Sri H S Krishnamurthy Vs Commissioner of Excise — Writ and Judicial Review | Karnataka HC (2025)

Sri H S Krishnamurthy Vs Commissioner of Excise — Writ and Judicial Review | Karnataka HC (2025)

What the court decided

AI extract

Outcome

Writ petition allowed; impugned order dated 21.03.2024 passed by respondent no.1 in Appeal no.ECS/81/APP/2021 (Annexure-A) and order dated 07.12.2021 passed by respondent no.2 bearing no.Exe/BUD5/Valaya-31/IML/15/2020-21 (Annexure-G) quashed as unsustainable in law.

Issue for consideration

Whether an application for transfer of excise licences, once filed along with the requisite fee, could be withdrawn by the applicant, and whether the licensing authorities could entertain or adjudicate disputes regarding payment/non-payment of consideration for the transfer. +1 more

Court's answer

Prima facie, any person who files an application before any authority is vested with the right to withdraw it, unless provisions of law provide that filing divests the applicant of that right, or the filing is on receipt of consideration rendering it irrevocable (as recognised in Suraj Lamps).

Ratio / Principle

The Rules do not provide for or recognise transfer based on consideration, do not require parties to state reasons or furnish documents for transfer, and therefore the authorities are not authorised to decide disputes about payment/part-payment/non-payment of consideration.

Key takeaways

There is no express prohibition against filing an application for transfer of excise licences for consideration; the burden to establish that the filing was for consideration, whether paid or promised, so as to render it irrevocable, lies on the person asserting it to be so.ratio¶78
Since the petitioner admittedly did not challenge the Endorsement at Annexure-E3, respondent no.3 would be unable to pursue its claim based on the Application without establishing that it was irrevocable due to passing of consideration (either in full or part) or otherwise.ratio¶84

Detailed headnote1 paragraphs

CAV order (Ravi V Hosmani, J.; HC-KAR, 12.09.2025): Writ petition under Article 226 by a CL-9/RVB licensee allowed; the Commissioner of Excise's order dated 21.03.2024 in Appeal No. ECS/81/APPLICATION/2021 (Annexure-A) and the Deputy Commissioner's order dated 07.12.2021 (Annexure-G) quashed. Held: (i) prima facie an applicant may withdraw an application unless law divests that right or consideration renders the filing irrevocable (Suraj Lamps); (ii) Rule 17-B, Karnataka Excise (General Conditions of Licences) Rules, 1967 neither recognises consideration-based transfers nor empowers authorities to adjudicate payment disputes - the burden of proving consideration lies on the person asserting it; (iii) Endorsement dated 05.12.2020 (Annexure-E3) meant the transfer Application was not in force, and the transferee (M/s. Kumar Enterprises), having failed to challenge it despite liberty reserved, could not press it without proving irrevocability; (iv) the MoU dated 18.05.2020 was unenforceable (agreement to agree; unstamped/unregistered); (v) a liquor licence is a privilege, not property (Khoday Distilleries), and mere filing of a transfer application is not conclusive; (vi) while Excise Authorities cannot delve into consideration disputes, the applicant could not be compelled to litigate them in another forum first.

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 12^TH DAY OF SEPTEMBER, 2025

BEFORE

THE HON'BLE MR. JUSTICE RAVI V HOSMANI

WRIT PETITION NO. 9258 OF 2024 (EXCISE)

BETWEEN:

SRI H.S.KRISHNAMURTHY, S/O H.D.S. NAIK, AGED ABOUT 58 YEARS, R/A NO.203, OM SAI SAPPHIRE APARTMENT, GOVINDAPPA LANE, 5^TH CROSS, KODIHALLI, BENGALURU - 560 008.

…PETITIONER

[BY SRI D.R.RAVISHANKAR, SR. COUNSEL FOR SRI ANOOP HARANAHALLI, ADVOCATE (PH)]

Digitally signed by GEETHAKUMARI PARLATTAYA S

Location: High Court of Karnataka

AND:

COMMISSIONER OF EXCISE, GOVERNMENT OF KARNATAKA, 2^ND FLOOR, BMTC TTMC BLDG., 'A' BLOCK, SHANTINAGAR, BENGALURU - 560 027.

