Sri Lakshmi Venkateshwara Enterprises vs The State Of Telangana
2025 Latest Caselaw 1782 Tel

Telangana High Court

Sri Lakshmi Venkateshwara Enterprises vs The State Of Telangana on 5 February, 2025

     THE HON'BLE THE ACTING CHIEF JUSTICE SUJOY PAUL
                            AND
           THE HON'BLE SMT. JUSTICE RENUKA YARA

              WRIT APPEAL Nos.124 AND 125 OF 2025

COMMON JUDGMENT:

(Per Hon'ble Smt. Justice Renuka Yara)

Since the issue involved in both these Writ Appeals is one and

the same, they are being disposed of by way of this common

judgment.

2. Heard Sri T.Srikanth Reddy, learned counsel for the appellant,

Sri A.Jagan, learned Government Pleader for Prohibition and Excise,

for the official respondents and Sri A.Venkatesh, learned Senior

Counsel representing Sri P.Vamshi Krishna, learned counsel for

respondent Nos.8 and 9 in W.A.No.124 of 2025 and respondent Nos.7

and 8 in W.A.No.125 of 2025.

3. These intra Court appeals are directed against the common

order, dated 13.12.2024, passed by a learned Single Judge of this

Court in W.P.Nos.28529 and 29567 of 2024, respectively.

4. For the sake of convenience, the facts and the submissions

made in W.A.No.125 of 2025 are hereunder discussed.

5. The background facts of the case are that the appellant has

taken a premises bearing No.8-2-293/82/A/197, Jubilee Hills,

Hyderabad, on lease from respondent Nos.7 and 8 and is running a

Cafe and Bar in the name and style of 'LE VANTAGE'. The appellant

entered into a rental agreement bearing document No.6316 of 2016

dated 03.12.2016 with respondent Nos.7 and 8, who are the owners of

the said premises. The said lease expired in the year 2019 and there

was no extension of lease. When the respondent Nos.7 and 8 refused

to extend the lease, the appellant filed a suit in O.S.No.2225 of 2019

on the file of VII Junior Civil Judge, City Civil Court, Hyderabad,

seeking perpetual injunction to restrain the respondent Nos.7 and 8

from forcibly evicting the appellant from the said premises. The

appellant also filed a suit in O.S No.1801 of 2019 on the file of IV

Additional Senior Civil Judge, City Civil Court, Hyderabad, seeking

specific performance of the registered lease deed for further extension

of lease by 3 more years. Consequently, respondent Nos.7 and 8, who

are the landlords, instituted a suit in O.S.No.195 of 2020 on the file of

IV Additional Senior Civil Judge, City Civil Court, Hyderabad, for

eviction of the appellant. Currently, the suit in O.S No.1801 of 2019

has become infructuous as the period for which the lease was to be

extended by way of specific performance was lapsed. The only right

subsisting in favour of the appellant as a tenant holding over is the

right to be in possession of the premises, until evicted through due

process of law.

6. The appellant was granted licence to run a Café and Bar vide

Licence No.17/2016-17 dated 26.03.2016 for the period commencing

from 23.06.2017 and ending with 30.09.2017. The licence was

periodically renewed for running the Cafe and Bar. The respondent

No.6 issued proceedings dated 19.09.2022 for renewal of licence

across the State of Telangana. The appellant paid necessary licence

fee for renewal of the licence. As per the amended Rule 9A of the

Telangana Excise (Grant of Licence of Selling by Bar and conditions of

Licence) Rules, 2005 (for short, 'the Rules of 2005'), in terms of

G.O.Ms.No.46, Revenue (Excise-II) Department dated 10.05.2023, the

annual renewal of 2B licence shall be deemed subject to conditions

that the proof of payment of requisite renewal fee, proof of payment of

first instalment of BET, Bank Guarantee, proof of payment of Trade

Licence for current year and Form 4B Affidavit are attached. The

appellant paid the necessary amount vide Challan No.6302555881

dated 27.09.2023, hence 2B licence is deemed to be renewed on

30.09.2024 as per the amended Rule 9A of the Rules, 2005. However,

the respondent No.6 refused to renew the 2B licence on the ground

that the appellant failed to submit valid sale deed/lease deed from the

owner of the premises.

