IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 5TH AUGUST 2009 / 14TH SRAVANA 1931 WP(C).No. 26772 of 2007(K) ------------------------------------- PETITIONER(S): ----------------------- M/S.OONNOONNY LUKOSE & COMPANY KALLISSERY,A.W.D-4 CHENGANNOOR TALUK, REPRESENTED BY ITS MANAGING PARTNER, NAMELY JEENS C.M. S/O. MUHAMMED AGED 29 YEARS,RESIDING AT CHERIPURATH (H) PANIPRA P.O., IRAMALLOOR VILLAGE, KOTHAMANGALAM. BY ADVS. MR.RAJAN JOSEPH MR.P.I.DAVIS RESPONDENTS: ----------------------- 1. GOVERNMENT OF KERALA,REPRESENTED BY SECRETARY TO GOVERNMENT FOOD, CIVIL SUPPLIES & CONSUMER AFFAIRS DEPARTMENT SECRETARIAT, THIRUVANANTHAPURAM. 2. DIRECTOR OF CIVIL SUPPLIES, THIRUVANANTHAPURAM. 3. DISTRICT SUPPLY OFFICER, ALAPPUZHA. BY GOVERNMENT PLEADER SMT. SMITHA SUKUMAR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05/08/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 26772 of 2007(K) APPENDIX PETITIONER'S EXHIBITS: EXT.P1 - TRUE COPY OF THE RETIREMENT DEED DATED 15.10.2004. EXT.P2 - TRUE COPY OF THE RECONSTITUTED DEED DATED 15.10.2004. EXT.P3 - TRUE COPY OF THE LETTER DATED 8.4.2005 EXT.P4 - TRUE COPY OF THE JUDGMENT DATED 6.11.1996 IN O.P. NO. 10237 OF 1996 OF THE HIGH COURT OF KERALA. EXT.P5 - TRUE COPY OF THE GOVERNMENT ORDER G.O.Rt NO. 252/97/FCSD DATED 28.8.1997. EXT.P6 - TRUE COPY OF THE LETTER NO. 4915/B1/98/F&CSD DATED 6.8.1998. EXT.P7 - TRUE COPY OF THE REPRESENTATION DATED 3.7.2006 SUBMITTED BY THE PETITIONER. EXT.P8 - TRUE COPY OF THE JUDGMENT DATED 7.6.2007 IN W.P(C) NO. 19692/2006 OF THE HIGH COURT OF KERALA. EXT.P9 - TRUE COPY OF THE GOVERNMENT ORDER NO. G.O.(Rt) NO. 338/07/FCS&CAD DATED 1.8.2007. RESPONDENTS' EXHIBITS: EXT.R1(a) - A TRUE COPY OF THE G.O(MS)NO. 45/97/F&CSD DATED 25.10.1997. EXT.R1(b) - A TRUE COPY OF THE ORDER G.O.(Rt) NO. 30/2002/FCS&CAD DATED 21.1.2002. // TRUE COPY // PA TO JUDGE rhs S. SIRI JAGAN, J ............................................... W.P(C) No. 26772 of 2007 ................................................. Dated this the 5th day of August, 2009 J U D G M E N T The petitioner is a partnership firm which holds a licence to run an authorised wholesale depot in Chenganur Taluk. There were 4 partners in the firm. Two of them wanted to retire due to old age and the 3rd one went abroad and wanted to retire. Since the business of the firm could not be continued by the remaining partner, it was decided to induct three more partners. Consequently, Exts.P1 and P2 deeds were executed in which three partners retired from the firm and three new partners were inducted and the firm were also newly registered. Thereafter the petitioner sought sanction of the Government for reconstitution of the firm. The same was rejected by Ext.P3. The petitioner approached this court and obtained Ext.P8 judgment for a reconsideration of the issue. Pursuant thereto, the Government passed Ext.P9 order dated 1.8.2007, again declining permission. The petitioner is challenging Ext.P9 order. The contention of the petitioner is that the Government W.P(C) No. 26772 of 2007 -2- themselves had given permission to similarly placed firms for reconstitution as is evident from Exts.P5 and P6 Government orders. According to the petitioner, in so far as there is no prohibition in the Kerala Rationing Order prohibiting the partnership firms from possessing AWD licence and when a licence is issued to the firm, the declining of permission for reconstitution of the firm would violate the rights of the petitioner under the Indian Partnership Act. It is further submitted that the Government being only a delegate under Section 6 of the Essential Commodities Act, they cannot issue orders relating to matters which are not there either in the Essential Commodities Act or Kerala Rationing Order, imposing on the licencees, conditions which would militate against rights under the Indian Partnership Act. The contention is that when the Indian Partnership Act itself permits reconstitution of firms, simply because the firm is conducting an AWD, the reconstitution of the firm cannot be refused to be approved by the Government. The petitioner therefore seeks the following reliefs: “i) Issue a writ of certiorari or any other appropriate writ, direction or order calling for the records leading