JUDGMENT G.P. Mathur and Dr. B.S. Chauhan, JJ.
1. This petition has been filed for quashing the proceedings initiated against the petitioner to recover the dues of the excise department.
2. Paras Nath Dubey and Rama Kant Pandey, respondent Nos. 5 and 6 were granted licence in Form FL 5 and the right to vend foreign liquor at Laldarwaja in the city of Ghazipur was settled in their favour by means of an auction held on 24.3.1997. They moved an application on 15.11.1979 before the Collector. Ghazipur praying that they may be permitted to take the petitioner Ram Dhani Prasad as a partner for the sale of foreign liquor at Laldarwaja as on account of several other contracts, they were finding it difficult to run the business properly. In this application, an endorsement was made by the petitioner that he was willing to become a partner along with respondent No. 5. This endorsement was also signed by the petitioner. A report was given by the Excise Inspector to the District Excise Officer that under Rule 337 of U. P. Excise Manual, the petitioner can be permitted to be impleaded as a co-licencee along with respondent Nos. 5 and 6. It appears that respondent Nos. 5 and 6 did not pay the entire dues of the department and accordingly, proceedings were initiated to recover the dues from the petitioner. The proceedings initiated against the petitioner are subject-matter of challenge in the present writ petition.
3. Learned counsel has submitted that respondent Nos. 5 and 6 committed a fraud and they obtained the consent and signature of the petitioner on the application dated 15.11.1979 under the influence of intoxication and the petitioner had in fact never given consent to become a partner along with them. The contention raised relates to a question of fact which can only be determined after taking oral evidence. Therefore, it is not possible to adjudicate upon this question in proceedings under Article 226 of the Constitution.
4. Learned counsel has next submitted that Rule 337 (2) of U. P. Excise Rules provides that an application for creation of partnership shall be referred by the Collector to the Excise Commissioner for approval and as in the present case, no approval had been granted, the petitioner, in law. cannot be deemed to have become a partner along with respondent Nos. 5 and 6 and therefore, he is not liable to pay any amount. In support of this submission, learned counsel has placed reliance on Union of India v. Mrs. Bheemsen Walaiti, AIR 1971 SC 2295. We have given our careful consideration to the contention raised. In our opinion, it is not open to the petitioner to take shelter of Rule 337 (2) of the Rules to avoid his liability to pay the dues of the department. A duty is no doubt cast upon the Collector to obtain approval of the Excise Commissioner before allowing partnership in an excise licence. However, if that has not been done, the person who had applied for being accepted as partner and who has functioned as such cannot escape his liability. The authority cited by the learned counsel is clearly distinguishable as under the relevant rule, there was a clear provision that the final bid would be made subject to the confirmation of the Chief Commissioner. In view of tills rule, it was held that contract of sale is not complete till the bid is so confirmed and the person whose bid had been provisionally accepted was entitled to withdraw his bid before confirmation. We. therefore, find no merit in the second contention raised by learned counsel for the petitioner.
5. Before parting with the case, we made it clear that it is always open to the petitioner to establish his right as against respondent Nos. 5 and 6 by filing a civil suit.
6. The writ petition is dismissed and the stay order dated 28.2.1980 is vacated. The petitioner will be liable to pay interest at the rate of 10 per cent on the amount due from him from the date of passing of the stay order, i.e.. 28.2.1980 till the date of realization.