7. Aggrieved by the refusal to renew licence, the appellant filed

W.P.No.29567 of 2024 to declare the proceedings in

Cr.No.B4/454/2022/DPEO(H), dated 19.10.2024 issued by

respondent No.6 as illegal, arbitrary and violative of the order dated

16.10.2024 passed in W.P.No.28529 of 2024, wherein, the appellant

was permitted to continue day-to-day operations of Le-Vantage Café

and Bar, including lifting the stock from TGBCL Depot (Excise)

through its ID.No.1703291 in view of the Rule 9A of the Telangana

Excise (Grant of Licence of Selling by Bar and conditions of Licence)

Rules, 2005 (for short, 'the Rules, 2005').

8. The learned Single Judge, upon examining the case of the

appellant and the respondents on the basis of the judgments of this

Court in Mandakini Restaurant and Bar v. Deputy Commissioner

of Prohibition and Excise 1 and Alla Venkata Krishna Reddy v.

The Government of Andhra Pradesh 2 dismissed the aforesaid writ

petition, holding that when the firm is not having valid lease deed,

there can be no question of renewal of the licence. Aggrieved by the

same, the present Writ Appeal is preferred.

9. In the grounds of appeal, the appellant contended that one of the

partner, who is the son of respondent No.7, the landlord, brought the

lease of the subject land as his investment and therefore, no separate

lease is required. Further, the appellant contends that the unofficial

respondent Nos.7 and 8 have waived rather estopped from insisting

2008(4) ALD 188

2013(6) ALD 130

the renewal of the lease deed, as they joined the son of respondent

No.7 as partner in the appellant partnership firm by bringing the

leased premises into partnership firm. The appellant contends that its

rights as a lessee would not come to an end automatically, when a civil

suit is pending. The grant of licence/renewal cannot be at the whims

and fancies of the owners of the premises, who have developed greedy

eye on the business of the appellant. The appellant contended that

absolute injunction order is passed in its favour and the said

document has to be considered in accordance with Section 31 of

Telangana Excise Act, Rules 5, 6, 9 and 10 of the Rules, 2005 and the

licence of the appellant ought to have been renewed.

10. According to the appellant, the learned Single Judge erred in

relying upon the judgment of Mandakini Restaurant and Bar's case

(1 supra), which is based on the un-amended Rule. There is an error

in the finding of the learned Single Judge while holding that Rule 6 of

the Rules, 2005 needs to be followed even while renewing the original

licence. As per the amended Rule 9A of the Rules, 2005, there is no

mention that all the conditions set out while granting licence have to

be complied again. Though the lease deed was not extended, the

appellant has the absolute injunction order in I.A.No.513 of 2019 in

O.S.No.2225 of 2019 and the said order can replace the lease deed in

proof of possession. Until the appellant is evicted under due process

of law, the appellant continues to be in possession and, therefore,

entitled for extension of the licence for carrying on the business. The

appellant contends that under Rule 6 of the Rules, 2005, the

conditions mentioned for grant of initial licence are not applicable for

renewal of licence. Also, Rule 9A of the Rules, 2005, does not speak

about valid subsisting lease deed for renewal of licence.

11. Further, according to the appellant, there is failure on the part of

the Single Judge in considering the existence of interim order passed

in favour of the appellant and the covenant of the lease deed, which

contemplates extension of the lease deed on enhancement of 10% of

the rental amount. Lastly, the appellant sums up its contentions in

the appeal claiming that as long as it is in lawful possession of the

premises, it can also exercise its right to do business under Article 19

of the Constitution of India. On the basis of aforementioned grounds,

the appellant prayed to set aside the impugned common order passed

by the learned Single Judge.

