Additional Collector of Central Excise vs Kathivesan Pillai

S. Mohan, Offg. C.J.

These writ appeals arise out of the judgment of learned Brother Kader J. rendered in W.P. 2012 to 2016 of 1988. All of them came to be dealt

with by common judgment dated 21st September, 1988. The facts do not admit of much controversy. The petitioners in W.P. 2012 to 2016 of

1988 the respondents herein are partners of the firm Sujatha Jewellers No. 105-A South Avani Moola St., Madurai. They filed individual writ

petitions for mandamus directing the Additional Collector of Central Excise, Madurai to dispose of their application, dated 18-11-1985 for

renewal of their licence under the Gold Control Act, hereinafter referred to as the Act, without reference to his order dated 16-10-1987, made in

C.No. XVII/7/59 Order No. 11/87. W.P. 2012 of 1988 was to quash the foresaid order of the Additional Collector of Central Excise,

Kathiresan, the petitioner in W.P. 2012 of 1988 was the holder of licence No. AVII/77, dated 3-9-1977, issued to him by the Assistant Collector

Of Central Excise, Madurai. The licence enabled the holder to carry on the business of making, manufacturing, preparing, repairing, polishing,

buying, selling, supplying, distribution, melting, processing or converting gold. This licence has been periodically renewed. In and by a partnership

dated 6th May, 1982, he entered into a partnership with Savitri, Kumaragurubaran and Shanmughavelayutham to continue the said business under

the name and style of Sujatha Jewellers. Even after this the licence was issued under the name of the firm, Sujatha Jewellers, but in the name of the

four individuals, namely, Kathiresan, Savitri, Kumaragurubaran and Shanmughavelayutham, the petitioners in W.P. Nos. 2012, 2013, 2014 and

2015 of 1988. The issue of licence was on 18-5-1982. The renewal also took the same pattern in the name of individuals, for the year 1983-85.

On 18-11-1985, all these four individuals who figured as writ petitioners applied to the Assistant Collector of Central Excise, Madurai, for

renewal of their licence. The Collector curiously enough issued a show cause notice to Messrs Sujatha Jewellers on 31-5-1987. Unfortunately the

licence holders did not take up objections at the initial stage itself that they were not concerned with a show cause notice issued to Sujatha

Jewelers. They raised various objections, more perhaps with an anxiety to defend their case. Whatever it may be, their defence was overhauled

and the impugned order dated 16-10-1987 was passed refusing renewal. This was on the ground that there were certain contraventions of the Act

and the Rules framed thereunder. Against this order of the rejection, an appeal was filed to the Collector of Central Excise. However, as a parallel

proceedings W.P. 11510 of 1987 was filed before this Court, that was dismissed by the learned Single Judge of this Court holding that inasmuch

as the remedy of the appeal had been availed of the writ petition was not maintainable. The appeal to the Collector of Central Excise was

dismissed on 29-12-1987. Against this order, the matter was taken up to the Tribunal. Before the Tribunal, leave was sought to withdraw the

appeal on the ground that the impugned order was non set and without jurisdiction. The Tribunal granted the required permission stating :-

Without expressing any opinion on the merits of the issue we accord permission to the appellant to withdraw the appeal and the appeal is

accordingly dismissed as withdrawn.

It was under these circumstances the writ petitions came to be filed.

The contention advanced on behalf of the writ petitioners-respondents herein broadly was that the licence stood in the name of four individuals

and not in the name of the firm. Therefore any notice issued to the firm would not bind the individuals. In support of the same reliance was placed

on the decision reported in Talwar Diamond v. Union of India 1987 Excise and Customs Cases 122. This argument found favour with the learned

Judge and accordingly he allowed the writ petitions quashing the impugned order dated 16-10-1987 with a direction to reconsider the renewal in

accordance with law without reference to the order which had been quashed. Thus the writ appeals.

The learned Advocate General prefaces his argument saying that insofar as the Managing Partner of the firm Kathiresan Pillai had chosen to file

a reply to the show cause notice in a detailed fashion, it cannot be contended that against there must be individual notices. Therefore one cannot

disregardful of the fact, press that line of argument into service and take advantage of the situation or drive a hard bargain. This exactly what the

petitioners-respondents want to do in these cases.

In opposing this, Mr. Habibulla Badsha, learned Counsel for the respondents, would urge that the categoric finding of the learned Judge is that

under the Act and the Rules made thereunder, a firm could be a licence. Where therefore, a licence came to be issued in the name of four

individuals albeit the fact that in Column 7 of the Schedule to the publication form, the names of the partners were given as partners of Sujatha

Jewellers, the licencing authority cannot turn round and say that the licence issued in the name of four individuals was meant to be that of the firm.

If, really, therefore, the four individuals are the licensees as has been found by the learned Single Judge, the issue of show cause notice to the firm

has no legal consequences whatever. Thus the findings of the learned Single Judge cannot be assailed at all.

