- 1 - NC: 2025:KHC:9188 WP No.9226 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 4TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO.9226 OF 2022 (EXCISE) BETWEEN: M/S SPR SPIRITS PVT. LTD., (FORMERLY KNOWN AS M/S SPR GROUP HOLDINGS PVT. LTD.,)., (INCORPORATED UNDER THE COMPANIES ACT 1956) F-113 NO.2 C AND D, 2ND FLOOR CENTRAL CHAMBERS 2ND MAIN GANDHINAGAR, BANGALORE-560009, REPRESENTED BY THEIR MANAGING DIRECTOR, M.THIMMEGOWDA S/O LATE MUTTEGOWDA AGED ABOUT 75 YEARS (SENIOR CITIZEN BENEFIT NOT CLAIMED) ...PETITIONER (BY SRI MADHUSUDAN R.NAIK, SENIOR COUNSEL A/W SRI SURAJ NAIK, ADVOCATE) AND: 1. THE STATE OF KARNATAKA, REPRESENTED BY ITS SECRETARY, FINANCE AND EXCISE DEPARTMENT VIDHANA SOUDHA, BANGALORE – 560 001. 2. THE EXCISE COMMISSIONER FOR THE STATE OF KARNATAKA VOKKALIGARA SANGHA BUILDING, KITTUR RANI CHENNAMMA CIRCLE, BANGALORE - 560001. Digitally signed by SHIVAKUMAR HIREMATH Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:9188 WP No.9226 of 2022 3 . THE DEPUTY COMMISSIONER, RAMANAGARA DISTRICT, RAMANAGARA-571511. ...RESPONDENTS (BY SRI REUBEN JACOB, A.A.G., A/W SRI B MANJUNATH, A.G.A., FOR R1 TO R3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER DATED 11.11.2021 VIDE ANNEXURE-A ISSUED BY THE RESPONDENT NO.2 AND ISSUE A WRIT IN THE NATURE OF MANDAMUS, OR NAY OTHER APPROPRIATE WRIT, ORDER OR DIRECTION, HOLDING THAT THE PETITIONER IS ENTITLED FOR THE BENEFIT OF ‘INTEREST WAIVER’ UNDER THE KARA SAMADHANA SCHEME-III AND IV, RESPECTIVELY AND DIRECTING THE RESPONDENT NOS.2 TO GRANT THE BENEFIT OF KARA SAMADHANA SCHEME-III (VIDE ANNEXURE-F) BEARING NO.FD 27 PES 2009 DATED 29.05.2010 ISSUED BY THR ERESPONDENT NO.1 AND IF NEED BE UNDER KARA SAMADHANA SCHEME - IV (VIDE ANNEXURE- Q) BEARING NO.FD 22 PES 2015 DATED 08.06.2016 ISSUED BY THE RESPONDENT NO.1 TO THE PETITIONER AND FOR CONSIDERING ADJUSTMENT OF THE FORFEITED EMD WHILE CALCULATING THE LOSS, IN THE TERMS OF THE OBSERVATIONS IN THE FINAL ORDER DATED 18.03.2021 IN WA NO.5851/2013 VIDE ANNEXURE-A AND ETC. THIS WRIT PETITION PERTAINS TO PRINCIPAL BENCH BENGALURU HAVING BEEN HEARD AND RESERVED ON 03.02.2025 AND COMING ON FOR PRONOUNCEMENT OF ORDERS AT KALABURAGI BENCH THROUGH VIDEO CONFERENCING, THIS DAY, THE COURT MADE THE FOLLOWING : CORAM: HON'BLE MR JUSTICE ANANT RAMANATH HEGDE - 3 - NC: 2025:KHC:9188 WP No.9226 of 2022 C.A.V. ORDER The petitioner has sought a writ of certiorari to quash the order dated 11.11.2021 passed by the respondent No.2/Excise Commissioner. In terms of said order at Annexure-A, 2nd respondent has rejected the petitioner's claim for waiving interest under Kara Samadhana Scheme- IV and adjustment of forfeited earnest money deposit towards arrears of loss incurred on account of termination of the contract for the excise year 2001-02. 2. The petitioner has also sought a writ to hold that the petitioner is entitled to the benefit of interest waiver under Kara Samadhana Scheme-III dated 29.05.2010 & Scheme IV dated 08.06.2016 and to direct 2nd respondent to grant benefit under the said schemes. 3. Writ of mandamus is also sought to direct the respondents to consider the representation dated 23.10.2017 and to refund the excess amount after granting benefit under the said schemes. The - 4 - NC: 2025:KHC:9188 WP No.9226 of 2022 representation dated 23.10.2017 is marked at Annexure-T. 4. Relevant facts pleaded in the petition are as under:- - Petitioner was a successful bidder in the “Lease of Rights of Retail Vend of Liquors” for the Excise year 2001-02. As per the terms of the bid, the petitioner was required to deposit a sum equivalent to one month's rent in advance and in addition to that, furnish security for the sums equivalent to rent for 3 months and 10 days. - In terms of the successful bid, the petitioner was required to pay Rs.10,32,01,200/- as rent for Ramanagar Taluk, Rs.7,11,00,000/- towards rent per month for Channapattana Taluk and Rs.12,30,01,200/- for Kanakapura Taluk per month. The total amount payable for the year was Rs.29,73,02,400/- towards rent for three taluks referred to above for the Excise year 2001-02. The petitioner paid Rs.9,77,38,627/- for these three taluks - 5 - NC: 2025:KHC:9188 WP No.9226 of 2022 towards the rental per month and towards the security for 3 months and 10 days. These facts are not in dispute. - The petitioner contends that