12. During the course of arguments, learned counsel for the

appellant would submit that the appellant is in legal possession of the

premises on the strength of the temporary injunction granted by the

learned VII Junior Civil Judge, City Civil Court, Hyderabad and,

therefore, they also have right to run the business in the said

premises, until evicted under due process of law. While so, the same

is vehemently opposed by the counsel for the landlords i.e. respondent

Nos.7 and 8 claiming that legal possession on the basis of a temporary

injunction order granted by a Court would not automatically extend

the right to continue to do business in the premises. Learned counsel

for the landlords would contend that an injunction order protects the

right of the appellant to be in possession until evicted under due

process of law, but the said injunction order would not give any right

to the appellant to continue to do business, as the said right is

dependent upon the statute governing the issuance of licence and

renewal of licence. The counsel for the landlords would contend that

the licence to run the Café and Bar expired, and in order to continue

to do business, the appellant has to get renewal of the licence by

meeting the terms and conditions stipulated under Rule 9A of the

Rules of 2005.

13. Learned counsel for the appellant in support of his contentions

relied upon the judgment of the High Court of Karnataka dated

27.03.2024 in W.P.No.22657 of 2023 (LB-BMP) arising from a dispute

between a landlord and tenant, wherein the tenant was running a

Hotel in the name and style of 'Velvette Hotel' under trade licence

granted on 31.07.2019. At the time of renewal of licence, the Health

Officer, BBMP office sought No Objection Certificate (NOC) from the

landlord. In the context, due to disputes, the landlords objected to

continuance of the hotel business activity of the petitioner therein. In

the said case, the High Court of Karnataka held that requirement of

NOC is only procedural requirement and cannot be insisted in all

circumstances and proceeded to state that the outcome of the

arbitration proceedings between the landlord and tenant would have a

bearing on the right of the petitioner to carry on business and such

contingence would arise only when the litigation attains finality and

accordingly, the respondent Nos.1 and 2 therein were directed to

consider the request for renewal or fresh licence without reference to

NOC from the landlord.

14. Learned counsel for the appellant also relied upon the judgment

of the High Court of Karnataka dated 25.01.2011 in W.A.No.2570 of

2009. The said appeal arises from the dismissal of the writ petition by

a learned Single Judge, which was filed seeking grant of licence, on

the ground that the landlady has not consented for grant of licence. A

civil case was instituted between the landlady and tenant. Since the

dispute was not yet adjudicated by the civil Court, the learned single

Judge had held that trade licence cannot be granted. The said order

has been assailed by way of writ appeal, wherein, it was held that

there is no specific provision wherein consent of the landlord is

mandatory in all circumstances. It is held that after the termination of

lease, though the possession is unlawful, the lessee cannot be

prevented from putting the premises to use. While so, the landlord

can at best seek mesne profits in accordance with law. The property

can be put to use only by obtaining the trade licence from BBMP.

Since the consent of the landlord is not mandatory and since it is only

a procedural requirement, the denial of renewal of trade licence is held

unsustainable.

15. In response to the contentions of the learned counsel for the

appellant, the learned counsel for the landlords would submit that the

citations relied upon by the appellant are not with regard to renewal of

an excise licence for running a Bar, but for renewal of licence to run

hotel. Learned counsel for the landlords submits that the facts and

circumstances of the citations referred by the learned counsel for the

appellant are not applicable to the facts and circumstances of the

present case. Instead the citations referred by the learned Single

Judge in Mandakini Restaurant and Bar's case (1 supra) and Alla

Venkata Krishna Reddy's case (2 supra) are squarely applicable to

the facts of the present case, as said cases referred to the disputes

between the landlord and tenant in the context of renewal of excise

licence under Rule 9A of the Rules of 2005. It is contended that this

Court has held that the conditions that apply for issuance of a licence

under Rule 9A of the Rules, 2005 are also applicable while renewing

the licence. In that context, learned counsel for the landlords referred

to judgment of the Hon'ble Supreme Court of India in C.Albert Morris

v. K.Chandrasekaran and others 3 wherein, a reference was made to

the case of M.C.Chockalingam and others v. Manickavasagam and

others (MANU/SC/0338/1973), where the main question dealt was

that whether a tenant who is not a statutory tenant is entitled to claim

to be in lawful possession of premises following termination of tenancy

or on expiry of the lease. The Hon'ble Supreme Court held in

M.C.Chockalingam's case, that litigious possession cannot be

regarded as lawful possession. Consequently, any right which the

dealer has over the site was a right which had been acquired in terms

of the lease. When the lease expires and when the landlord declined to

renew the same and also called upon the erstwhile tenant to surrender

possession, the erstwhile lessee can no longer assert that he had any

right to the site.

