T.S. Krishnamurthy and Another vs The State of Tamil Nadu and Others

Ratnam, J.—These Writ Appeals are directed against the order of Mohan J., in Writ Petition No. 6334 of 1981 and Writ Petition No. 6112 of 1981 and they are dealt with together as common questions arise for decision. While Writ Appeal No. 332 of 1982 is directed against the dismissal of Writ Petition No. 6334 of 198.1, Writ Appeal Nos. 263 of 1982, 274 of 1982 and 281 of 1982 have been preferred at the instance of the third Respondent Respondents 1 and 2 and the Petitioner respectively against the order in Writ Petition No. 6112of 1981. The common question that arises relates to the propriety or otherwise of the grant of the privilege for the whole-sale in Indian made foreign liquor with reference to Thanjavur and Tirunelveli districts respectively.

In Writ Appeal No. 332 of 1982, the Appellant and the third Respondent and three others had applied for the grant of the privilege for locating a wholesale depot for Thanjavur for storage and supply of Indian made foreign liquor in respect of that district. The Commissioner of Prohibition and Excise considered the applications of the Appellant and the third Respondent in Writ Appeal No. 332 of 1982 and stated with reference to the application made by the Appellant therein, that there is no reference to the registration of the firm or to the turnover of the firm in the records and that though the Managing Partner of the firm slated that the firm is doing business in Surgical Instruments and Plastic Industry and the partners together can invest Rs. 50 lakhs in the business, yet the solvency certificate had not been produced to substantiate this. In dealing with the application filed by the third Respondent in Writ Appeal No. 332 of 1982, the Commissioner found that the application was in order excepting for the fact that one Thiru Gopalakrishnan had not signed the application. The financial soundness was taken into account in the light of the solvency certificate for Rs. 5 lakhs issued by the Tahsildar, Kumbakonam and the report of the Collector and the statement of the third Respondent himself to the effect that nearly Rs. 40 Lakhs could be invested by him. The proposal of the third Respondent to run the wholesale business only in his name and not with Thiru Gopalakrishnan, who had not signed the application, and who had not appeared for the enquiry, was also taken note of. On a purported consideration, of the matters enumerated under Rule 5 of the Tamil Nadu Indian Made Foreign Spirits (Supply by Wholesale) Rules, 1981, the Commissioner granted a licence in favour of the third Respondent in Writ Appeal No. 332 of 1982 subject to his depositing a sum of Rs. 25,000 by way of security for the due observance of the conditions of the licence. Aggrieved by this order, the Appellant in Writ Appeal No. 332 of 1982 filed Writ Petition No. 6334 of 1981 praying for the issue of writ of Certiorari to quash the order of the Commissioner of Prohibition and Excise, dated 3rd August 1981 by which the licence was granted in favour of the third Respondent in Writ Appeal No. 332 of 1982. Inter alia, it was contended on behalf of the Appellant in Writ Appeal No. 332 of 1982 that the rejection of the application on the ground of insufficiency of the solvency certificate was not correct as it has no place whatever with reference to the matters to be considered under Rule 5 and solvency is not one of the criteria for the selection under the Act and rules, that it was overlooked that the Managing Partner of the Appellant in Writ Appeal No. 332 of 1982 was a disabled ex-service man and that the application filed by the third Respondent in Writ Appeal No. 332 of 1982 having been signed by Usman Ali only and not Gopalakrishnan, would be incompetent. In the counter filed by Respondents 1 and 2 in Writ Appeal No. 332 of 1982, it was stated that the authorities had taken into account all the relevant considerations in granting the privilege in favour of the third Respondent in Writ Appeal No. 332 of 1982 and that the licensing authority had granted the license in favour of the third Respondent only after being satisfied that the application was in order and the applicant was also found suitable. In the counter affidavit filed by the third Respondent in Writ Appeal No. 332 of 1982, it was stated that a solvency certificate only for Rs. 75,000 had been produced by the Appellant in Writ Appeal No. 332 of 1982, that though the application made was stated to emanate from the third Respondent and Thiru Gopalakrishnan, Thiru Gopalakrishnan did not join and had not even signed the application and therefore, the authorities were justified in the treating the application as one emanating from the third Respondent only and granting it, that the authorities had taken into account the relevant factors in granting the licence and that the order is not vitiated in any manner.

