THIS WP IS FILED PRAYING TO QUASH THE IMPUGNED ORDER DATED 20/02/2024 IN NO. EXE/MISE/SA.BA/04/2011-12 AS PER ANNEXURE-A PASSED BY THE R4. DIRECTING THE RESPONDENTS TO EXTEND THE BENEFITS KARASAMADHANA SCHEME -IV NOTIFICATION DATED 23/05/2017 IN NO. FD 22 PES 2015, AS PER ANNEXURE-B AND CONSEQUENTLY THAT KARASAMADHANA SCHEME-V BY NOTIFICATION DATED 05/10/2023 IN NO. FD 3 PES 2023 VALID UP TO 02/11/2024 AS PER ANNEXURE-S. GRANT AN INTERIM ORDER TO STAY THE EFFECT AND ENFORCEMENT OF THE IMPUGNED ORDER DATED 20/02/2024 IN NO. EXE/MISE/SA.BA/04/2011-12 PASSED BY THE R4 AS PER ANNEXURE-A AND ALL FURTHER PROCEEDINGS CONSEQUENT THERETO.

¶22

THIS PETITION, COMING ON FOR DICTATION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MRS JUSTICE K.S. HEMALEKHA

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¶24

NC: 2024:KHC:47876 WP No. 8997 of 2024

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ORAL JUDGMENT

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The petitioner is seeking for the following prayers;

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“(a) Issue a Writ of Certiorari or any other appropriate writ, order or direction, quashing the impugned Order dt.20.02.2024 in No. EXE/MISE/Sa.Ba /04/2011-12 as per Annexure -A passed by the Respondent No. 4.

¶28

b) Issue a Writ of Mandamus or any other appropriate writ order or direction, directing the Respondents to extend the benefits Karasamadhana Scheme -IV Notification dt.23.05.2017 in No. FD 22 PES 2015, as

¶29

per Annexure-B and consequently that Karasamadhana Scheme -V by Notification dt.05.10.2023 in No.FD 3 PES 2023 valid up to 02.01.2024 as per Annexure - S.

¶30

c) Issue any other appropriate writ, order or direction as the Hon'ble Court deems it fit under the facts and circumstances of the case to meet the ends of justice.”

¶31

The grievance of the petitioner is that the respondent No.4 vide order dated 20.02.2024 rejected the claim of the petitioner for adjustment of earnest money deposit (“EMD” for short) towards the arrears of excise revenue and declined to extend the benefit of

¶32

¶33

NC: 2024:KHC:47876 WP No. 8997 of 2024

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Karasamadhana Scheme-V introduced by the respondent

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No.1 - State by the impugned order at Annexure-A.

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Petitioner is a Registered Excise Contractor, pursuant to the notification issued by the Excise Commissioner to dispose of the right of retail vendor by way of lease under Rule-IV of Karnataka Excise (Lease of the Right of Retail Vend of Liquor) Rules 1969 (hereinafter referred to as ‘Rules’) for the excise year 2003-04, the petitioner being the highest bidder, the State confirmed the offer of bid for grant of leasehold rights to the petitioner for vending arrack, by its order dated 27.06.2003 and 24.07.2003. As the petitioner could not furnish the required Bank guarantees in respect of the taluks obtained, as per the period stipulated under Rule XVII, the confirmation order passed by the respondent No.1 stood cancelled, by which the cash deposit made by the petitioner in respect of the areas in possession and as per the rules contemplated, forfeited the cash deposit, assailing the order passed by the State canceling the

¶37

5 - NC: 2024:KHC:47876 WP No. 8997 of 2024

¶38

confirmation order WP No.50017/2003 and connected WP No.50018/2019 was preferred by the petitioner before this Court. This Court by an order dated 07.07.2004 rejected the Writ Petition and held that the petitioner is not entitled for the relief as prayed in the Writ Petition.

¶39

As per the Rules, the petitioner had deposited EMD of ₹2,19,49,500/- and as the petitioner failed to furnish the Bank guarantee to the Excise Department, the EMD amount of the petitioner i.e., ₹2,19,49,500/- was forfeited, which act is not disputed by the petitioners, as the petitioner in the WP No.50017/2003 and connected writ petition clearly stated that in light of the petitioner not furnishing the required Bank guarantee, the confirmation order was cancelled and the amount in question was forfeited by the State. The petitioner had arrack shop rental dues for 3 talukas of Shivamogga District totaling to an amount of ₹27,64,27,928/- and the leasehold right was terminated and fresh auction was conducted as per Rules.

