfer of licence in favour of Sharada Bai in the year 2004 and hence they could not object to the transfer of licence by their mother in favour of M/s. Sri Nidhi Enterprises, cannot be accepted for two reasons.

¶167

Firstly, even if it is to be assumed that the children had signified their consent for transfer of the licence in favour of their mother Sharada bai, that consent cannot

¶168

¶169

be extended to the transfer made by the mother to M/s. Sri Nidhi Enterprises.

¶170

Secondly, as already noticed above, the transfer in favour of Sharada Bai itself was wholly improper and illegal, as it was on the basis of a fake death certificate. If the transfer to Sharada Bai has been held to be invalid

¶171

by the licensing authority because of the fake death certificate, the person claiming benefit under that fraudulent transfer cannot contend that there is a valid transfer in his favour.

¶172

The other argument that the transfer in favour of M/s. Sri Nidhi Enterprises on 03.08.2006 has not at all been challenged by the children, and therefore, the entire basis of the writ petitions would have to fail, cannot also be accepted for the simple reason that the transfer in favour of M/s. Sri Nidhi Enterprises would be valid only if the transfer of licence in favour of Sharada Bai was valid. Since the authorities have rightly held that the transfer in favour of Sharada Bai in the year 2004

¶173

¶174

was improper and since there was no challenge made to this order of transfer, the subsequent order of transfer in favour of M/s. Sri Nidhi Enterprises would be of no consequence at all and would fall to the ground, if the transfer in favour of Sharada Bai has been held to be non-est .

¶175

In this case, it is clear that fraud has been practiced on the Department. Though the licence holder had passed away in the year 1996, the licence was strangely renewed from 1996 till 2004 and in the year 2004, on the basis of a fake death certificate, the licence was transferred to his wife alone and she, thereafter, alleged to have transferred it to M/s. Sri Nidhi Enterprises. It is inconceivable that the wife of the licensee i.e., Sharada Bai would have produced a fake certificate in the year 2004 to seek for transfer basically because the fact that her husband had died was not in dispute and the fact that she was entitled for a transfer along with her children, in law, was also not in dispute.

¶176

¶177

It is, therefore, inconceivable that Sharada Bai had made an application seeking for transfer of licence on the premise that her husband had died on 23.06.2004. The finding recorded by the Deputy Commissioner that the death certificate dated 23.06.2004 was relatable to some other person also indicates that fraud had indeed been played in this case. As a result of this fraud being played, it is clear that M/s. Sri Nidhi Enterprises benefited from the fraud and they cannot claim that there was a valid transfer in their favour. The transfer of licence in their favour being completely invalid would have to be fundamentally ignored.

¶178

The argument that the ‘B’ report filed by the police pursuant to the investigation conducted as per the order 30.05.2013 indicated that there was no wrongdoing, and therefore, the transfer in favour of Sharada Bai was required to be accepted, is also untenable. The complaint of Sharada Bai was essentially that fraud had been played by the aides of her husband. The police in their

¶179

¶180

investigation appeared to have concluded that no fraud had been established. Merely because the police are of the view that no crime had been established, the serious illegality committed in transferring the licence in favour of Sharada Bai alone and thereafter, in favour of M/s. Sri Nidhi Enterprises cannot be ignored. I am, therefore, of the view that the order passed by the Appellate Tribunal in setting aside the order of the Deputy Commissioner suspending the licence in favour of M/s. Sri Nidhi Enterprises, cannot be sustained and the same is accordingly quashed and the order of the Deputy Commissioner is upheld.

¶181

As a further consequence, the writ petition filed by the petitioner to implement the order dated 30.05.2013 i.e., W.P.No.80383/2013 is required to be allowed and it is accordingly allowed .

¶182

The Deputy Commissioner of Excise is directed to implement the order dated 30.05.2013 and ensure that the CL-II licence which was standing in the name of N.T.

¶183

¶184

Baddi would stand transferred in favour of his wife and children, jointly and they alone would be entitled to vend liquor.

¶185

The Deputy Commissioner of Excise shall ignore the transfer made in favour of Sharada Bai in 2004 and her subsequent alleged transfer in favour of M/s. Sri Nidhi enterprises.

¶186

The amount of `15,00,000/- which has been deposited by respondents 4 to 6 pursuant to the interim order dated 19.04.2018 shall stand forfeited and be made over to the Excise Department as respondents 4 to 6 had no legal entitlement to secure the renewal and had wrongfully utilized the CL-II licence though they had absolutely no right to do so.

¶187

W.P.No.85500/2013 is also allowed and the order dated 13.11.2013 passed by the Karnataka Appellate Tribunal, Bangalore, in Appeal No.706/2013 is quashed and the order passed by the Deputy Commissioner on 12.07.2013 which was affirmed by the

¶188

¶189

Excise Commissioner in Appeal No.ECS 71 APP 2013, shall stand restored and the respondents 4 to 6 shall not be permitted to carry on the business of the CL-II licence which was alleged to have been transferred in their favour.

¶190

In view of W.P.No.80383/2013 being allowed, the Excise Authorities (respondents 1 to 3 in this writ petition) are directed to implement the order dated 30.05.2013 passed by the 3^rd respondent by giving effect to deemed transfer of the CL-II licence from N.T.Baddi to his wife and children and thereby facilitate the carrying on of business by them on the strength of the deemed transfer of the CL-II licence in their favour.

¶191

After the order is pronounced, an oral prayer is made by the learned counsel, Sri.J.S.Shetty, to stay this order.

¶192

¶193

I find no reason to entertain this prayer. The same is accordingly rejected.

¶194

(Sd/-) JUDGE

¶195

PKS

Sharada Bai W/O. Narayansa Baddi v. the Excise Commissioner

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Sharada Bai W/O. Narayansa Baddi v. the Excise Commissioner

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