Liquor License Can't Be Suspended Citing Family Dispute Between Legal Heirs After Death Of License Holder In Partnership: Bombay HC

Justice Manish Pitale relied on two circulars which stated that licenses should be temporarily renewed subject to the outcome of the dispute, if a valid application is made by even one of the disputing partners with proper compliance.

"Thus, the thrust of the State Policy appears to be safeguarding government revenue and permitting business to run, even during pendency of such dispute pertaining to liquor licenses. The impugned order passed by the Collector appears to be contrary to the aforesaid policy of the State manifested in the said circulars."

Justice Pitale thus directed renewal of the CL-III license for 2022-23 in the surviving partner's name i.e. the wife (petitioner), despite rival claims by the couple's sons (respondents) asserting their rights as legal heirs. However, the court ordered that all accounts should be maintained and submitted before the civil court before whom the matter was pending.

Facts

The license holder Mohanbabu Jaiswal passed away in 2019 after which the Collector added names of both the sons as license holders in 2021, despite objections by the mother, Aruna, who was Jaiswal's partner in the liquor business. Aruna's name was also subsequently added, but the matter about who is the rightful licensee is still pending before the competent authority.

Meanwhile, when Aruna tried renewing the liquor license in 2022, the Collector suspended the license on May 6, 2022 citing the legal dispute and said that the license would remain suspended till the family dispute was not resolved.

The petitioner wife, Aruna Mohanbabu Jaiswal, then approached the HC assailing this suspension order and said it was in the teeth of the Maharashtra Prohibition Act and the Maharashtra Country Liquor Rules, 1973.

Arguments

Advocate MM Agnihotri for the petitioner wife submitted that the Collector could not have suspended the CL-III license citing the dispute among legal heirs. The Collector failed to note that a partnership deed was issued between the couple in 2014 with his permission. Therefore, the present matter should be seen as one partner having expired and the license would devolve on her.

Advocate Ritu Jog for the sons cited a 1996 circular used by the Collector while suspending the license and said it was correctly applied. They claimed that their mother wanted to usurp the entire liquor business.

Observations

At the outset, Justice Pitale said that the 1996 circular was wrongly applied as it contemplated a scenario where there was a dispute between legal heirs wherein the license was originally held by an individual. However, the present case was regarding a partnership firm, Justice Pitale noted.

A March 19, 1985 circular specifically directs that in cases where disputes between partners arise in the context of a CL-III license and an application for renewal with due compliance is made on behalf of the partnership by one of the partners, such renewal should be granted subject to any contrary orders issued by the competent Civil Court.

According to another circular issued on February 9 this year, if the original license holder or shareholder in such license dies and the process of incorporation of names of the legal heirs are pending before the concerned authorities, till final decision in the matter is reached, for the year 2022-23 ad hoc or temporary renewal of the liquor license should be undertaken.

"This Court is of the opinion that suspension of the CL-III license in the present case is not justified and that in any case it does not enure to the benefit of any party, including the State, which is likely to suffer loss of revenue during the suspension of the license and consequent closing down of the country liquor business."

While refraining from making any remark on the pending dispute between the parties, the court held that "…suspending the CL-III license and bringing the business of country liquor, being run for number of years, to a halt cannot be the solution."