¶40

6 - NC: 2024:KHC:47876 WP No. 8997 of 2024

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In the meantime, the Government of Karnataka

¶42

introduced the waiver of interest scheme called the Karasamadhana Scheme-IV and under the scheme there was a waiver of interest. The respondent No.4-authority issued an endorsement calling upon the petitioner to deposit a sum of ₹2,52,45,906/- being the amount of arrears of rental dues in order to attract the benefit under the Karasamadhana Scheme-IV. The petitioner approached this Court in WP No.1329/2018 seeking a relief of mandamus to consider the grievance of the petitioner and to grant extension of time. The prayer in WP No.1329/2018 is culled out as under;

¶43

“THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE R-1 AND 2 TO CONSIDER THE REPRESENTATIONS DATED 31.10.2017 AND 17.11.2017 SUBMITTED BY THE PETITIONER VIDE ANNEXURE-C AND D TO THE WRIT PETITION AND ALSO DIRECT THE R-2 AND 3 TO GRANT 6 MONTHS PERIOD TO PAY OFF RS.2,52,45,906/- AS DEMANDED BY THE R- 3 VIDE ENDORSEMENT DATED 25.10.2017 VIDE ANNEXURE- B TO THE WRIT PETITION; AND ETC.”

¶44

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NC: 2024:KHC:47876 WP No. 8997 of 2024

¶46

6. WP No.1329/2018 came to be disposed of with

¶47

the following observation;

¶48

“ 6. Sri Devi Prasad Shetty, learned counsel appearing for the petitioners submits that several properties are standing in the name of respondent No.7 and hence, seeks for setting aside of the order impugned dated 22nd November, 2018. In the facts and circumstances of the case and in view of the fact that the petitioner in writ petition No.1329 of 2018 undertook to deposit Rs.2,52,45,906/- with respondent-authority and if the same is accepted by respondent-Department in terms of "Kara-Samadhana-04" Scheme as mentioned in Annexure-A in writ petition No.1329 of 2018, I am of the view that the impugned order dated 22nd November, 2018 issued by the respondent No.2 is liable to be set aside. In view of the disposal of Writ Petition No. 1329 of 2018, as observed above, Writ Petition No.54804 of 2018 is to be allowed, accordingly allowed. Any decision or action taken by the respondent- authorities pursuant to order dated 22nd November, 2018, is set aside in respect of the petitioner herein.”

¶49

(Emphasis supplied)

¶50

7. This Court in WP No.1329/2018 permitted the

¶51

petitioner to deposit the earnest money, the petitioner

¶52

8 - NC: 2024:KHC:47876 WP No. 8997 of 2024

¶53

remitted a total sum of ₹2,52,45,906/- by way of challan as against the total rental amount due of ₹4,71,95,406/-. The details of the rentals due by the petitioner is culled out as under;

¶54

vÁ®ÆèPÀÄ	C¸À®Ä	§rØ ¢£ÁAPÀ 31-03-2017 gÀ CAvÀåPÉÌ	MlÄÖ
²ªÀªÉÆUÀÎ	3,38,10,402/-	6,57,71,591/-	9,95,81,983/-
¸ÁUÀgÀ	52,27,481/-	1,00,74,506/-	15,31,01,987/-
ºÉÆ¸À£ÀUÀgÀ	80,87,523/-	1,55,86,435/-	2,36,73,958/-
rJ¯ï-6 & r J¯ï 9	70,000/-	0	70,000/-
¸À£Àß¢£À ªÀåvÁÛ¸ÀzÀ ªÉÆvÀÛ
MlÄÖ	4,71,95,406/-	9,14,32,532/-	27,64,27,928/-

¶55

The case of the petitioner is that the petitioner

¶56

is not in arrears of any amount to the State towards arrack renting business carried on by him in part for the relevant year, the respondent Nos.3 and 4 failed to provide the benefit of Karasamadhana Scheme-IV and reiterating by way of demand a sum of ₹4,71,95,406/-. Again being aggrieved, by the action of the respondent No.1-State from refusing to give benefit of wavering of interest, the petitioner once again approached this Court in WP No.23168/2023 seeking to quash the demand notice. This Court allowed the Writ Petition and remanded

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9 - NC: 2024:KHC:47876 WP No. 8997 of 2024

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the matter for fresh consideration to the respondent No.4 in accordance with law. The grievance of the petitioner is that the respondent No.4 has passed the similar order rejecting the claim for adjustment of the EMD deposited towards the alleged excise arrears and denied to extend the benefit of Karasamadhana Scheme-V.