DEPUTY COMMISSIONER OF EXCISE, BENGALURU URBAN (BUD-5), BENGALURU - 560 002.

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M/s. KUMAR ENTERPRISES PARTNERSHIP FIRM, NO.343, 9^TH MAIN, SECTOR-VII, HSR LAYOUT, BENGALURU - 560 102, REP BY ITS PARTNER SRI BHARATH S. KUMAR.

…RESPONDENTS

[BY SRI G.K.BHAT, SR. COUNSEL FOR SMT. D.SUDHA, ADVOCATE FOR R3 (PH); SRI BHOJEGOUDA T. KOLLER, AGA FOR R1 & R2 (PH)]

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 OF THE CONSTITUTION OF INDIA, PRAYING TO A) QUASH THE IMPUGNED ORDER DATED 21.03.2024 PASSED BY THE R1 IN APPEAL NO.ECS/81/APPLICATION/2021 AT ANNEXURE-A, B) QUASH THE IMPUGNED ORDER DATED 07.12.2021 BEARING NO.EXE/BDA-5/VALAYA-31/ML/15/2020-21 AT ANNEXURE-G.

THIS PETITION IS HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 04.09.2025, THIS DAY, THE COURT, PRONOUNCED THE FOLLOWING:

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CAV ORDER

Challenging order dated 21.03.2024 passed by Respondent no.1 in Appeal no.ECS/81/APPLICATION/2021 at Annexure-A and order dated 07.12.2021 passed by Respondent no.2 bearing no.Exe/BUD5/Valaya-31/IML/15/2020-21 at AnnexureG, this writ petition is filed.

Sri DR Ravishankar, learned Senior Counsel appearing for Sri Anoop Haranahalli, learned counsel for petitioner submitted, petitioner was holder of CL-9 with attached Retail Vend of Beer licence for his premises at no.88, Sy.no.97, Inorbit Mall, Second floor, EPIP area, Hoodi village, KR Puram Hobli, Bengaluru East, Bengaluru. On 14.08.2020, he had submitted an application before respondent no.1 requesting for transfer of licence to respondent no.3 - Firm, as per Annexure-C1 ( ' Application ' , for short). Application was filed along with requisite transfer fee and additional licence transfer fee paid vide challan dated 20.08.2020. Said application was filed under Rule 17-B of Karnataka Excise (General Conditions of Licences) Rules, 1967 ('Rules' for short). It was submitted, proposal was forwarded for prior approval of respondent no.1, on 31.08.2020.

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But, on 01.09.2020, petitioner filed complaint before respondent no.2 alleging that respondent no.3 had not paid complete consideration amount. Similar complaint was filed by petitioner's wife before respondent no.1 on 21.09.2020. A complaint was also filed before Police. In response to said complaint, respondent no.2 issued Endorsement dated 05.12.2020 as per Annexure-E3, informing petitioner and respondent no.3 that Application would be considered only after they had sorted out their differences and filed fresh application for transfer.

Such being case, respondent no.3 filed WP no.13507/2020 without adding petitioner as party seeking for direction to respondents to consider Application . Said writ petition was disposed of on 18.12.2020 directing respondent no.2 herein to consider and directing respondent no.1 to cause consideration of Application within period of two weeks. It was submitted, respondent no.3 had failed to bring to notice of this Court that under Endorsement at Annexure-E3, Application stood disposed of and parties were required to file fresh application.

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Thereafter, respondent no.2 passed order dated 11.01.2021 as per Annexure-E7, transferring petitioner's licences in favour of respondent no.3. Said order was challenged by petitioner in WP no.2756/2021. Same was allowed on 21.06.2021 as per order at Annexure-F, both on ground that petitioner was not heard before passing order as well as on ground that Application stood rejected as per Annexure-E3 and reserving liberty to respondent no.3 herein to challenge same. Liberty was also reserved to petitioner to support his application for withdrawal of Application .