Mohan J. who dealt with Writ Petition No. 6334 of 1981 Was of the view that the Appellant in Writ Appeal No. 332 of 1982 should dislodge the order adverse to him before he can question the grant in favour of the third Respondent in Writ Appeal No. 332 of 1982 and in this view, concluded that the solvency certificate produced by the Appellant in Writ Appeal No. 332 of 1982 was only for a meager sum of Rs. 75,000 which was inadequate having regard to large stakes involved and that the Commissioner was quite right in declining to grant a licence in favour of the Appellant in the view that the Government should not be obliged to go after sixteen partners of the unregistered firm, viz., the Appellant in Writ Appeal No. 332 of 1982, should it fall into arrears or otherwise become liable to the Government. In this view, the learned Judge did not deal with the other objection raised by the Appellant in writ Appeal No. 332 of 1982 that the application filed on behalf of the third Respondent was not application in the eye of law which could be considered by the licensing authorities ultimately, the learned Judge concluded that the Appellant cannot be permitted to attack the validity of the order passed by the Commissioner as a petition for the exercise of Writ jurisdiction, at the instance of a person who is least interested and who had lost, before the lower authority, cannot be entertained. In this view, the writ petition was dismissed and it is the correctness of this order that is challenged in Writ Appeal No. 332 of 1982.

In so far as Writ Appeal Nos. 263 of 1982, 274 of 1982 and 281 of 1982 are concerned, all those appeals arise put of the order-in Writ Petition No. 6112 of 1981. In that case, in response to notification to locate a wholesale depot in Tirunelveli District under Rule 3 of the Tamil Nadu Indian made Foreign Spirits (Supply by Wholesale) Rules, 1981, the Appellant in Writ Appeal, No. 281 of 1982, the Appellant in Writ Appeal No, 263 of 1982; and another Varghese, who is no longer interested, submitted their applications. The application filed by the Appellant in Writ Appeal No. 263 of 1982 purported to be on his behalf and also on behalf of M. A. Vinayak in considering the relative mentis. of the applicants, the Commissioner of Prohibition and Excise found with reference to the Appellant in Writ Appeal No. 263 of 1982 that the Appellant had selected a good building that the applicant is solvent and able to invest Rs. 3 lakhs in the proposed business, that his parents have an annual turnover of Rs. 20 lakhs that though M.A. Vinayak had not signed the application presented by the Appellant in Writ Appeal No. 263 of 1982, the name of M.A. Vinayak may be dropped and that the Appellant in Writ Appeal No. 263 of 1982 may be treated as the sole applicant. In dealing with the suitability of the, Appellant in Writ Appeal No. 281 of 1982, the Commissioner stated that he was solvent for about Rs. 10 lakhs, that he had very recently retired from service in the Tamil Nadu