on account of inaction on the part of the State Government to curb the sale of illegal liquors, the petitioner could not run the business and had to surrender the licence midway and the Government had to re-auction the licence. In the reauction, the State secured Rs.4,14,26,053/-, Rs.2,73,68,320/- and Rs.5,62,61,077/- for the remaining period in the excise year 2001-02 for three taluks named above. - It is stated that considering the sum paid by the petitioner, and the amount recovered from the second auction, the short fall for the year 2001-02 would be Rs.2,77,59,100/-, Rs.2,04,46,634/-, and Rs.63,02,589/- for the respective taluks referred to above. Thus, according to the petitioner, the total loss would be Rs.7,45,83,023/- under the Karnataka Excise (Lease or - 6 - NC: 2025:KHC:9188 WP No.9226 of 2022 Right of Retail Vend of Liquors) Rules, 1969 ( Rules, 1969). - The petitioner was holding a distillery licence and in terms of Government Order dated 28.07.2003, the licence was renewed on the condition that 20% of sales/running bills from the distillery business, shall be deducted every month towards petitioner's excise arrears referred to above. The amount so deducted was agreed to be kept in an escrow account pending consideration of the Revision Petition under Section 62 of the Karnataka Excise Act, 1965 (for short 'Act of 1965') filed by the petitioner, wherein the petitioner questioned the arrears of excise revenue quantified by the respondent authority. - In terms of order dated 17.01.2006, the Revision Petition filed by the petitioner is dismissed. Subsequently, in terms of order dated 12.06.2007, as a condition precedent for renewal of licence, 20% deduction which was agreed earlier, was reduced to Rs.10,00,000/- - 7 - NC: 2025:KHC:9188 WP No.9226 of 2022 per month. Said amount is agreed to be deducted towards payment of arrears of excise dues. - It is stated that on 17.08.2006, the Government issued a Notification under Rule 15-A of Rules, 1969 notifying Kara Samadhana Scheme-II. Under the said Scheme, the interest payable on the excise arrears was to be waived if the entire principal amount is paid during the currency of the Scheme which was in force from 01.08.2006 to 31.10.2006. - The petitioner states that in a Writ Petition filed by one Guravamma, the amount of earnest money deposit and security offered by the licencee, which is forfeited, should be adjusted towards payment of arrears while calculating the loss. Order in Smt.Guruvamma vs. State of Karnataka and Ors.1 is questioned by the State in W.A.No.558/2007 and Writ Appeal is dismissed. The State’s challenge to the said order by way of Special Leave 1 2007(3) AIR KAR 99 - 8 - NC: 2025:KHC:9188 WP No.9226 of 2022 Petition is also dismissed by the Apex Court. These facts are undisputed. - The petitioner further states that on 29.05.2010, Kara Samadhana Scheme-III was launched which provided for waiver of interest on payment of principal amount. The petitioner sought benefit under Kara Samadhana Scheme-III and made a request to take into account, a sum of Rs.2,47,75,200/- which was forfeited towards the arrears before calculating the loss suffered by the Government. The petitioner claims that this request is in tune with the law laid down in Guravamma supra. However, the respondent-State did not grant the benefit and issued an endorsement on 29.07.2010 refusing to make such adjustments as claimed. - The petitioner filed Writ Petition No.26542/2010 challenging the said endorsement and same was dismissed reserving liberty to the petitioner to challenge the calculation pursuant to an order on the application under - 9 - NC: 2025:KHC:9188 WP No.9226 of 2022 Kara Samadhana Scheme-III. The petitioner filed Writ Appeal No.3578/2010. In the said appeal, the Court passed an order, directing the appellant/present petitioner to pay admitted amount along with the application under the Kara Samadhan Scheme. Later the appeal was withdrawn, as the petitioner was permitted to file representation before the Authority. - On 30.10.2010, the petitioner filed application seeking benefit of Kara Samadhan Scheme-III. However, the application was not considered. The petitioner on 14.03.2011 filed WP No.11342/2011. The petitioner states that in the said proceeding, by way of an interim order, the petitioner was permitted to