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Ruby Tour Services Pvt. Ltd. v. Union of India

Writ Petition (Civil) · 2018 INSC 649Decided 30 Jul 2018
Writ Petition (Civil) No. 638 of 2018
Justice A.K. Sikri · Justice Ashok Bhushan

Background

This judgment jointly decided three writ petitions by Private Tour Operators (PTOs) whose applications to conduct Haj 2018 pilgrimage services were rejected by the Union Government for failing to meet conditions of the Haj PTO Policy 2018. Writ Petition (C) No. 638 of 2018 was filed by Ruby Tour Services Pvt. Ltd., a long-time registered PTO whose 2018 application was rejected on the ground that its claimed annual turnover of Rs. 2.16 crore (needed to meet the Rs. 1 crore minimum-turnover condition) actually belonged to a different entity, a sole proprietorship, "Ruby Tours & Travels", rather than to the newly incorporated private limited company that had actually applied for registration.

Decision Breakdown

The Court held that since the petitioner company had produced no document showing that the proprietorship's business, assets and turnover had actually been transferred to or merged into the company, the Government was justified in refusing to treat the proprietorship's turnover as the company's own, and the rejection on this ground (non-compliance with Clause (iv) of the policy) was neither perverse nor baseless. It further rejected the argument that the Government was estopped from raising this objection merely because a similar issue had not been caught in an earlier year's registration, holding there is no estoppel against the Government correcting an earlier oversight. Having upheld the rejection on this turnover ground alone, the Court found it unnecessary to examine the second ground of rejection (missing/defective rental receipts) and dismissed Ruby Tour's writ petition. (In the two companion petitions decided in the same judgment, the Court set aside one rejection as based on trivial, non-substantive documentation errors, awarding Rs. 5 lakh compensation to that petitioner, and upheld the rejection of the third petitioner for failure to properly explain discrepancies in its submitted rental documents.)

Lesson Learnt

When a business changes its legal form (e.g., from a sole proprietorship to a private limited company), it must formally document the transfer of assets, liabilities and business history to the new entity: a regulator is entitled to disregard the predecessor's track record or financial figures if that continuity isn't proven on paper, even where the business has effectively continued under new management.

Official source (sci.gov.in)View Judgment (PDF)

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