Electricity Board arid therefore, it is not desirable to grant him a whole sale licence in foreign liquor covering a big district, that the letting out of the building by the wife of the Appellant in Writ Appeal No. 281 of 1982 to one K. Ramasamy for storing bottles arrack and the need for the Appellant in Writ Appeal No. 282 of 1982 to secure a rented building after having let out the building of his wife to another, would indicate that the Appellant in Writ Appeal No. 281 of 1982 had applied for the licence on behalf of K. Ramaswamy with the idea of securing a monopoly over the dealership for arrack and foreign Spirit trade. On the aforesaid reasoning and taking it no account the relative merits of the Appellants in Writ Appeal Nos. 263 of 1982 and 281 of 1982 respectively the Commissioner granted a licence in favour of the Appellant in Writ Appeal No. 263 of 1982. Aggrieved by this, the Appellant in Writ Appeal No. 281 of 1982 filed Writ Petition No. 6112 of 1981 to quash the order of the Commissioner by the issue of a writ of certiorari. The main ground upon which the order of the Commissioner granting the licence in favour of the Appellant in Writ Appeal No. 263 of 1982 was sought to be quashed was arbitrariness. In addition a further objection was also raised to the effect that inasmuch as the Appellant in Writ Appeal No. 263 of 1982 and another M.A. Vinayak had made an application, which had not been signed by M.A. Vinayak, in law, there was no valid, application and therefore, the application should have been rejected in lamina. On behalf of the Appellant in Writ Appeal No. 263 of 1982, it was contended that the order of the Commissioner granting a licence in his favour cannot be characterized to be in any manner arbitrary and that the application for license made by the Appellant and M.A. Vinayak, which had not been signed by M. A. Vinayak, could, in effect and substance, be only an application on his behalf and cannot therefore he thrown out of consideration in lamina. Moham J., found that the recent retirement from the Electricity Board of the Appellant, in Writ Appeal No. 281 of 1982 would not be disqualification for a consideration of the is application on this ground could not be sustained. On the question whether the application of the Appellant in Writ Appeal No. 283 of 1982 was in order, the learned Judge was of the view that there was no valid application in law, as only Velayutham of the two applicants Velayutham and M.A. Vinayak, had signed in the application. Ultimately however, the learned Judge remitted the matter to the Commissioner of Prohibition and Excise for a reconsideration of the claims of the Appellant in Writ Appeal No. 281 of 1982 in accordance with law for the grant of a licence with a direction that order should be passed before 30th April, 1982. Dissatisfied with this order, the Petitioner as well as the Respondents ill Writ Petition No. 6112 of 1981 have preferred Writ Appeal Nos. 282 of 1982, 274 of 1982 and 263 of 1982 respectively.