seek extension of the scheme and to pay 60% of the amount on or before 31.03.2011 and balance within one week. The petitioner claims that he complied the directions in the interim order. The Writ Petition No.11342/2011 is allowed and this Court held that the amount forfeited is to be adjusted towards the recovery while calculating the loss incurred. - 10 - NC: 2025:KHC:9188 WP No.9226 of 2022 - It is further stated that the respondent – State filed a belated appeal challenging the order dated 04.02.2013 passed in W.P.No.11342/2011 in W.A. No.5851/2013, wherein this Court held that the petitioner is entitled to the benefits conferred in the case of Guravamma supra. - When the said Writ Appeal was pending, the Government issued Notification dated 25.09.2017 amending the Rules, 1969 and incorporated a proviso to sub-rule (2) of Rule 18. The petitioner claims that the said proviso is inserted incorporating the view taken in Guruvamma's case supra. - In the meantime, in the year 2016 itself, the Government had also launched Kara Samadhan Scheme- IV and the petitioner had made an application under the said Scheme to adjust the forfeited amount as well as the amount paid pursuant to the agreement for the renewal of distillery licence. The application under Kara Samadhana Scheme-IV was not considered citing pendency of Writ - 11 - NC: 2025:KHC:9188 WP No.9226 of 2022 Appeal. Petitioner filed an interim application in W.A. No.5851/2013 to consider the Kara Samadhana Scheme- III & IV. The Division Bench vide order dated 20.12.2018 directed the Authority to consider the application under Kara Samadhana Scheme-IV. Later, the Deputy Commissioner of Mysore rejected the application under Kara Samadhana Scheme-IV and the petitioner challenged the said order in the pending Writ Appeal on the premise that Deputy Commissioner is not the Competent Authority to consider the application under the Scheme and the same should be considered by the Excise Commissioner/respondent No.2. - In the said Writ Appeal No.5851/2013 vide order dated 18.03.2021, the Court held that the order dated 22.12.2018 passed by the Deputy Commissioner on application under Kara Samadhana Scheme-IV is without jurisdiction and directed the Commissioner of Excise to consider the application. Later, 2nd respondent vide impugned order dated 11.11.2021 had rejected the - 12 - NC: 2025:KHC:9188 WP No.9226 of 2022 application filed by the petitioner for Kara Samadhana Scheme-IV. 5. Learned Senior counsel appearing for the petitioner would contend that the writ of mandamus issued in Writ Petition No.11342/2011 vide order dated 04.02.2013 is not yet complied by 2nd respondent by giving deductions to the forfeited earnest money deposited by the petitioner. It is also his further submission that the reasons assigned by 2nd respondent in not adjusting the amount forfeited and also the amount paid pursuant to an agreement while renewing the distillery licence is contrary to the ratio laid down in the case of Guruvamma supra which is held applicable in W.P. No.11342/2011 and also contrary to the amended Rule which incorporated a proviso to sub-rule (2) of Rule 18 of Rules, 1969 and contrary to Kara Samadhana Schemes-III & IV. 6. Elaborating his submission, he would contend that the Scheme was launched to give benefit not only to the persons who are in arrears of the principal sum, but - 13 - NC: 2025:KHC:9188 WP No.9226 of 2022 also to the persons who are in arrears of interest having paid the entire principal sum. Thus, it is urged that the benefits of the Kara Samadhana Scheme cannot be denied to the petitioner. 7. Learned Additional Advocate General appearing for the respondent-State on the other hand would contend that the petition is not maintainable as the Writ Petition challenging the order of cancellation is dismissed as withdrawn and the petitioner cannot raise the grievance after having withdrawn the Writ Petition wherein the petitioner has challenged the order dismissing Revision Petition seeking waiver of the entire excise dues. It is also contended that 2nd respondent/Commissioner of Excise is justified in rejecting the application filed under Kara Samadhana Scheme-IV as the principal amount is already recovered and the benefit of the Scheme is available only to those persons where the principal amount is not recovered. - 14 - NC: 2025:KHC:9188 WP No.9226 of 2022 8. It is also urged on behalf of the respondent- State that the petitioner’s application under Kara Samadhana Scheme-III cannot be considered as the order passed in W.P.No.11342/2011 merged with order in W.A. No.5851/2013. 