Kathiresan Pillai and Others vs The Additional Collector of Central Excise

S.A. Kader, J.—As these writ petitions deal with a common matter they are dealt with together.

The petitioners in W.P. Nos. 2012 to 2015 of 1988, who are partners of the firm ""Sujatha Jewellers"", 105-A, South Avani Moola Street,

Madurai, have filed these separate writ petitions for the issue of a writ of mandamus directing the respondent--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 without reference to his

order dated 16-10-1987 in C. No. XVII/7/59 order No. 11/87 and pass such other and necessary order. W.P. No. 2012 of 1988 has been filed

to quash the aforesaid order of the respondent--Additional Collector of Central Excise.

The brief facts of the case are these: Thiru M. Kathiresen, petitioner in W.P. No. 2012 of 1988 was the holder of licence No. XVII/77 dated

3-9-1977 issued to him by the Assistant Collector of Central Excise, Madurai for carrying on the business of making, manufacturing, preparing,

repairing, polishing, buying, selling, supplying, distributing, melting, processing or converting gold. This licence has subsequently been renewed for

the years 1979, 1980 and 1981. By and tinder a deed of partnership dated 6-5-1982 the said Kathiresan has entered into a partnership with the

petitioners in W.P. Nos. 2013, 2014 and 2015 of 1988, viz., Srimathi Savithri, Kumaragurubaran and Shanmughavelayutham for carrying on the

said business under the name and style of M/s. Sujatha Jewellers. Thereafter the licence has been issued in the names of these four petitioners, viz.,

Kathiresan, Savithri, Kumaragurubaran and Shanmughavelayutham on 10-5-1982. This licence has been renewed for the years 1983 to 1985. On

18-11-1985 these four petitioners have applied to the Assistant Collector of Central Excise, Madurai for renewal of their licence. The Collector of

Central Excise has issued a show cause notice to M/s. Sujatha Jewellers on 31-3-1987 and after hearing objections the respondent has passed the

impugned order dated 16-10-1987 refusing renewal for contravention of certain provisions of the Gold Control Act and Rules framed thereunder.

M/s. Sujatha Jewellers filed an appeal before the Collector of Central Excise and at the same time a writ before this Court in W.P. No. 11510 of

1987. A single Judge of this Court dismissed the writ petition holding that the Appellate Authority was already seized of the matter and directing

the petitioner therein to move the Appellate Authority, viz., the Collector of Central Excise for disposal of the appeal itself. The Appellate Authority

viz., the Collector of Central Excise dismissed the appeal by his order dated 29-12-1987. M/s. Sujatha Jewellers took up the matter before the

Customs, Excise and Gold Control Appellate Tribunal. It was contended before the Tribunal that M/s. Sujatha Jewellers was not the licensee

under the Gold Control Act at any time and the impugned order refusing renewal of licence in favour of M/s. Sujatha Jewellers was non est and

without jurisdiction and hence sought permission to withdraw the appeal. The Tribunal passed the following order.

The appeal is sought to be withdrawn on the ground that the impugned order is non est and without jurisdiction. 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.

Thereafter these writ petitions are filed.

The contention advanced on behalf of the respondent-Additional Collector of Central Excise is that though the licence stood in the name of four

partners it was in essence a licence in favour of the firm M/s. Sujatha Jewellers that the show cause notice has rightly been issued to M/s. Sujatha

Jewellers and after hearing the Managing Partner, the order of refusal of renewal has been passed. It is not open to the petitioners to contend that

the licence was in the individual names of the partners and not in the name of the partnership and the order refusing renewal is, therefore, void in

law.

The matter lies with a short compass. The question is, whether the licence No. XVII/77 is in the name of four partners or in the name of the firm

M/s. Sujatha Jewellers as such. u/s 2(h) of the Gold Control 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. It is clear from the aforesaid

definition that a firm can be the holder of a licence under the Act. Section 52 of the Act lays down that when any firm has been licensed under this

Act to carry on business as a dealer or refiner, such licence shall, notwithstanding anything contained in this Act, become invalid on and from the

date on which there is a change in the partnership of such firm, unless such change in the partnership has been approved by the Administrator. This

also indicates that a firm can be a licensee.