We are more than surprised to see that the licensing authority has not even cared to properly scrutinise the application for renewed. Whatever

might have been the original position with reference to the issue of licence at the earliest point of time, namely, 3-9-1977, when Kathiresan was

issued the licence individually where it is stated that the applicant described the business premises as Sujatha Jewellers, 105-A South Avani Moola

St., Madurai, that was not taken note of. The licence was renewed in 1979, 1980, 1981 and 1982. It was at that stage Savitri, Kumaragurubaran

and K. Shanmughavelayutham were taken as partners. Even after this, the application in Form No. G.S. 6 as prescribed under Rule 5(2) was in

the name of four individuals, residing at No. 150-A South Avani Moola St., Madurai, as Kathiresan is concerned, and at No. 14

Subramaniapuram, Madurai with respect to the other three partners. They were to Carry on business at No. 105-A South Avani Moola St.,

Madurai, as seen from the Schedule. Then again, for the subsequent year licence was issued under Licence No. 17/77 on 18-5-1982 in the name

of four individuals. That was renewed on 22-10-1984, for the years 1983 to 1985, and for the years 1986 to 1988 a sum of Rs. 25 has been paid

towards renewal fee along with application dated 18-11-1985. In the application dated 18-11-1985, under Column 7, it is stated thus :-

Here again, the applicants were only the four individuals. But, without noting these partners, a show cause notice comes to be issued on 31-3-

1987 as follows :-

M/s. Sujatha Jewellers have applied for renewal of their GDL No. 17/77 for three years 1986-88 enclosing therewith a G.S. application dated

18-11-1985, Original GDL, proforma and a paid up challan dated 24-10-1985 towards renewal fee"".

This is reason why we remarked even at the beginning of the judgment after the narration of the fact that there has been not been a proper scrutiny

by the licensing authority concerned. Nowhere did the Sujatha Jewellers apply for the renewal. Nor did at any relevant point of time the licensee

stand in the name of Sujatha Jewellers. Where from trios information was obtained as though Sujatha Jewellers is the holder of a licence or again

had applied for renewal in GDL No. 17/77 passes our comprehension. As a matter of fact, as just now we pointed out, Sujatha Jewellers never

applied for renewal at all. It is only the four individuals who went on repeatedly applying for renewal. If really the intention of the licensing authority

was to issue the licence in favour of Sujatha Jewellers nothing, would have been easier to look into the application form carefully and call upon the

applicants as to what exactly is meant by Column 7 which we have extracted above. Nothing of that sort was done. Therefore, the very basis of

the show cause notice tends to ignore the well accepted position of a ''firm'' under the law of partnership. We will quote the relevant passage from

Law of Partnership in India by S. D. Singh and J. P. Gupta, 2nd Edition :-

The Indian Partnership Act goes further than the English Partnership Act, 1980 in recognising that a firm may possess a personality distinct from

the persons constituting it and is thus more in accordance with the law of Scotland than with that of England. But the fact, that a firm possesses a

distinct personality does not involve that the personality continues unchanged so long as business of the firm continues. The Indian Act like a

English Act, avoids making a firm corporate body enjoying the right perpetual succession.

It may be noted that a firm is not a juristic person but is only compendious expression of the names or individuals who for the time being are its

partners, A firm is entitled to file a suit in its own name or in the name of its partners. Under Order 30 Rule 1, Civil Procedure Code, it is the

partnership firm alone which is entitled to file a suit in firm name.

Therefore, this is well laid distinction cannot be obliterated as is sought to be done now. Under these circumstances, we are in entire agreement

with the findings of the learned Single Judge who held that u/s 2(h) of the Act, ''dealer'' includes a Hindu undivided family, a local authority,

company society registered under the Societies Registration Act, a Co-operative Society, club, firm or other association of persons. Section 52

also had been rightly referred to. Therefore, it is clear that a firm can be holder of a licence under the Act, In this case, only the four individuals

have applied for renewal of the licence and not the firm. Therefor, the show cause notice issued to the firm is non set in law. The fact that such a

ground was not taken in the reply to the show cause notice cannot be put against the respondents. Mr. Habibulla Badsha, in an anxiety to defend

the cases, several defences might have been put fourth on merits. But that does not detract from the position that the show cause notice had come

to be issued to the firm. Under these circumstances, we find little hesitation in confirming the order of the Single Judge and dismiss these writ

appeals. Accordingly they are dismissed with costs. Counsel fee - Rs. 1000 one see

Now that we have dismissed the writ appeals, the question arises as to what is to be done till application for renewal is considered and orders

passed. The learned Advocate General represents to us that at the shortage possible time the application for renewal will be disposed of on merits

after issue of show cause notice afresh. However, Mr. Habibulla Badsha would say that the respondents must be enabled to run their business. We

find from the records that the business had actually been stopped by the respondents on 28-2-1988. Though an interim direction was obtained

pending the writ petitions before the learned the learned Single Judge, that had come to be stayed because the licensing authority had taken up the

matter in appeal in W.A. 740 of 1988. Therefore, virtually the business was not run from the date. Under these circumstances, to permit the

respondents to run the business will only complicate the issue. To us the proper and just course appears to be given a direction to dispose of the

renewal application in accordance with the following time Schedule.

The application dated 18th November, 1985 received for the years 1986, 1987 and 1988, will be taken up for consideration. Should the

licencing authority think that a show cause notice is necessary about which we say nothing, such a show cause notice shall be issued on or before

the 3rd February, 1989, for which the reply shall be filed by the respondents by 10th of February, 1989. The disposal of the application shall take

place in the manner indicated in the judgment on or before the 22nd February, 1989 in accordance with the reply to the show cause notice after

affording a personal hearing to the respondents. Should the respondents succeed in obtaining renewal for the period, they will make the application

for renewal within one week from the date of receipt of the order for year 1989, 1990 and 1991, should they fail to get the renewal, it is open to

them to file a fresh application also.