Aggrieved thereby, respondent no.3 filed WA no.794/2021, but same was dismissed by Division Bench of this Court on 07.09.2021, under order at Annexure-F1. Thereafter, respondent no.2 sought to hold proceedings for consideration of petitioner's request for withdrawal of Application and passed order dated 07.12.2021 as per Annexure-G holding that once an application for transfer of excise licences were filed along with requisite fee, it could not be withdrawn. Said order was challenged by petitioner in Appeal no.81/2021 before respondent no.1. By order dated 08.06.2023 at Annexure-G4, Appeal was dismissed and challenged by petitioner before

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Karnataka Appellate Tribunal (' Tribunal ' for short) in Appeal no.238/2023.

During pendency of said appeal, as there was refusal to renew licence, WP no.14129/2023 was filed. Same was however disposed of on 04.08.2023 relegating petitioner to pursue pending appeal before Tribunal. Thereafter, by order dated 30.10.2023 at Annexure-J, appeal came to be allowed, order at Annexure-G4 was set-aside and matter remitted back to respondent no.1 to pass orders afresh after giving opportunity to both parties.

Learned Senior Counsel pointed out to specific finding by Tribunal that wordings of Endorsement at AnnexureE3 could only mean that Application was not in force and fresh application was required to be filed. It was submitted, said order had attained finality. In pursuance of same, however, parties appeared before respondent no.1. Despite petitioner specifically pointing out import of Endorsement at Annexure-E3, as noted by Division Bench of this Court as well as specifically spelt by Tribunal that Application cannot be held to be in force available for consideration and liberty was reserved to respondent no.3 to challenge Annexure-E3, but not challenged

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by respondent no.3, respondent no.1 proceeded to pass impugned order dismissing appeal, rejecting petitioner's application for withdrawal of Application and allowing Application for transfer of Excise licences in favour of respondent no.3. Aggrieved by said order dated 21.03.2024 at Annexure-A, this writ petition is filed.

Relying upon decision of Hon'ble Supreme Court in case of Hope Plantations Ltd., v. Taluk Land Board, Peermade & Anr. reported in (1999) 5 SCC 590 , it was submitted, in course of proceedings leading to impugned order, firstly, this Court in its order at Annexure-F; secondly, Division Bench in order at Annexure-F1 and thirdly, Tribunal in its order at Annexure-G4 had held by virtue of Endorsement at Annexure-E3, Application could not be treated as in force. It was further submitted, though liberty was specifically reserved in order at Annexure-F to challenge endorsement at AnnexureE3, respondent had failed to question same and as such estopped from pursuing/persisting for consideration of Application or for seeking rejection of petitioner's application for withdrawal of Application.

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It was further submitted main reason for dispute arising between petitioner and respondent no.3 in relation to transfer of licences was that petitioner was not paid consideration amount agreed to be paid, and respondent no.3 had sought to defraud petitioner of consideration amount by firstly, promising to pay same and later claiming to have paid it in cash even though it was far beyond permissible limit for transaction in cash. Referring to decision of Hon'ble Supreme Court in case of Correspondence, RBANMS Educational Institution v. B Gunashekar & Anr. reported in 2025 SCC OnLine SC 793, it was submitted, if respondent no.3 persisted with claim to have paid part of consideration of Rs.1 Crore 35 Lakhs to petitioner in cash, that too before Excise Authorities, then there would be need for intimation to Income Tax Authorities for verification of transaction.

Learned Senior Counsel also contended, though in muffled voice that Application filed was invalid/defective and hence its rejection was justified. On above grounds, sought for allowing writ petition.

On other hand, Sri GK Bhat, learned Senior Counsel appearing for Smt.D Sudha, learned counsel for respondent

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no.3 opposed writ petition. It was submitted, in terms of a Memorandum of Understanding ('MoU' for short) dated 18.05.2020 at Annexure-C, petitioner had agreed to transfer his CL-9 and RVB licences in favour of respondent no.3 for total consideration amount of Rs.2 Crores and 75 Lakhs and had received advance amount of Rs.1 Crore and 40 Lakhs at that time. It was submitted, on 14.08.2020, as admitted, petitioner filed Application along with necessary documents and transfer fee. Petitioner had received balance amount at time of filing Application. But on 05.09.2020, filed false complaint before respondent no.2 alleging that he was fraudulently induced to file Application.

