Case Note & Summary
The judgment concerns two writ petitions filed by M/s. Shankar Wines and M/s. Blue Peacock Ventures, both holders of CL-2 licences under the Karnataka Excise Act, 1965, for the sale of Indian and foreign liquors. The petitioners challenged orders passed by the Commissioner of Excise and the Deputy Commissioner cancelling their licences on the ground that their shops were located within 75 meters of a religious place, allegedly violating Rule 8(2) of the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968. The petitioners argued that their shops were established long before the 2002 amendment introducing the distance restriction, and that the rule could not be applied retrospectively. They also contended that no show cause notice was issued before cancellation, violating principles of natural justice. The respondents argued that the distance rule applied to all licences, including renewals. The court examined the language of Rule 8(2) and held that it applies only to new grants of licences and not to existing shops. The court further held that cancellation without a show cause notice was illegal. The court quashed the impugned orders and directed the respondents to restore the licences and allow the petitioners to continue their business.
Headnote
A) Excise Law - Distance Restriction - Rule 8(2) of Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968 - Applicability to Existing Shops - The distance restriction of 75 meters from a religious place introduced by the 2002 amendment does not apply to shops that were already in existence and had valid licences prior to the amendment. The rule operates prospectively and cannot be used to cancel existing licences without a show cause notice. (Paras 1-10) B) Excise Law - Cancellation of Licence - Principles of Natural Justice - Show Cause Notice - The cancellation of a CL-2 licence without issuing a prior show cause notice is illegal and violative of principles of natural justice. The Commissioner of Excise must follow the procedure under the Karnataka Excise Act, 1965 and the Rules before cancelling a licence. (Paras 1-10) C) Excise Law - CL-2 Licence - Renewal - The renewal of a CL-2 licence is a continuation of the original licence, and conditions existing at the time of original grant cannot be altered by subsequent amendments unless expressly made retrospective. (Paras 1-10)
Issue of Consideration
Whether the distance restriction under Rule 8(2) of the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968 applies to existing shops that were granted licences before the amendment introducing the distance rule, and whether the cancellation of a CL-2 licence without a prior show cause notice is valid.
Final Decision
The court allowed the writ petitions, quashed the impugned orders dated 07.04.2014, 28.10.2013, and 07.05.2012, and directed the respondents to restore the CL-2 licences and allow the petitioners to continue their business.
Law Points
- Rule 8(2) of Karnataka Excise (Sale of Indian and Foreign Liquors) Rules
- 1968
- does not apply retrospectively to shops existing before the 2002 amendment
- cancellation of licence without show cause notice is illegal
- principles of natural justice must be followed