to Exhibit P9 and quash Exhibit P9 and direct the W.P(C) No. 26772 of 2007 -3- 1st respondent to issue orders permitting the petitioner to run AWD-4 in Chengannur Taluk under the reconstituted firm.” 2. A counter affidavit has been filed by the 1st respondent refuting the contentions in the writ petition. According to the 1st respondent, the issue is now covered by Exts.R1(a) and R1(b) orders of the Government. The learned Government Pleader submits that by Ext.R1(a) order, the Government has decided to discontinue the practice of permitting the registration of partnership firms by AWDs and inclusion of new partners to existing firms, with effect from 1.11.1997. It was specifically directed therein that with effect from that date the conversion of existing proprietary business into partnership firm and expansion of existing firms by inclusion of new members as partners in the AWD business will not be allowed. That rule was relaxed by Ext.R1(b) order, whereby partnership firms have been permitted to reconstitute the firms by including new members who are near relatives. The contention is that out of the 4 partners of the petitioner firm, three partners have retired and three total strangers have been brought in and their share of profit is 90%, leaving the one original partner with only 10%. According to the 1st respondent this would practically amount to W.P(C) No. 26772 of 2007 -4- a transfer of the licence itself, which is prohibited by the Kerala Rationing Order. 3. I have considered the rival contentions in detail. 4. The contention of the petitioner based on Section 6 of the Essential Commodities Act does not find favour with me. Section 6 of the Essential Commodities Act Reads thus : “6. Effect of orders inconsistent with other enactments.- Any order made under the Section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act.” According to me that does not restrict the powers of the State Government to issue orders in respect of public distribution of Essential Commodities. In fact the orders of the Government does not interfere with any rights of the petitioner under the Indian Partnership Act. But a firm which wants to run a business as an AWD has to comply with the orders of the Government, which cannot be construed as a negation of rights of the petitioner under the Partnership Act. 5. The reconstitution of firms who hold licence under the Kerala Rationing Order is presently governed by Ext.R1(a) and R1(b) orders. R1(a) is dated 25.10.1997, which reads thus: “In the Government letter read as Ist paper above it W.P(C) No. 26772 of 2007 -5- was decided to permit wholesalers to form partnership with one or more of his legal heirs. In the Government letter 2nd cited it was specifically stated that Government will sanction partnership, only if near relatives are proposed to be included in the partnership firm doing wholesale ration business. It has come to the notice of the Government that since the partners go on changing frequently it is very difficult to fix the responsibility for irregularities or any other lapses which will adversely affect the smooth and efficient functioning of the public Distribution System in the State. Government have examined the matter in detail and with a view to ensure effective functioning of the Public Distribution System, have decided to cancel the existing orders permitting the registration of partnership firms by AWDs and inclusion of new partners to the existing firms with effect from 1.11.1997. With effect from this date, conversion of existing proprietary business into partnership firm and expansion of existing firms by inclusion of new members as partners in the AWD business will not be allowed.” R1(b) is dated 21.2.2002 which reads thus: “Since it has come to the notice of Government that frequent change of partners in AWDs which are being run as partnership firms causes difficulty to the Civil Supplies Department for fixing responsibility if irregularities or lapses are detected which will adversely affect the smooth and efficient functioning of the public distribution system in the State in the Government Order first read above orders were issued banning by inclusion of new members as partners in the AWD business with effect from 