A partnership firm holding CL-2 and CL-9 liquor licences was ordered by excise authorities to be operated separately by its two sibling partners per their reconstituted partnership deed. The High Court dismissed the writ petition, upholding the authorities' orders and directing the Tribunal to dismiss the pending appeal.
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 06th DAY OF AUGUST, 2024
BEFORE
THE HON'BLE MR JUSTICE N S SANJAY GOWDA WRIT PETITION NO. 17073 OF 2024 (EXCISE)
BETWEEN:
M/S SANDESH ENTERPRISES REPRESENTED BY ITS MANAGING PARTNER H.S SAGAR, S/O LATE SHIVALINGAPPA, HAVING HIS ADDRESS AT #36/6, SRINIVAS REDDY BUILDING, SECTOR-2, HSR LAYOUT, SOMASUNDARA PALYA, BENGALURU. REGISTERED UNDER SECTION 58(1) OF THE INDIAN PARTNERSHIP ACT 1932.
…PETITIONER
(BY SRI. MANIAH FOR SRI.B.RAMACHANDRA REDDY, ADVOCATE)
Digitally signed by KIRAN KUMAR R Location: HIGH COURT OF KARNATAKA
AND:
AGED ABOUT 60 YEARS, W/O M.C. SHIVALINGAIAH, R/AT SHIVASAILA NILAIAH, VIVEKANANDA NAGARA, RAMANAGARA TALUK, RAMANAGARA DISTRICT KARNATAKA.
(R-4 IMPLEADED VIDE COURT ORDER DATED:05.07.2024)
…RESPONDENTS
(BY SMT. RADHA RAMASWAMY, AGA FOR R-1 TO R-3; SRI. B.N.SHETTY, ADVOCATE FOR R-4)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ORDER DATED:22.04.2014 PASSED BY THE DEPUTY COMMISSIONER BEARING No.EXE/KMRI/ML/CL2/847/2013-14 AS PER ANNEXURE-A SO FAR AS IT ALLOCATES THE CL-2 AND CL-9 LICENSE STANDING IN THE NAME OF THE PARTNERSHIP FIRM M/S SANDESH ENTERPRISES TO INDIVIDUAL PARTNERS TO BE RUN AS THOUGH THEY ARE INDIVIDUAL LICENSEE, ETC.
THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 26.07.2024, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:
CORAM: THE HON'BLE MR JUSTICE N S SANJAY GOWDA
CAV ORDER
Firm ”) engaged in the business of running a bar and restaurant and a wholesale liquor shop was the recipient of a CL2 license (for running a wine store) and also a CL9 license (for running a bar and restaurant). The Firm was constituted under a partnership deed dated 12.06.2000 and comprised three partners — Sri. H. S. Sagar, Smt. H. S. Shylaja (Sagar’s sister), and one Sri. G. Venkatesh. It appears that said Sri. G. Venkatesh was inducted as a partner on 21.02.2004 and went out of the firm on 06.08.2010, per the extract furnished by the learned counsel for the petitioner.
NC: 2024:KHC:31930 WP No. 17073 of 2024
i.e., the siblings as the partners. The re-constituted partnership deed (at Annexure-E) records as follows regarding the role of the Managing Partner and the Partner i.e., the siblings:
“8. Managing Partner : Sri.H.S.Sagar will be managing partner of the partnership firm and authorized to appear before all governments departments and all other authorities. Both the partners shall be equally responsible to act, represent and to transact on behalf of firm with consent of the other partners. Consequently guidelines will be framed. Sri.H.S Sagar will only look after the Sanjay Bar and Restaurant of the M/s.Sandesh Enterprises. The second partner Smt.H.S. Shailaja will only look after Victoria Wines (Shyla Wines).”
“ 11. Books and Accounts : The Regular books of accounts shall be maintained by both the partners separately. The Managing Partner Sri.H.S. Sagar shall maintain the books and accounts of the Sanjay Bar and Restaurant solely and the second partner Smt.H.S. Shailaja shall maintain the books and accounts of the Victoria Wines (Shyla Wines) separately. Both the partners shall have right to look
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over the books of accounts for audit purpose in the name of M/s.Sandesh Enterprises and to pay the tax for the concerned departments.”
partnership deed, which is admitted in this writ petition, the brother – Sri. H. S. Sagar is to look after the bar and restaurant, while the sister – Smt. H. S. Shailaja is to look after ‘Victoria Wines’.
the wholesale liquor business under the CL2 License. In this suit, the Trial Court granted a temporary injunction on 20.02.2013, against which an appeal was filed in M.F.A. No.2334/2013. This appeal was disposed of by consent, on the submission made by the learned counsel appearing for the brother and sister, in the following terms-
“ The respondent who is present in person has paid Rs.50,000/-(Rupees Fifty Thousand) to appellant No.1 in cash in the presence of the counsel for the parties in Court today. Learned counsel appearing for the respondent further submits that the respondent will pay another sum of Rs.50,000/- on or before 5th July 2013 relating to the month of June 2013. His submission is placed on record.