This question has come up directly for consideration before a Bench of the High Court of Delhi in Talwar Diamonds v. Union of India [1987] 12

ECC 122. The petitioner therein M/s. Talwar Diamonds is a firm consisting of six partners and it applied for a licence under the Gold Control Act

in the prescribed form. This application was rejected by the Deputy Collector, Central Excise on the ground that three of the partners of this firm

were already partners in another firm known as M/s. Talwar Jewellers, which was holding licence as a dealer under the Gold Control Act, in view

of Rule 2(dd) of the Gold Control (Licensing of Dealers) Rules, 1969, which lays down that the Administrator in issuing a licence will have regard

to the fact whether the applicant is a person who does not held a valid licence to carry on business as a licensed dealer in his name or is a person

who is not a partner of a firm which holds such licence. It was argued before the learned Judges of the High Court of Delhi that the petitioner M/s.

Talwar Diamonds did not hold a valid licence and the firm was not a partner of a firm which was holding such a licence and hence Rule 2(dd)

cannot justify the refusal of the application filed by the petitioner. The contention of the Department was that a firm does not have a juristic

personality and that when a licence is granted in the name of a firm, it is really a licence granted to all the partners of the firm jointly. It was

submitted that since three of the partners of M/s. Talwar Jewellers, which was holding a licence, were partners of the petitioner-firm the prohibition

contained in Rule 2(dd) will come into operation. Rejecting the contention the Bench held:

We are unable to accept the contention urged on behalf of the department. A perusal of the Gold (Control) Act clearly shows that a licence under

the Act is to be granted to a ''dealer''. ''Dealer'' is defined in Section 2(h), as including a Hindu undivided family, a local authority, company, society

registered under the Societies Registration Act, a co-operative society, a club, firm or other association of persons. It is, therefore, clear that,

whether a firm can be treated as a legal person or not in general law, for the purposes of Gold Control Act a firm is a legal entity. In fact it is

common ground that licences are applied for by the firms and are granted to firms. Indeed, in the case of M/s. Talwar Jewellers, licence has been

granted in the name of the firm itself. . .The Act clearly envisages a licence in the name of a firm. This is also clear from the provisions of Section 52

of the Act. . .It is, therefore, clear in the context of the Gold Control Act that in the case of a firm, the ''person'' who holds a licence is the firm

itself. As under the Income Tax Act, so under this Act a firm is also a ''person'' capable of holding a licence. . .Our conclusion is also fortified by

the form prescribed for application for a licence under the Gold Control (Forms, Fees and Miscellaneous Matters) Rules, 1968 where one of the

columns requires an applicant to name the partners of the firm.

It is thus obvious that the licence under the Gold Control Act can be in the name of an individual or individuals or in the name of a firm. The licence

in the instant case is in the names of the four petitioners in W.P. Nos. 2012 to 2015 of 1988, who are no doubt the partners of M/s. Sujatha

Jewellers, but not in the name of the firm. The four petitioners are the licensees and not the firm. The application for renewal has been filed only by

the four petitioners and not by the firm. The respondent has proceeded on the erroneous assumption that the holder of licence No. XVII/77 is the

firm M/s. Sujatha Jewellers, that the application for renewal has been filed by the said firm, has given notice to the firm and passed an order

rejecting renewal of the licence. When the firm is not the licensee and when the firm has not applied for renewal of the licence, the order rejecting

renewal as if the firm is the holder of the licence is void in law. These four partners are the holders of the licence No. XVII/77 it is they who have

filed the application for renewal and hence their application for renewal has to be considered without reference to the firm.

In the result, all the writ petitions are allowed. The impugned order in C. No. XVII/7/59 order No. 11/87 dated 16-10-1987 of the respondent

is quashed. The respondent is directed to consider and dispose of the application for renewal filed by the petitioners in W.P. 2012 to 2015/88,

who are the holders of the licence in accordance with the law without reference to the impugned and quashed order dated 16-10-1987. There will

be no order as to costs.