It was submitted, Rules provided for transfer of Excise licences as per Rule 17-B. Said Rule stipulated two requirements, firstly, about application being accompanied with transfer fee and secondly, verification about transferee not being ineligible. In view of above, once an application for transfer were filed, there would be no scope for authorities to enquire into disputes about payment/non-payment of consideration for transfer nor entertain any complaint about same. They would be mandated to consider application in

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accordance with law and on application being found compliant with requirements, proceed with transfer and leaving it to disputing party to settle dispute before appropriate forum.

It was submitted, referring to above position in law, respondent no.2 had passed order at Annexure-G4 allowing Application and rejecting petitioner's application for withdrawal of Application. Same was duly appreciated even by respondent no.1, who also considered grounds urged by petitioner and dismissed appeal.

Learned Senior Counsel further submitted that none of decisions relied upon by petitioner were relevant nor decided question whether an application for transfer of Excise licences once filed could be withdrawn on any ground whatsoever and whether Authorities under Act were authorized to entertain and/or deal with disputes about non-payment of consideration for transfer. Therefore, on above grounds, sought for dismissal of writ petition.

Learned AGA for respondents no.1 and 2 supported impugned order.

Heard learned counsel and perused material on

record.

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From above, it is seen, petitioner's grievance against order impugned at Annexure-A is that it was passed without due appreciation of specific contentions urged by petitioner relying upon observation/finding about consequence of respondent no.2 issuing Endorsement at Annexure-E3 and failure of respondent no.3 in challenging same despite specific liberty being reserved. While respondent no.3 seeks to contend that an application for transfer of excise licence once filed, could not be withdrawn for any reason whatsoever.

Prima facie, generally any person who files any application before any authority would be vested with right to withdraw same, unless provisions of law would provide that filing of application would result in applicant divesting himself of right to withdraw or where filing of such an application is on receipt of consideration rendering it irrevocable as recognized by Hon'ble Supreme Court in case of ' transfer' of immovable property by execution of General Power of Attorney coupled with consideration in Suraj Lamps and Industries Pvt. Ltd. reported in (2012) 1 SCC 656 .

Indeed, as rightly contended by learned Senior Counsel for respondent no.3, Rules do not provide or recognize

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transfer based on consideration. They do not require parties to state reason for transfer or furnish documents in that regard. Therefore, authorities would not be authorized to decide dispute about payment/part-payment/non-payment of consideration.

At same time, there is no express prohibition against filing of application for transfer of excise licences for consideration. In other words, burden to establish that filing of application was for consideration whether paid or promised in order to render filing of application irrevocable, would be on person asserting it to be so.

Besides, in instant case, after filing of application at Annexure-C1, complaints were filed with respondents no.1 and 2 alleging that petitioner was fraudulently induced to file Application. On consideration of same, respondent no.2 had issued Endorsement dated 05.12.2020 at Annexure-E3, directing parties to sort out their differences elsewhere and thereafter file fresh application for. In writ petition filed challenging said order, this Court in its order at Annexure-F had noted effect of said endorsement would be that Application could not be treated as pending and liberty reserved to respondent no.3 to challenge endorsement. Said observation

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received confirmation in order at Annexure-F1 with dismissal of Writ Appeal. Said aspect was specifically highlighted by Tribunal in it's order at Annexure-J.

Admittedly, petitioner has not challenged endorsement at Annexure-E3. Resultantly, respondent no.3 would be unable to pursue his claim based on Application, without establishing that it was irrevocable due to passing of consideration (either in full or part) or otherwise. Even, contention of respondent no.3 based on MoU would not hold good for two reasons. Firstly, an MoU being only an agreement to enter into agreement, would not be enforceable and secondly, even if it is contended that same is a complete agreement; for want of payment of necessary stamp duty/registration.

