M/S. MODERN HOTEL versus COMMISSIONER OF EXCISE & ORS.

Citation: [2015] 9 S.C.R. 789 · Decided: 19-08-2015 · Supreme Court of India · Bench: VIKRAMAJIT SEN · Disposal: Dismissed
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Judgment (excerpt)

[2015) 9 S.C.R. 789 
MIS. MODERN HOTEL 
v. 
COMMISSIONER OF EXCISE & ORS. 
(Civil Appeal No. 2508 of 2008) 
AUGUST 19, 2015 
A 
B 
[VIKRAMAJIT SEN AND SHIV~ KIRTI SINGH, JJ.] 
Foreign Liquor Rules: Rule 13A(5), proviso - Excise 
Licence - Renewal of licence subject to payment of abkari C 
arrears due to Government - Firm having FL-3 licence to 
run a bar in its hotel- Reconstitution of firm on entry of a new 
partner - Subsequent request of appellant firm for renewal 
of its FL-3 licence - Rejected on the ground that one of the 
partners had conducted abkari business earlier and incurred 0 
dues to the Government which had further grown on account 
of interest and until 50% of abkan· arrears pending at the time 
of renewal of licence was cleared, the licence could not be 
renewed -Appellant filed writ petition - High Court from time 
to time granted renewal of licence on condition of part E 
payment of arrears totalling Rs.50 lacs in addition to licence 
fees - Writ petition was ultimately dismissed on the ground 
that one of the partners had suffered disqualification - In the 
instant appeal, I.A. filed seeking return of Rs. 50 lacs in view 
of the fact that the Government declared an Amnesty Scheme F 
wherein if the other conditions were satisfied, a lump sum 
payment of 75% of pnnc~oai dues could be sufficient to waive 
the remaining principal as well as penalty and interest -
Taking advantage of scheme, the defaulting partner paid 
75% of the principal amount- On the basis of such payment, 
G 
this Court ordered refund of Rs. 50 Lacs from the concerned 
authority but on furnishing of required security - Held: 
Appellant is not entitled to receive refund of Rs. 50 Lacs on 
789 
H 
790 
SUPREME COURT REPORTS 
[2015] 9 S.C.R. 
A account of subsequent deposit of required percentage of 
principal dues under the Amnesty Scheme of 2008 - The 
amnesty earned in 2008 must be confined to the arrears of 
interest outstanding at the relevant time in 2008 and by that 
date the earlier deposits of Rs. 50 Lacs had already been 
B appropriated towards interest - No fault can be found in 
appropriating that amount because there is no dispute 
regarding the actual outstanding amounts of principal and 
interest - Exercise of writ jurisdiction to help the defaulter 
would be inappropriate. 
c 
Dismissing the appeal, the Court 
HELD: 1. Appellant is not entitled to receive refund 
of Rs.50 Lacs on account of subsequent deposit of 
o required percentage of principal dues under the 
Amnesty Scheme of 2008. The amnesty earned in 2008 
must be confined to the arrears of interest outstanding 
at the relevant time in 2008 and by that date the earlier 
deposits of Rs.50 Lacs had already been appropriated 
E towards interest. No fault can be found in appropriating 
that amount because there is no dispute regarding the 
actual outstanding amounts of principal and interest 
which clearly find mention in the certificate dated 
10.11.2008 (Annexure P-6) to I.A. No.1 on which appellant 
F itself has placed reliance. [Para 9] [796-8-D] 
2. Since there was no challenge to the proviso to 
Rule 13A(5) of the Foreign Liquor Rules, the respondents 
were well within their legal rights to insist that at least 
G 50% of the excise dues agai!lst the partners of the 
appellant was required to be paid in accordance with 
the proviso, to get the desired renewal. Such decision 
of the High Court does not require any interference. 
Section 5 of the Indian Partnership Act, 1932 (the Act) 
H provides unequivocally that the relation of partnership 
MODERN HOTEL V.'COMMISSIONER OF EXCISE 
791 
arises from contract and not from status. Such contracts A 
clearly cannot override provisions in a statute or 
statutory rules. Section 49 of the Act stipulates for 
payment of firm debts and also of separate debts of any 
partner by use of firm's property and ifthere is no surplus 
then separate property shall be applied for payment of a B 
partner's separate debts. Other than the defaulting 
partner can always claim their loss, if any, from the latter. 
[Para 1 O] [796-D-G] 
3. The factum of excise dues of one of the partners c 
of the appellant and its subsequent payment under the 
Amnesty Scheme is not in dispute or controversy. 
Though large part of the interest amounting to several 
crores could not be recovered but that was on account 
of grace shown by the Government itself by formulating D 
the Amnesty Scheme of 2008. In such circumstances 
exercise of writ jurisdic
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