9. This Court has considered the contentions raised at the bar and perused the records. 10. The following points arise for consideration: i. Whether the direction issued in W.P. No.11342/2011 to consider the application under Kara Samadhana Scheme III is still operating and 2nd respondent is required to consider the same? ii. Whether 2nd respondent is justified in rejecting the application under Kara Samadhana Scheme-IV? 11. As far as the first point is concerned, it is an admitted fact that in terms of order dated 04.02.2013, this Court in W.P. No.11342/2011 directed 2nd respondent to consider the petitioner's application filed under Kara - 15 - NC: 2025:KHC:9188 WP No.9226 of 2022 Samadhana Scheme III. In the said Writ Petition, the co-ordinate Bench of this Court has conclusively held that the forfeited earnest money deposit has to be adjusted towards the recovery of loss on account of termination of contract. This order is passed following the law laid down in Guruvamma's case supra. 12. It is also noticed from the impugned order that absolutely there is no consideration of the application filed by the petitioner under Kara Samadhana Scheme-III. It is not the case of the respondent-State that said application is considered and order is passed. On the other hand, respondent-State contends that the said application does not survive because of the merger of the Order in W.A. No.5851/2013. 13. The contention that Application under Kara Samadhana Scheme-III has lapsed on the premise that order in W.P.No.11342/2011 has merged with order in W.A. No.5851/2013 is entirely incorrect. It is relevant to note that Writ Appeal No.5851/2013 is filed challenging - 16 - NC: 2025:KHC:9188 WP No.9226 of 2022 the order passed in Writ Petition No.11342/2011. The said Writ Appeal is filed by the respondent-State. The said order was filed challenging the writ issued in Writ Petition No.11342/2011 and connected cases. The Division Bench of this Court in the said Writ Petition has in unmistakable terms dismissed the Writ Appeal filed by the State and it has not interfered with the findings of the learned Single Judge by holding as under: "6. Thus, it is evident that the learned Single Judge has interpreted Rule 18(2) of the Rules, and has held that the forfeited amount has to be adjusted while computing the loss under Rule 18(2) of the Rules. The aforesaid decision of the learned Single Judge has been upheld by the division bench as the appeal preferred by the appellants herein has been dismissed by an order dated 21.01.2008 in W.A.No.1298/2007. Therefore, the legal principle laid down in Guruvamma supra applies to the facts of this case and the decision rendered in Guruvamma supra cannot be said to be not applicable merely on the ground that in that case, the licencee had - 17 - NC: 2025:KHC:9188 WP No.9226 of 2022 expired before the commencement of vend of arrack. The submission made by learned Additional Government Advocate does not deserve acceptance." 14. It is also relevant to note that the petitioner also filed application under Kara Samadhana Scheme-IV claiming benefit and the Division Bench of this Court in W.A. No.5851/2013 has directed the State to consider the application filed under Kara Samadhana Scheme-IV. Pursuant to the said direction, the Deputy Commissioner had passed an order rejecting the application under Kara Samadhana Scheme-IV. Later, same was set-aside by the Division Bench of this Court and direction is issued to the Excise Commissioner to consider the application under Kara Samadhana Scheme-IV in terms of order dated 18.03.2021. 