¶59

State has filed the statement of objections inter alia contending that the petitioner is not entitled to claim Karasamadhana Scheme-IV as per Rules, until the remaining amount of excise due to the extent of ₹2,19,49,500/is paid. Respondent No.1-State categorically stated that the benefit of waiver of interest and penalty by the introduction of Karasamadhana Scheme-V by notification dated 05.10.2023 is valid up to 31.03.2024, according to the respondent, the petitioner has to pay the previous arrears of principal amount for the year 2003-2004 to be eligible to claim the new Karasamadhana Scheme-V and since the remaining amount of ₹2,19,49,500/- is not yet paid which is towards

¶60

10 - NC: 2024:KHC:47876 WP No. 8997 of 2024

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the arrears of arrack rental and the recovery amount is legally recoverable by the State Government through Excise Department.

¶62

Heard the learned counsel Sri. G.K.Bhat, Senior counsel for Smt. Sudha D., appearing for petitioner and the learned counsel Sri. Reuben Jacob, Additional Advocate General for the respondents and perused the materials on record.

¶63

It is undisputed that the petitioner was a successful bidder in the public auction held on 18.06.2003 for the retail rent of arrack in the talukas of Shimogga District. The confirmation order of the bid of the petitioner was communicated and due to the non compliance of the mandatory provisions of Rules 16 and 17 of the Rules by the petitioner, the bid which was provisionally confirmed within a stipulated period automatically stood cancelled and thereafter, the EMD made by the petitioner with the Department was forfeited. Rule 15 of the Rules provides for the procedure required to be followed by the parties

¶64

11 - NC: 2024:KHC:47876 WP No. 8997 of 2024

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after the acceptance of the tender of the tenderer for the grant of leasehold rights for retail rent of liquor in the areas by taking other steps by the parties after confirmation of the bid was accepted and communicated to the highest bidder. Rule 16 of the Rules provide for lease to be executed in favor of the State by the highest bidder in whose favor the confirmation order is passed in respect of such contract, after the highest bidder complying with the mandatory requirements of the Rules by depositing the stipulated amount of one month rentals within 15 days from the date of receipt of communication or confirmation order by incorporating the statutory terms and condition in the lease deed by the respondents under which the right of Retail Vend liquor is a list in favor of the highest bidder. This mandatory requirement being not complied, the confirmation order in respect of the areas in question was cancelled. Rule 17(1)(a)(1) of the Rules as per the said Rule, the petitioner was required to submit an application with the list of the sites with its boundaries selected by him for locating the shops for issuing the licenses in

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12 -

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NC: 2024:KHC:47876 WP No. 8997 of 2024

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respect of each of the shops within 15 days from 01.07.2003 and thereafter, as per the Rule 17(1)(a)(1) of the Rules, the petitioner has to furnish various documents sought therein.

¶69

The mandatory requirements of the statutory rules having not been complied by the petitioner after receiving the confirmation order within the period stipulated in the above Rules, the confirmation order was cancelled and the EMD amount deposited was forfeited. The challenge made by the petitioner to the cancellation of the confirmation order in WP No.50017/2003 and connected Writ Petition has been rejected. In the Writ Petition No.1329/2023, the petitioner undertook to deposit ₹2,52,45,906/- with the authority.

¶70

The petitioner having undertaken to pay the amount and now cannot seek to contend that the EMD amount which was forfeited by the State way back in the year 2003-2004 to be adjusted towards the arrears of rentals due. The Karasamadhana Scheme is applicable

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13 - NC: 2024:KHC:47876 WP No. 8997 of 2024

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only if the arrears of rental due by the petitioner has been deposited.

¶73

The forfeiture of the EMD is in light of the violation of the mandatory provisions and thus the EMD amount forfeited cannot be toward arrack vending business. The respondent No.4 as per the Rule 18(2) of Rules has considered and passed the order directing the plaintiff to pay the amount of ₹2,19,49,500/-. The petitioner would be entitled to claim interest under the new Karasamadhana Scheme-V in the event of petitioner paying the remaining rental dues to the extent of ₹2,19,49,500/- and then the Karasamadhana Scheme would be extended in favor of the petitioner. With the said observations, the writ petition stands disposed of .

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SD/- (JUSTICE K.S. HEMALEKHA)

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PJ/ CT-PA LIST NO.: 19 SL NO.: 2

Ajanthkumar S R v. the State of Karnataka

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Ajanthkumar S R v. the State of Karnataka

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