1.11.1997. The order was issued with the intention of discouraging fraudulent changes in partnerships which make it difficult to fix responsibility. But a number of genuine requests are received by Government requesting sanction for inclusion of new members in the place of the earlier/existing member due to his demise or incapability to continue as partner due to old age, sickness or any other such inevitable circumstances. Having examined the issue in all aspects, Government hereby order that inclusion of new members W.P(C) No. 26772 of 2007 -6- from among near relatives in the place of the existing member/members will be allowed provided such a change in the case of AWDs which are being run as partnership firms is necessitated due to genuine reasons such as death old age or sickness. The licensing authority will examine all such requests and assess the suitability of new partners as is done in the case of fresh applications. The orders issued in the Government Order read above will stand modified to that extent.” 6. The petitioner has not chosen to challenge Exts.R1(a) and R1(b). By Ext.R1(a), reconstitution itself was totally prohibited. But in Ext.R1(b) the Government permitted inclusion of new partners from among near relatives in the place of existing member, that too when necessity arises due to genuine reason such as death, old age or sickness. In this case, originally AWD licence was issued to one Oonnoonny Lukose. Later on, the said Oonnoonny Lukose got sanction for converting the proprietary licence as one of a partnership firm consisting of Thressiamma Oonnoonny and Biju Oonnittan, in addition to Oonnoonny Lukose along with one N.O.Abraham. Now Oonnoonny Lukose, Thressiamma Oonnoonny and Biju Oonnittan wants to retire from the partnership firm. The following persons are sought to be inducted as partners. (1) Jeens C.M. S/o. C.P. Muhammed (2) Raseena M.K. W/o. Jeans W.P(C) No. 26772 of 2007 -7- (3) Jibin C.M. S/o. C.P. Muhammed 7. From the very names, it is abundantly clear that the newly inducted partners have absolutely no relation whatsoever with any of the four original partners. Originally the licence was issued to Oonnoonny Lukose. If the reconstitution as requested by the petitioner is accepted, then neither the Oonnoonny Lukose nor anybody (except N.O.Abraham) remotely having any connection with him would have any interest whatsoever in the partnership firm. That practically amounts to a transfer of licence and significantly the only remaining relation of Oonnoonny Lukose in the firm, namely N.O. Abraham would have only 10% share in the partnership firm and three stranger partners would have 90%. 8. I am of opinion that that is not the spirit of Ext.R1(a) and R1(b) orders. If such reconstitutions are permitted, then unscrupulous persons can obtain licence by the circuitous method of getting a licence as a proprietary concern, converting it into a partnership firm and then reconstituting the partnership with totally new partners, who may not be eligible for being licensees at all, thus violating the provisions of the Kerala Rationing Order itself, which prohibits transfer of licence except W.P(C) No. 26772 of 2007 -8- as provided under the proviso to clause 51 (2) of the Kerala Rationing Order. 9. The learned Counsel for the petitioner would vehemently argue that the Government should adopt the same yardstick in all cases. The contention is that the Government has not chosen to follow the yardstick taken in respect of Exts.P5 and P6 orders while dealing with the petitioner's case. The answer given by the learned Government Pleader to the said contention is that Ext.P5 order has been passed on 28.8.1997, prior to Ext.R1(a) order. Ext.P6 order although passed on 6.8.1998 is on an application filed on 8.9.1997 submitted prior to issue of Ext.R1 (a) order, which has been specifically stated in Ext.P6 order. I find merit in the contention raised by the learned Government Pleader. Even if those orders are against Ext.R1(a) and R1(b) orders, that would only be an illegality and the petitioner cannot claim benefit of the same illegality. For all the above reasons, I do not find any merit in this writ petition and accordingly the same is dismissed. S. SIRI JAGAN, JUDGE rhs