16. Learned counsel for the landlords referred to judgment rendered

by a learned single Judge of this Court in W.P.No.36681 of 2018 dated

22.02.2016, wherein it was held that "continuance of possession over

the leased premises by virtue of the legal protection would not have

the effect of extending the lease for the purpose of Rule 6 or Rule 9A of

the Rules, 2005". As Rule 6 of the Rules, 2005, specifically requires

production of a lease deed from the owner of the premises, the

protection afforded by the injunction order insofar as the possession of

2006(1) ALD 106(SC)

the respondent No.5 therein is concerned cannot be a substitute for

the legal requirement of producing a lease deed. The possession of

respondent No.5 therein would only be protected by such injunction,

but she is not entitled to seek renewal of a Bar licence without a lease

deed in relation to the said premises.

17. Having considered the rival contentions of the appellant-tenant

and the respondents-landlords, there is a need to examine whether the

amended Rule 9A of the Rules, 2005 supports the contention of the

appellant about the conditions meant for grant of a licence are not

applicable for renewal of said licence. A close reading of the Rule 9A,

renewal of 2B licence before and after amendment, shows that there

was only a minor amendment made about renewal of 2B licence

deemed subject to conditions specified, while the rest of the conditions

remained the same. Only for the purpose of facilitating the running of

business while the renewal application is pending, there is a deemed

grant of renewal of licence, otherwise the amended Rule 9A also

requires same conditions to be fulfilled for renewal of 2B licence,

which includes an affidavit in Form 4B. The affidavit in Form 4B

requires production of a valid lease deed for the property where the

Bar is located. Thus, the Rules clearly stipulate that the appellant has

to produce a valid lease deed for the property for renewal of the

licence. The appellant cannot escape the obligation to produce a valid

lease deed for the premises in order to get renewal of 2B licence.

While so, on account of disputes between the appellant and its

landlords, there is no extension of lease deed and the suit filed seeking

specific performance of extension of a lease deed for execution of fresh

lease deed has become infructuous.

18. The current status of the appellant is that there is no valid lease

deed for the premises and the suit filed in connection thereof has

become infructuous. The only subsisting right of the appellant is to be

in possession of the leased premises, until evicted under due process

of law. In the said facts and circumstances, even as per amended

Rule 9A of the Rules, 2005, the appellant has to produce a fresh lease

deed before the licencing authority for renewal of 2B licence. The

citations referred by the appellant are not related to renewal of 2B

licence for running Bar, but are in connection with running Hotel

business in the State of Karnataka. The citations referred by the

counsel for landlords in Mandakini Restaurant and Bar's case (1

supra) and Alla Venkata Krishna Reddy's case (2 supra) are dealing

with issuance of 2B licence with respect to leased premises when there

is no extension of lease and, therefore, squarely applicable to the facts

of the present case. The dicta laid down by the Hon'ble Supreme

Court in M.C.Chockalingam's case that litigious possession is not

legal possession and right arisen from a legal lease cannot be extended

upon expiry of the lease is a rationale, which is binding to the present

case. On the basis of the ratio laid down in Mandakini Restaurant

and Bar's case (1 supra) and Alla Venkata Krishna Reddy's case (2

supra), the appellant has only a right to be in possession of the leased

premises until evicted under due process of law. However, the said

possession does not entitle him to get extension of 2B licence. Since

the appellant is not entitled to grant 2B licence, the question of

interfering with the action taken by respondent Nos.2 to 5 in sealing

the Bar counter Fridge Liquor Store and Liquor Fridge does not arise.

Thus, there are no grounds to interfere with the impugned common

order passed by the learned Single Judge of this Court. The appeals

lack merit and are liable to be dismissed.

19. Accordingly, the Writ Appeals are dismissed. There shall be no

order as to costs.

Miscellaneous applications, if any, pending in these appeals,

shall stand closed.

___________________ SUJOY PAUL, ACJ

____________________ RENUKA YARA, J Date: 05.02.2025 ssp