15. Though the learned Additional Advocate General contends that the application filed under Kara Samadhana Scheme-III has become infructuous in view of Kara - 18 - NC: 2025:KHC:9188 WP No.9226 of 2022 Samadhana Scheme-IV and subsequent application filed by the petitioner under Kara Samadhana Scheme-IV, it is relevant to note that the writ issued in Writ Petition No.11342/2011 is not yet taken to its logical conclusion. The said order in the Writ Petition No.11342/2011 has attained finality and not modified by any subsequent order of the Court. Thus, the said writ still operates and it is to be given effect to. 16. Merely because one more application is filed under subsequent Kara Samadhana Scheme viz., Scheme IV, one cannot conclude that the application under Kara Samadhana Scheme-III which is otherwise filed in time, and ordered to be considered in terms of the order passed in W.P.No.11342/2011 and which is yet to be considered, loses its relevance. There is nothing in Kara Samadhana Scheme-IV to suggest that all pending applications filed under Kara Samadhana Scheme-III will lapse, despite Court order directing consideration of application under Kara Samadhana Scheme-III, though one of the conditions - 19 - NC: 2025:KHC:9188 WP No.9226 of 2022 would specify that all pending applications before the Government and the Court should be withdrawn. 17. It is relevant to note that clause No.7 of Kara Samadhana Scheme-IV recognises the pending application under earlier Schemes, and those applicants whose applications under earlier Kara Samadhana Schemes have been rejected are also eligible to file applications under Kara Samadhana Scheme-IV. Though, it is stated in the Scheme that the applications pending must be withdrawn, it does not contemplate withdrawal of application where there is a direction to consider the same by the Court. 18. Hence, the contention that application filed under Kara Samadhana Scheme-III does not survive for consideration and must be rejected. There is one more angle to it. If the State is to contend that, withdrawal of application under Kara Samadhana Scheme-III is a condition precedent to file application under Scheme -IV, if the application under scheme -III is not withdrawn at all, then the State is required to consider the application under - 20 - NC: 2025:KHC:9188 WP No.9226 of 2022 Scheme -III which is covered by the Writ of this Court in W.P. No.11342/2011 affirmed in W.A. No.5851/2013. 19. Further discussion in the said order in Writ Appeal is relating to the developments that have taken place pursuant to Kara Samadhana Scheme-IV. It is relevant to note that during the pendency of the said Writ Appeal, Kara Samadhana Scheme-IV was notified and the present petitioner, who was the respondent in the said appeal moved an application for considering his application pending in Kara Samadhana Scheme-IV. The Court in the said Writ Appeal directed consideration of the application filed under Kara Samadhana Scheme-IV notwithstanding pendency of the Writ Appeal and during the pendency of the Writ Appeal, the Deputy Commissioner passed an order rejecting the application under Kara Samadhana Scheme-IV and the said order rejecting the application was brought to the notice of the Division Bench in Writ Appeal (by way of interim measure a direction was issued to consider the application under Kara Samadhana - 21 - NC: 2025:KHC:9188 WP No.9226 of 2022 Scheme-IV) and the Division Bench noticing the fact that the Deputy Commissioner has no jurisdiction to decide the application under Kara Samadhana Scheme-IV, set-aside the order with a direction to the Excise Commissioner, who is the Competent Authority to deal with application under Kara Samadhana Scheme-IV. 20. The direction issued to consider the application under Kara Samadhana Scheme-IV at any stretch of imagination cannot be construed as having diluted the order passed in Writ Petition No.11342/2011 in view of rejection of the appeal by the State challenging the order in Writ Petition No.11342/2011. 21. For the aforementioned reasons, this Court is of the view that the application filed under Kara Samadhana Scheme-III does survive for consideration. 22. Now this Court has to consider the effect of Kara Samadhana Scheme-III. The relevant clauses of the Kara Samadhana Scheme-III would be clauses No.1, 4, 7 and 8. Those clauses are extracted as under: - 22 - NC: 2025:KHC:9188 WP No.9226 of 2022 "1. Under the Karasamadhana Scheme- III, a defaulter who is in arrears of payment of excise dues pertaining to period prior to 30.06.2007 and comes forward to pay the entire principal amount so due as reflected in the books of account of the Excise Department shall be eligible for waiver of upto-date interest pertaining to the principal payable under Rule 15 of the Karnataka Excise Licences (General Conditions) Rules 1967. 