While passing impugned order, after adverting to rival contentions, respondent no.1 observed that transfer of licence is akin to transfer of property and filing of application as being similar to process of registration and as such, irrevocable. It is also observed that permitting withdrawal of application

would set wrong precedent and uncertainty in mind of transferee. It is also stated that Department cannot delve into

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disputes 'after transfer'. And, virtually holding that once both parties appear before Authorities and affix their consenting signatures and Department accepts genuineness of transfer application, process would be complete. Respondent no.1 has also held petitioner had failed to approach appropriate forum to have financial dispute resolved.

Firstly, licence under Rules is only a privilege and not property having due deference to decision in case of M/s. Khoday Distilleries Ltd. v. State of Karnataka & Ors. reported in (2017) 6 KLJ 507 , wherein it is held that no person can claim right to trade in liquor as a matter of right.

Secondly, filing of application for transfer would be conclusive insofar as applicant only after it's acceptance and passing of order for transfer. Therefore, mere filing of application cannot be held to be conclusive. Said reasoning by respondent no.1 would be unsustainable.

While, respondent no.1 rightly held that Excise Authorities cannot delve into disputes about consideration, it would not be justified in requiring applicant to approach other forum and establish claims about consideration, as it would be on person staking his right in pursuance of application for

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transfer to have his claims against applicant adjudicated prior to approaching authorities for effecting transfer.

For aforesaid reasons, writ petition succeeds, impugned orders dated 21.03.2024 passed by respondent no.1 in Appeal no.ECS/81/APP/2021 at Annexure-A and order dated

07.12.2021 passed by respondent no.2 bearing no.Exe/BUD5/Valaya-31/IML/15/2020-21 at Annexure-G would

be unsustainable in law and therefore quashed .

Sd/(RAVI V HOSMANI) JUDGE

AV

List No.: 1 Sl No.: 57

Procedural history

How this case reached the court

AI extract

Order under challenge
Order dated 21.03.2024 passed by Respondent no.1 (Commissioner of Excise) in Appeal no.ECS/81/APPLICATION/2021 (Annexure-A), dismissing petitioner's appeal, rejecting his application for withdrawal of the Application and allowing the transfer Application in favour of respondent no.3; together with order dated 07.12.2021 passed by Respondent no.2 (Deputy Commissioner of Excise) bearing no.Exe/BUD5/Valaya-31/IML/15/2020-21 (Annexure-G) holding that an application for transfer once filed with requisite fee could not be withdrawn.¶29
Respondent no.1 - Commissioner of Excise, Government of Karnataka (co-impugned order by Respondent no.2 - Deputy Commissioner of Excise, Bengaluru Urban (BUD-5)) · 21.03.2024
Prior proceeding
Petitioner, holder of CL-9 licence with attached Retail Vend of Beer (RVB) for premises at Inorbit Mall, Hoodi, Bengaluru, applied on 14.08.2020 to respondent no.1 for transfer of the licence to respondent no.3 firm under Rule 17-B of the Karnataka Excise (General Conditions of Licences) Rules, 1967, with transfer fee and additional licence transfer fee paid vide challan dated 20.08.2020.¶30
Prior proceeding
Complaints followed: petitioner complained to respondent no.2 on 01.09.2020 that respondent no.3 had not paid complete consideration; petitioner's wife made a similar complaint before respondent no.1 on 21.09.2020; a complaint was also filed before Police.¶34
Prior proceeding
In response to the complaints, respondent no.2 issued Endorsement dated 05.12.2020 (Annexure-E3) informing petitioner and respondent no.3 that the Application would be considered only after they sorted out their differences and filed a fresh application for transfer.¶34
Prior proceeding
Respondent no.3 filed WP no.13507/2020 without adding petitioner as party, seeking direction to respondents to consider the Application.¶35
Prior proceeding
WP no.13507/2020 was disposed of on 18.12.2020, directing respondent no.2 to consider and respondent no.1 to cause consideration of the Application within two weeks.¶35
Prior proceeding
Respondent no.2 passed order dated 11.01.2021 (Annexure-E7) transferring petitioner's licences in favour of respondent no.3.¶38
Prior proceeding
Petitioner's WP no.2756/2021 against the transfer order was allowed on 21.06.2021 (Annexure-F), both on the ground that petitioner was not heard and that the Application stood rejected as per Annexure-E3; liberty was reserved to respondent no.3 to challenge the endorsement and to petitioner to support withdrawal of the Application.¶38
Prior proceeding
Respondent no.3's WA no.794/2021 was dismissed by the Division Bench of this Court on 07.09.2021 (Annexure-F1).¶39
Prior proceeding
Respondent no.2 passed order dated 07.12.2021 (Annexure-G) holding that once an application for transfer of excise licences was filed along with requisite fee, it could not be withdrawn.¶39
Prior proceeding
Petitioner challenged Annexure-G in Appeal no.81/2021 before respondent no.1; the appeal was dismissed by order dated 08.06.2023 (Annexure-G4).¶39
Prior proceeding
Petitioner challenged Annexure-G4 before the Karnataka Appellate Tribunal in Appeal no.238/2023.¶42
Prior proceeding
During pendency of the Tribunal appeal, WP no.14129/2023 was filed over refusal to renew the licence; it was disposed of on 04.08.2023, relegating petitioner to pursue the pending appeal before the Tribunal.¶43
Prior proceeding
By order dated 30.10.2023 (Annexure-J), the Tribunal allowed Appeal no.238/2023, set aside Annexure-G4 and remitted the matter to respondent no.1 to pass orders afresh after giving opportunity to both parties.¶43
Prior proceeding
In the remanded proceedings, respondent no.1 passed the impugned order dated 21.03.2024 (Annexure-A) dismissing petitioner's appeal, rejecting his application for withdrawal of the Application and allowing the transfer Application in favour of respondent no.3, prompting this writ petition.¶47