Appeal disposed of.”
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“Smt.H.S.Shailaja, Partner, M/s.Sandesh Enterprises shall look after the transactions in the CL2 licence shop at No.36/36, Srinivasa Reddy Building Sector 2 HSR Layout Somasundarapalya Bangalore560 102 in the name and style “SHILA WINES” for the remaining period of the licence year 2013-14 (e w 30.06.2014) subject to the final decision of the Hon XXXIX Addl. City Civil & Sessions Judge, Bangalore City, O.S. No.8919/2012.
In respect of the CL-9 license at No.4, Sy.No.92, Vijanapura Main Road, Dooravaninagar, K.R. Puram, BANGALORE in the name and style “SANJAY BAR AND RESTAURANT”, Sri.H.S.Sagar shall carry on the Transactions and to take full
remuneration as agreed by both Sri.H.S. Sagar and Smt.Shailaja in the Partnership Deed on 04.08.2010.”
nature of the Firm from that of a partnership to a proprietorship.
action for changing the license from being in favour of the Firm to that of a Proprietorship, which was impermissible.
constituted partnership deed and an order passed in terms
of this deed could not be found fault with.
the Deputy Commissioner as well as that of the Appellate Authority before the Tribunal and the same is pending consideration.
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entitled to run the wine store while the brother was required to run the bar and restaurant separately. Since the re-constituted partnership deed is not in dispute, the terms of which mandate that each of them run their business separately while maintaining separate books cannot also be disputed. In this view of the matter, the argument of the learned counsel for the petitioner cannot be accepted.
only for an injunction, and the rights of the parties under the terms of the deed was not the subject matter. The suit was filed by the brother to basically restrain his sister from his exclusive right to run both the wine store (CL-2 license) and the bar (CL-9 licence), and hence, any observation made therein cannot really determine the
NC: 2024:KHC:31930 WP No. 17073 of 2024
rights of the parties, especially when the plaint itself had been rejected.
NC: 2024:KHC:31930 WP No. 17073 of 2024
contend that he can exclusively run both the CL2 and CL9 licenses which were issued in the name of the Firm.
conditions laid down while granting the license. If a Firm constituted under a deed, by itself, indicates that the partners are to run the businesses separately, maintain their accounts separately and also remit the taxes separately, the authorities can accept the terms of the deed under which the Firm was constituted or reconstituted. In such a case, it would not be open for one of the partners to contend before the licensing authorities that the terms of the deed were itself illegal or that the partnership was itself void.
the parties have approached the appropriate Civil Court seeking the dissolution of the Firm, or for any other aspect in relation to the partnership deed. As long as both the parties to the deed admit to the execution and existence of the deed under which the Firm was either constituted or re-constituted, it would not be permissible for either of the parties to go beyond the terms of said deed. If one of the parties is of the view that the terms of the partnership
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deed is void or illegal, it would be open for them to approach the appropriate Court for relief but until a decree in that regard is passed by the Civil Court, the Licensing Authorities are bound by the terms of the deed of partnership or the deed of reconstituted partnership on the basis of which they have granted licenses.
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petition, which are also challenged in the appeal, are just, proper and do not suffer from any infirmity.
Sd/(N S SANJAY GOWDA) JUDGE
HNM List No.: 19 Sl No.: 3 CT: HR
2 issues framed by the court
Whether excise authorities could validly allocate CL-2 and CL-9 licenses held by a partnership firm to the individual partners to operate separately.
Whether a partner can challenge the reconstituted partnership deed as void before licensing authorities absent civil court adjudication.
2 provisions across 2 enactments
M/s Sandesh Enterprises (represented by Managing Partner H.S. Sagar)
The Excise Commissioner of Karnataka
Deputy Commissioner of Excise Bengaluru Urban District
The State of Karnataka (Department of Excise)
H.S. Shailaja
N S Sanjay Gowda
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