From the above narration, the three questions which arise for consideration in these appeals are: (1) Whether the application on the Appellant in Writ Appeal No. 332 of 1982 could be rejected on the ground that the solvency certificate produced was only for Rs. 75,000,(2) whether the rejection of the application of the Appellant in Writ Appeal No. 281 of 1982 on the ground that he had recently retired from the service of the Tamil Nadu Electricity Board is arbitrary? and (3) whether the application of the Appellant in Writ Appeal No. 263 of 1982 which purports to have bees made on behalf of more than one person but signed by only one cannot be entertained and considered as an application for the purpose of granting a licence under the relevant rules.

It is necessary to notice in this connection the requirements of Rule 5 which sets out the matters to be taken into account by the Commissioner, while granting the privilege, which are as under:

(a) the suitability of the applicant for the grant of licence;

(b) Whether the applicant is a person who will abide by the provisions of the Act and the rules made there under:

(c) the suitability of the site and building selected or to be constructed where the wholesale depot is to be located. and

(d) Whether the application is made bonafide on behalf of the applicant himself or in benami of any other person.

It may be noticed that the solvency of the applicant as such is not one of the matters enumerated in the rule. But, even so, the form of application for a licence under item 5 thereof requires the applicant to give in the case of a private individual the personal solvency of the applicant with details of property, owned. Item 5(b) of the form of application enquires whether a solvency certificate from the Tahsildar is enclosed. It is thus seen that though the rules do not mention solvency as such of the applicant as one of the matters to be considered, the form of application makes provision for that and enjoins an applicant to fulfill that requirement. To say that merely because the rules do not provide solvency as one of the matters to be taken into account in considering the application made by a person, an applicant need not possess any property at all, but would be entitled to a consideration of his application favorably, is difficult to accept. In our view, the solvency or otherwise of an applicant would be comprehended within the scope of the expression suitability of the applicant enumerated under Clause (a) of Rule 5 of the Tamil Nadu Indian Made Foreign-Spirits (Supply by Wholesale) Rules, 1981. It is very necessary that in the process of granting a privilege to a person, the Government also should safeguard its interest in the sense that if the licensee falls into arrears, the Government should have recourse to the Property of the licensee in order to realize the arrears due. The file (at page 167) discloses that the Appellant in Writ Appeal No. 332 of 1982 consists of 16 partners and that all the partners had proposed to invest large sums totaling to Rs. 50 lakhs in the business. Without adverting to this, the Commissioner has proceeded to negative the claim of the Appellant in Writ Appeal No. 332 of 1982 on the ground that a solvency certificate had not been produced by it. As pointed out earlier, it is only in the case of a private individual, the form of application for licence requires the details of the property owned to be given and there is no similar provision with reference to a firm. But even so, in considering the suitability for the grant of a licence in favour of a firm the Commissioner has necessarily to be satisfied about its solvency and it is in this context that we have to state that the Commissioner has proceeded to reject the application of the Appellant in Writ Appeal No. 332 of 1982 on the only ground that the solvency certificate had not been produced to sub stantiate the investment of Rs. 50 lakhs. It does not appear from the records that the applicant was given an opportunity to furnish the solvency certificate and that despite that, it had failed to do so. In the absence, therefore, of anything in the rules which compel the rejection of an application even by a firm on the ground that the solvency certificate had not been produced. We are of the view that the rejection of the application of the Appellant in Writ Appeal No. 332 of 1982 by the Commissioner is not quite in order. It may be that large stakes are involved in the course of the conduct of the business pursuant to the licence granted. But even so, the interest of the Government can be suitably safeguarded and in the face of the declared willingness of the partners of the Appellant in Writ Appeal No. 332 of 1982 to invest nearly Rs. 50 lakhs in the business, it cannot be taken to be established that the Appellant in Writ Appeal No. 332 of 1982 is not solvent to the extent of enabling it to meet the liabilities to which it may be subjected. We are therefore of the view that the rejection of the application of the Appellant in Writ Appeal No. 332 of 1982 on the ground that the solvency certificate to show a possible investment of Rs. 50 lakhs had not been produced, is not in order. That would mean that this ground of rejection had to be set aside and the application of the Appellant in Writ Appeal No. 332 of 1982 has to be reconsidered by the Commissioner of Prohibition and Excise.

That takes us to a consideration of the rejection of the application of the Appellant in Writ Appeal No. 281 of 1982 on the ground that he bad recently retired from the service of the Tamil Nadu Electricity Board. It may be that the Appellant, for very good reasons, thought fit to start a business of his own after retirement from the Tamil Nadu Electricity Board, Merely because he had retired and not even a year had passed since such retirement, the Appellant in Writ Appeal No. 281 of 1982 cannot be denied the licence, if he is otherwise qualified. The services of the Appellant in Writ Appeal No. 281 of 1982 in the Electricity Board and his retirement there from certainly would not be disqualification, as it may well be that as a result of his vast experience gathered while in service, the Appellant in Writ Appeal No. 281 of 1982 might be in a position to carry on the business efficiently and also profitably. The recent retirement of the Appellant in Writ Appeal No. 281 of 1982 from the service of the Tamil Nadu Electricity Board has absolutely no nexus to the privilege of vending Indian made foreign liquor in wholesale and this ground for rejecting the application of the Appellant in Writ Appeal No. 281 of 1982 was undoubtedly arbitrary. We agree with Mohan J., on this aspect of the matter,

