Removing a joint FL-3 licensee alters the licence’s content and scope, defeating renewal under Rule 13B(3).

An FL-3 licence for M/s. Hotel Chembarathy Garden, Thaliparamba, was renewed in the joint names of the petitioner and the fourth respondent, both representing the partnership firm, after the fourth respondent was inducted into the firm following his father’s death.

The partnership reconstitution deed recorded that the petitioner held 40% rights, the fourth respondent 50%, and another partner 10%, and provided that all partners would have rights over the bar licence according to their profit-sharing ratios.

Owing to disputes, the petitioner and certain other partners held a meeting on 5 April 2026, without the fourth respondent’s participation, and resolved to remove him as joint licence holder and seek renewal of the FL-3 licence solely in the petitioner’s name.

The Excise Commissioner rejected the application, holding that it involved a change in the licence contrary to the proviso to Rule 13B(3), violated Rule 19, and was not supported by the consent of the fourth respondent.

The petitioner challenged that order under Article 226 of the Constitution.

1. Whether an application seeking removal of an existing joint FL-3 licence holder and renewal of the licence solely in the name of another partner constitutes a “renewal” within the meaning of Rule 13B(3) of the Kerala Foreign Liquor Rules, 1953.

2. Whether removal of the fourth respondent, a 50% stakeholder and joint licence holder, without his consent or a legally valid decision binding upon him, altered the nature, content, or scope of the licence so as to attract the proviso to Rule 13B(3).

3. Whether the alleged transfer of rights to run the bar-attached hotel, without prior sanction of the Excise Commissioner, attracted Rule 19(i) and (ii) of the Rules.

4. Whether the petitioner could rely on the decisions in Mallika Residency, George Joseph, and Suresh Babu to claim renewal of the licence in his sole name.

Rule 13B(3) of the Kerala Foreign Liquor Rules, 1953 empowers renewal of a licence only where there is no change in the nature, content, or scope of the licence or premises.

“Content” and “scope” include material particulars such as the persons in whose favour the licence is issued, the purpose and activities authorised, the premises, and the duration of the licence.

Rule 19(i) prohibits sale, transfer, or sub-renting of a licence without the previous sanction of the Excise Commissioner, while Rule 19(ii) treats specified changes in the constitution or ownership of a partnership or company, including addition or deletion of partners, as transfer of the licence.

The Court relied on Binu Jose v. State of Kerala and held that an unauthorised change in ownership or in the persons entitled to exploit an FL-3 licence can justify refusal of renewal under Rule 13B(3).

George Joseph and Suresh Babu, which recognise the primacy of majority partners in seeking renewal or deciding the partner in whose name a licence is to be held, were distinguished because the petitioner was not the majority stakeholder.

Mallika Residency was distinguished on facts, and the Court expressed doubt about its broader reasoning concerning transfer of the licensed business, though it declined to refer the matter to a larger Bench.

The Court held that the application was not for renewal simpliciter because it simultaneously sought the removal of the fourth respondent and renewal of the licence in the petitioner’s sole name.

Since the existing licence stood jointly in the names of the petitioner and the fourth respondent, removal of the latter—who held a 50% stake—would materially alter the persons entitled to the licence and therefore its content and scope.

The resolution relied upon by the petitioner was inadequate: the fourth respondent was neither given notice of nor included in the meeting, no valid procedure had been adopted to remove him from the partnership or licence, and he had expressly opposed the proposed change.

Further, the petitioner was not a majority stakeholder and therefore could not invoke the majority-rule reasoning in George Joseph or Suresh Babu.

The Court also found that the sale document appeared to transfer rights to run the bar-attached hotel, which derived from the FL-3 licence, raising a serious issue under Rule 19(i) and (ii).

Applying Binu Jose, the Court concluded that the proposed renewal involved an unauthorised alteration of the licence and could lawfully be refused.

It held that renewal of the existing joint FL-3 licence solely in the petitioner’s name, after removing the fourth respondent without his consent or a legally valid process, altered the licence’s content and scope and was outside the limited concept of renewal under Rule 13B(3).

The alleged transfer of the right to run the bar-attached hotel also justified refusal under Rule 19(i) and (ii).

Finding no illegality, irrationality, or procedural impropriety warranting judicial review, the Court dismissed the writ petition.