Merger of Companies – Fees for Transfer of Liquor Manufacture Licence
Scheme of Arrangement and merger of the Chitali Distillery with the petitioner shows that after the scheme was approved by this Court and the High Court of Karnataka, all movable and immovable properties, assets, licences, permits, approvals, authorisations and every other right belonging to Chitali Distillery Limited automatically stood transferred to and vested in the petitioners. No separate document or further act was required for such transfer.
One of the conditions for transfer of the liquor licences was that under Rule 5 of the Bombay Prohibition (Privileges Fees) Rules, 1954, where a licence is transferred from one name to another, the fee payable would be five times the licence fee for grant or renewal, whichever was higher. On that basis, respondent No.2 demanded payment of Rs.1,21,78,500/-, being five times the licence fee of Rs.24,35,700/-.
It is important to notice that at the stage when the shares were transferred, no request was made for changing the licences from one name to another. Consequently, there was no occasion for the authorities to examine the matter under Rule 5 at that time.
The authorities proceeded on the basis that the ownership of shares had changed and therefore no privilege fees were payable. The position changed after the petitioners submitted an application dated 22 March 2011 requesting that the licences should thereafter stand in their own name. In my opinion, this application cannot be treated as merely a continuation of the share transaction.
The transfer of shares and the transfer of licences, though connected, are not the same event. Both have separate consequences and are governed by different provisions.
he Scheme of Arrangement derives its authority under the Companies Act. On the other hand, recovery of privilege fees is governed by the Maharashtra Prohibition Act and the Bombay Prohibition (Privileges Fees) Rules, 1954. Both these provisions operate in different fields and for different purposes. The Scheme determines the manner in which the rights and liabilities of company become vested in another company. It does not deal with exemption from fees payable under another enactment unless there is a specific provision to that effect. No such provision has been shown before this Court.
The sanction granted by the Company Court binds the parties regarding transfer contemplated under the Scheme. However, it cannot take away the powers vested in another authority under an independent enactment. Therefore, though the licences stood vested in the petitioners by operation of the sanctioned Scheme and the respondents were bound to recognise such vesting, the consequences flowing from the Maharashtra Prohibition Act and the Rules framed thereunder did not disappear.
Judgment dated 30.6.2026 of the High Court of Bombay in Writ Petition No.2391 of 2019 of John Distilleries Private Limited Vs. The State of Maharashtra and others