4. The scheme shall also apply to those who have only the interest outstanding and do not have arrears towards principal amount pertaining to the period prior to 30.6.2007. 7. Such of those defaulters whose applications have been rejected in Karasamadhana Scheme-I and II are also eligible to avail the benefit of the scheme Amounts paid by them under these Schemes towards principal will be treated as such. 8. Amount paid by the defaulters towards arrears after expiry of Karasamadhana Scheme-I will be reckoned as principal amount.” - 23 - NC: 2025:KHC:9188 WP No.9226 of 2022 23. On a reading of the clauses, it is noticed that the Scheme is applicable to: (a) persons who have defaulted in paying the principal amount; (b) Also the persons who have paid the principal amount but are in arrears of interest. (c) The payment made towards arrears after expiry of Scheme-I shall also be reckoned as principal amount. 24. It is also noticed that the persons whose earlier applications under Kara Samadhana Schemes-I and II have been rejected are also eligible to file application under Kara Samadhana Scheme-III and the amount paid under earlier applications shall be treated as amount paid towards principal amount. More importantly, Clause No.8 would reveal that any amount paid by the defaulters towards arrears, after expiry of Kara Samadhana Scheme- I will be reckoned as the principal amount. - 24 - NC: 2025:KHC:9188 WP No.9226 of 2022 25. As could be seen from the records and moreso from the contentions raised by the respondent/State, it is the contention of the State that Kara Samadhana Scheme- III application does not survive for consideration in view of the Kara Samadhana Scheme-IV being notified. Thus, at this stage, it is an admitted factual position that Kara Samadhana Scheme-III application filed by the petitioner is not considered despite a writ operating to consider the same. 26. Hence, it is required to be considered in the manner it should be. In the normal circumstances, this Court would have directed the respondent/State to consider the Scheme in accordance with the provisions of the Scheme and also in accordance with the directions issued in Guruvamma's case supra. However, in terms of the impugned order rejecting the application under Kara Samadhana Scheme-IV, the Commissioner of Excise has declined to follow the ratio in Guruvamma's case supra and the Writ in W.P.No.11342/2011 upheld in W.A. - 25 - NC: 2025:KHC:9188 WP No.9226 of 2022 No.5851/2013, to adjust the amount forfeited by the State while calculating the loss incurred by the State on account of re-auction. In addition, also because the dispute is pending for more than 15 years, this Court is of the view that few points relating to application of Kara Samadhana Scheme-III are to be discussed and suitable directions has to be issued to the Commissioner of Excise to pass orders on application to Kara Samadhana Scheme-III. 27. The whole object of Kara Samadhana Scheme- IV is to recover the principal amount due and to waive the interest accrued on the principal amount. The Scheme prescribed certain terms and conditions to be followed to avail the benefit of the Scheme. State does not state that the petitioner has not followed the requirement under the Scheme for consideration of his application for availing the benefit under the Scheme. The Authority under the State has proceeded to hold that if the defaulter’s due is recovered after forfeiture, then the Kara Samadhana Scheme itself is not applicable. The terms and conditions - 26 - NC: 2025:KHC:9188 WP No.9226 of 2022 of the Scheme would clearly specify that the Scheme is applicable even in a situation where the amount is paid after Kara Samadhana Scheme-II. It is not in dispute that the amount is recovered by way of forfeiture and also in terms of contributions made pursuant to order renewing the distillery licence. 28. Under these circumstances, the Court has to observe that amount of Rs.2,47,75,200/- which is admittedly the forfeited amount has to be adjusted towards the arrears and same has to be deducted from Rs.9,77,38,672/- the amount of loss calculated by the respondent/State. Thus, the amount of actual loss would be Rs.7,45,08,323/- (after applying the principle in Guruvamma's case supra). This Court has also taken this view given the fact that this benefit is given to the petitioner in terms of the order dated 04.12.2013 in Writ Petition No.11342/2011 confirmed in W.A. No.5851/2013. 