Cite this judgement

Sri H S Krishnamurthy v. Commissioner of Excise, WP/9258/2024 (KA), decided on 12 September 2025.

The High Court of Karnataka publishes no neutral citation for this judgement — cite it by case number and date of decision.

Cases cited4

Hope Plantations Ltd., v. Taluk Land Board, Peermade & Anr.Referred¶48
Correspondence, RBANMS Educational Institution v. B Gunashekar & Anr.Referred¶51
Suraj Lamps and Industries Pvt. Ltd.Relied on¶72

View all cases cited

Statutes3

Constitution of IndiaArticle 226
Karnataka Excise (General Conditions of Licences) Rules, 1967Rule 17-B · Rule 17-B

View all statutes

Procedural history15

Order dated 21.03.2024 passed by Respondent no.1 (Commissioner of Excise) in Appeal no.ECS/81/APPLICATION/2021 (Annexure-A), dismissing petitioner's appeal, rejecting his application for withdrawal of the Application and allowing the transfer Application in favour of respondent no.3; together with order dated 07.12.2021 passed by Respondent no.2 (Deputy Commissioner of Excise) bearing no.Exe/BUD5/Valaya-31/IML/15/2020-21 (Annexure-G) holding that an application for transfer once filed with requisite fee could not be withdrawn.Respondent no.1 - Commissioner of Excise, Government of Karnataka (co-impugned order by Respondent no.2 - Deputy Commissioner of Excise, Bengaluru Urban (BUD-5)) · 21.03.2024
Petitioner, holder of CL-9 licence with attached Retail Vend of Beer (RVB) for premises at Inorbit Mall, Hoodi, Bengaluru, applied on 14.08.2020 to respondent no.1 for transfer of the licence to respondent no.3 firm under Rule 17-B of the Karnataka Excise (General Conditions of Licences) Rules, 1967, with transfer fee and additional licence transfer fee paid vide challan dated 20.08.2020.
Complaints followed: petitioner complained to respondent no.2 on 01.09.2020 that respondent no.3 had not paid complete consideration; petitioner's wife made a similar complaint before respondent no.1 on 21.09.2020; a complaint was also filed before Police.

View full history

Bench / Coram

RAVI V HOSMANI

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