MAT/1424/2023 of M/S DOWNTOWN TEMPTATIONS PVT LTD Vs STATE OF WEST BENGAL AND ORS. on 31 August 2026

1. The appeal arises out of a judgment and order dated July 25, 2023, passed by a learned Single Judge in WPA No.15287 of 2023. The issue before His Lordship was whether the Excise Commissioner had acted in accordance with law, in refusing to renew the excise licence of the appellant no.1/ company and also whether the Collector erred in cancelling the licence which had been issued in the name of an erstwhile Director of the company.

2. The relevant laws governing the field are the West Bengal (Selection of New Sites and Grant of Licence for Retail Sale of Liquor and Certain Other Intoxicants) Rules,

(hereinafter referred to as “the 2003 Rules”) and the West Bengal Excise (Change in

Management) Rules,

(hereinafter referred to as “the 2009 Rules”).

3. Upon hearing the rival contentions of the parties, His Lordship was of the view that the writ petitioner/appellant had admittedly changed its shareholding. Not informing about the change was a violation of the terms of the licence. Further, Rule 4(2) of the 2001 Rules had been violated. This led to an automatic termination, particularly, since there was no application under Rule 4 by the petitioner. Hence, the order of the Excise Commissioner in refusing to renew the licence in the name of the company or the new management was held to be justified.

4. However, His Lordship was of the view that the order of the Collector in cancelling the licence as a necessary fall out of the decision of the Excise Commissioner not to renew the licence, was illegal and, as such, the cancellation order of the Collector was set aside by His Lordship.

5. His Lordship directed the appropriate authority to issue a show cause to the appellant company with the contemplation of the 4th paragraph of Rule 4(2) of the 2009 Rules within 7 days from the passing of the order. Thereafter, upon considering the explanation, if any, the Collector was to send his opinion and recommendation along with the explanation to the State Government which would, thereupon, review the case after granting the party an opportunity of being heard and pass necessary orders in terms of the 4th paragraph of Rule 4(2) of the West Bengal (Change in Management) Rules, 2009.

6. Aggrieved by the aforementioned decision and direction of the learned Single Judge the appeal has been filed on various grounds.

7. Mr. Majumder, learned senior advocate for the appellants, submits that His Lordship had given a narrow interpretation to the fourth paragraph of Rule 4(2) of the 2009 Rules. The proviso could not be read in isolation to the substantive provision under Rule 4(2). According to him, any default on the part of the current management in bringing to the notice of the authority any change in management without taking the necessary approval or prior permission in terms of the provisos to Rule 4(2), was a curable defect and Rule 5 of the 2000 Rules clearly provided that change in management required payment of fees, upon the State Government granting necessary approval. According to Mr. Majumder, the cause of action arose sometime in 2017 and steps were taken by the authorities on and from 2017. He submits that the applicable fees at the relevant point of time should be directed to be paid by the appellants and the renewal of the licenses would be a matter of course.

8. The learned Additional Government Pleader submits that the defect or the irregularity in the manner in which the appellants proceeded can be cured by payment of fees and other charges as may be applicable under the 2003 and the 2009 Rules.

9. Heard the rival contentions of the parties.

10. According to Mr. Majumder, the fees in this case would be three times the licence fee in respect of each of the shops and restaurants involved. For each change the fees payable would be 1.5 times the licence fee. The change in shareholding occurred twice in this case. The calculation of the fee is not before us. However, as per the calculation made by appellants, and which is accepted by the respondents, it appears that a total amount of Rs.25, 00,000/- (twenty five lakhs) as of today, should be paid by the appellants for renewal of licenses and for approval of the change in management.

11. Upon perusal of Rules 4 and 5 of 2009 Rules and upon a harmonious construction of the two provisions, we are of the view that the change in management can be permitted upon payment of fees. Rule 5(1) is quoted below: “5. Payment of fees for change in management.-(1) After getting approval of the State Government or the Excise Commissioner, as the case may be, the Collector shall allow change in management of a license after realizing one and a half times (1½ times) the registration fee for initial grant of license similar to the one applicable for grant of a new excise license of the same category, of the same local area. The Collector shall also record such change in the concerned licence.”

12. We therefore direct the appellants to pay a sum of Rs.25,00,000/- for the purpose of renewal and for change of management in respect of the three units. Such payment shall be made by the appellants within a week.

13. Upon deposit of the money, necessary steps shall be taken by the appropriate authorities, permitting change of management and grant of renewal. The renewal will be for the current year 2026-2027. The authority will allow the appellants to complete the necessary formalities for the purpose of approval with regard to change in management, and renewal of licence.

14. Upon such change of management and renewal being allowed, the appellants will continue to comply with the legal provisions, while carrying on the said business.

15. The order of the Excise Commissioner is accordingly set aside. The order impugned is modified to the above extent.

16. This direction amounts to full and final settlement of the issues which were the subject matter of decision in the writ petition.

17. We direct the State Government or the Excise Commissioner, as the case may be, to approve the change of management and grant necessary permission for renewal of licence within a week from the date of receipt of the payment and the concerned Collector shall issue necessary orders and renew the licence, on the basis of our decision within a period of one week from such approval.

18. Accordingly, the appeal is disposed of.

19. Parties are directed to act on the basis of the server copy of this order.

(Shampa Sarkar, J.)

(Arjun Ray Mukherjee, J.)