On the last question, which is common to all the appeals Mohan J., in Writ Petition No. 6112 of 1981, was of the view that if an application which purports to have been made on behalf of two persons had been signed by only one, there is no valid application at all. However, when, the same point was pressed before the learned Judge in Writ Petition No. 6334 of 1981, the learned Judge declined to deal with it stating that the Petitioner therein ought first to dislodge the order against him before questioning the grant in favour of other persons on the ground that there was no valid application. In Writ Appeal No. 332 of 1982, the third Respondent therein Usman Ali only had signed in an application the names of Usman Ali and Gopalakrishnan of Memill an Wines. The persons named were not partners but were individuals and the use of the expression of Hamilt (sic)Wines was there are only descriptive to identify the individuals. The application had been signed only by Usman Ali. Two amounts of Rs. 25,000 and Rs. 200 were remitted only by Usman Ali. The solvency certificate for Rs. 5 lakhs as well as the income tax clearance certificate and a guarantee were all furnished only by Usman Ali in his individual name. In relation to Writ Appeal No. 263 of 1982, the Appellant Velayutham had submitted an application in the name of R. Velayutham and M. A. Vinayakam of Nellai Wines, Tirunelveli District. That application had also been signed only by Velayutham. The words Nellai Wines employed therein are only descriptive for purposes of identity and not suggestive of any jural relationship between them, as in the other case also. There also, the remittances of Rs. 25,000 and Rs. 200 were made only by the Appellant in Writ Appeal No. 63 of 1982. The solvency certificate was also furnished only by R. Velayutham, Here also, the application was not made on behalf of two individuals and the application had been signed by only one. In the back drop of the aforesaid facts, the validity of the application has to be considered. No rule has been brought to our notice which compels the rejection of an application which purports to have been made by more than one person, but signed by only one. We fail to see how an application ex facie made by two persons but signed by only one, can really be construed as one made by two persons, in the absence of anything to indicate that the applicant had the capacity to represent the other. In the absence of such representative capacity as in the present case though the names of two individuals are found in the application, but it is signed by only one of them and only One of such applicants remits the required amount, furnishes the guarantee as well as the solvency certificate, we really do not see any impediment in the authorities considering such an application as having been made by the person who actually signed the application and had also furnished the other details in relation to himself. It may be open to exception if in such a case, the authorities proceeded to grant a licence in favour of the two applicants, when the application has been signed by only one, but such is not the case here. The records clearly establish that though ''n''t''allh two names were give in the application, yet the application bad been signed by only one of two persons, who had also conformed to the other requirements of the rules and the form of application. We fail to see how such an application can be treated to be honest in law at least in so far as the person who had signed the application is Concerned. In such cases, the application has to be treated as having, been made by the person who had signed it and that application has to be considered by the licensing authority in the light of the requirements of the statute and the rules. The record disclose that M. A. Vinayakam, who had joined the application of the Appellant in Writ Appeal No. 263 of 1982 had subsequently stated that owing to his being obliged to pay attention to his other business interests he was withdrawing the application made along with the Appellant in Writ Appeal No. 263 of 1982. In our view, such a with drawl was wholly unnecessary as M. A. Vinayakam was not an applicant at all, since he had not signed the application and the withdrawal was superfluous. In the absence of anything in the rules which prohibits the authorities from considering an application in the name of two persons but signed by one for the grant of a licence, we are of the view that even in such cases, the application has to be treated and considered as having been made by the person who had subscribed his signature to that and such an application cannot be stated to be either non-est or otherwise invalid. We are therefore not inclined to share the view of mohan, J., on this aspect of the matter. That would mean that the objection raised by the Appellant in Writ Appeal No. 332 of 1982 on this scope cannot be upheld. Likewise, the rejection of the application put in by the Appellant in Writ Appeal No. 263 of 1982 cannot be maintained. Mohan J., in Writ Petition No. 6112 of 1981 ultimately remitted the matter to the Commissioner of Prohibition and Excise for a reconsideration of the claims of the Appellant in Writ Appeal No. 281 of 1982 in the view that he would be the lone contender. But since we have now held that the application of the Appellant in Writ Appeal No. 263 of 1982 will be a valid application entitled to be considered its merits, the remit order in Writ Petition No. 61 (2 of 1982) will be maintained but with the further direction that the commissioner of prohibition and Excise, Madras-5, should consider not only the application of the Appellant in Writ Appeal No. 281 of 1982 but also that of the Appellant in Writ Appeal No. 263 of 1982. Similarly Writ Appeal No. 332 of 1982 will stand allowed and there will be a direction that the Commissioner of Prohibition and Excise, Madras-5 should consider the application of the Appellant in Writ Appeal No. 332 of 1982 and the third Respondent therein. There will be an order accordingly in Writ Appeal No. 332 of 1982 Writ Appeal No. 263 of 1982 and Writ Appeal No. 281 of 1982. Writ Appeal No. 274 of 1982 will stand dismissed. There will be no order as to costs in all these writ appeals.