29. As already noticed, the respondent/State has recovered the amount from the petitioner while imposing - 27 - NC: 2025:KHC:9188 WP No.9226 of 2022 the conditions for renewal of distillery licence in terms of the Government Order dated 28.07.2003 and the subsequent modified order dated 12.06.2007. The Kara Samadhana Scheme-III in express terms recognises (in terms of Clause-8 that amount paid after the expiry of Kara Samadhana Scheme-I will be reckoned as principal amount). Thus, the amount recovered from the petitioner in terms of two orders dated 28.07.2003 and 12.06.2007 which were available in the coffers of the State should be adjusted towards the principal amount due from the petitioner. 30. Since, the Kara Samadhana Scheme provides for complete waiver of interest in the event of the principal amount being paid in terms of the Scheme, the respondent/State shall have to waive the interest calculated on the arrears. 31. It is further relevant to note that Kara Samadhana Scheme-IV was launched on 08.06.2016 and that Scheme also provided for waiver of entire interest in - 28 - NC: 2025:KHC:9188 WP No.9226 of 2022 the event of the defaulters paying the principal amount as provided in the Scheme. It is also noticed that though Clause No.6 of Kara Samadhana Scheme-IV provides for withdrawal of earlier applications to file application under Scheme-IV, this Court in Writ Appeal No.5851/2013 permitted the petitioner to file application under Kara Samadhana Scheme-IV without insisting for withdrawal of earlier application under Kara Samadhana Scheme-III. The State has not questioned the said order. In the Writ Appeal, the Court did not dilute the direction issued in the Writ Petition. 32. Learned Additional Advocate General appearing for the State referring to the proviso to Sub-rule 2 of Rule 18 of Rules, 1969 would urge that the amount already remitted towards loss shall not be refunded. The said amendment was introduced in the year 2017 vide Notification dated 25.09.2017. This Court is of the view that the said amendment does not take away the right crystallized in favour of the petitioner in terms of the order - 29 - NC: 2025:KHC:9188 WP No.9226 of 2022 passed in Writ Petition No.11342/2011 and the benefits that are available to the petitioner under Kara Samadhana Scheme-III and also the Kara Samadhana Scheme-IV which are notified prior to the amendment. The delay in processing the application is by the State. Had it been done in time, as directed in W.P. No.11342/2011, before amendment of sub Rule 2 of Rule 18 of the Rules, 1969, the State could not have urged the contention based on the said amendment in 2017. The petitioner who is held entitled to benefit of ratio in Guruvamma's case supra and was conferred the benefit in W.P. No.11342/2011 and eligible under Kara Samadhana Scheme-III cannot be deprived of the benefit when there is a writ to consider the application under the Scheme. 33. If at all the amended Rule 18 deprives the benefit, the Writ Appeal No.5851/2013 would have been allowed. However, same is dismissed even after 2017 amendment to the Rules, 1969. Thus, the contention of the State has to be rejected. - 30 - NC: 2025:KHC:9188 WP No.9226 of 2022 34. Hence the following: ORDER (i) The Writ Petition is Allowed-in-part. (ii) The impugned order dated 11.11.2021 bearing No.ECS/15/WP/2011 passed by the Excise Commissioner - respondent No.2 is quashed. (iii) Respondent No.2 is directed to consider the pending application filed by the petitioner under Kara Samadhana Scheme-III keeping in mind the findings recorded by this Court. (iv) The forfeited Earnest Money Deposit on account of termination of petitioner’s contract for the Excise Year 2001-02 shall be adjusted towards arrears. (v) On consideration of the said application, in case any amount is found to be adjusted towards interest on the excise arrears payable, same shall be refunded to the petitioner. - 31 - NC: 2025:KHC:9188 WP No.9226 of 2022 (vi) The whole exercise shall be completed within 30 days from the date of receipt of certified copy of this order. Sd/- (ANANT RAMANATH HEGDE) JUDGE GVP/BL List No.: 19 Sl No.: 2