- 1 - HC-KAR NC: 2025:KHC:48391 WP No. 27095 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MRS. JUSTICE K.S. HEMALEKHA WRIT PETITION NO.27095 OF 2025 (EXCISE) BETWEEN: 1. SHARATH KUMAR SHETTY S/O MANJUNATHA SHETTY, AGED ABOUT 48 YEARS, R/AT NO.9, 4TH CROSS, SHEENAPPA LAYOUT, PAPIREDDY PALYA, NAGARABHAVI 2ND STAGE, BENGALURU-560 072. 2. SATHISH KUMAR SHETTY, S/O GOPAL SHETTY, AGED ABOUT 41 YEARS, NO.9, NAGASHREE, 4TH CROSS, SHEENAPPA LAYOUT, PAPIREDDY PALYA, NAGARABHAVI 2ND STAGE, BENGALURU-560 072. …PETITIONERS (BY SRI G.K. BHAT, SENIOR COUNSEL FOR SMT. SUDHA D., ADVOCATE) AND: 1. THE STATE OF KARNATAKA, BY ITS ADDITIONAL CHIEF SECRETARY, FINANCE DEPARTMENT, VIDHANA SOUDHA, BENGALURU-560 001. 2. THE EXCISE COMMISSIONER IN KARNATAKA, 2ND FLOOR, TTMC, ‘A’ BLOCK, BMTC BUILDING, SHANTINAGAR, BENGALURU-560 027. Digitally signed by MAHALAKSHMI B M Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:48391 WP No. 27095 of 2025 3. THE DEPUTY COMMISSIONER, UDUPI DISTRICT, UDUPI-574 105. 4. THE DEPUTY COMMISSIONER OF EXCISE, UDUPI DISTRICT, UDUPI-574 105. …RESPONDENTS (BY SRI RAJ KUMAR M., AGA) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF CERTIORARI OR ANY OTHER APPROPRIATE WRIT OR ORDER QUASHING THE IMPUGNED ORDER CAPTIONED AS ENDORSEMENT DATED 05.04.2025 NO.UDP/KND/IML/06/2024-25 PASSED BY RESPONDENT NO.3 AS PER ANNEXURE –G AND ETC. THIS PETITION COMING ON FOR FURTHER HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MRS. JUSTICE K.S. HEMALEKHA ORAL ORDER The petitioners have approached this Court seeking to quash the impugned order / endorsement dated 05.04.2025 passed by respondent No.3 (Annexure-G) and further directing respondent Nos.3 and 4 to consider the petitioners’ application for grant of licence in CL-7 made in terms of the representation dated 14.02.2024 (Annexure- F) treating the same as the one made for the current excise year 2025-26. - 3 - HC-KAR NC: 2025:KHC:48391 WP No. 27095 of 2025 2. The petitioners are partners of a firm intending to establish a CL-7 liquor vending outlet at the premises situated in Sy.No.55/1A3, Kollur Village, Byndoor Taluk, Udupi District. It is averred that the property is legally constructed commercial building purchased under a registered sale deed and requisite statutory approvals including building license, commercial use permission, fire safety certificate and Gram Panchayat NOC have been obtained. The petitioner applied for CL-7 licence through representation dated 14.02.2024, vide the impugned endorsement 05.04.2025, the application came to be rejected by the Deputy Commissioner of Excise- respondent No.3. According to the petitioners, the rejection is arbitrary, non-speaking and violates the amended proviso to Rule 5 of the Karnataka Excise Licence (General Conditions) Rules, 1967 (‘Rules, 1967) notified on 16.08.2024, which expressly exempts CL-7 establishment within Gram Panchayat limits (population above 3000 from highway distance restrictions). - 4 - HC-KAR NC: 2025:KHC:48391 WP No. 27095 of 2025 3. It is averred that no opportunity of hearing was granted before passing the impugned order and the Deputy Commissioner has completely ignored the amended Rule and mechanically relied on the highway circulars. 4. The writ petition is opposed by the respondents contending that the petitioners have an efficacious alternative statutory remedy of appeal under Section 61 of the Karnataka Excise Act 1965, which they failed to avail. It is asserted that the Deputy Commissioner has passed the impugned endorsement after relying on the Excise Commissioner Circular dated 11.12.2020, the order passed by this Court in the case of Sri. Dayananda B Shetty Vs. The Executive Engineer and Others1 (Sri.Dayananda B Shetty) and the reports issued by National Highways Authority of India (NHAI), Project Director Honnavara (PWD officials), which have confirmed 1 W.P.No.36314/2019 D.D 25.08.2021 - 5 - HC-KAR NC: 2025:KHC:48391 WP No. 27095 of 2025 the petitioners building lies only 25.6 meters from the center line of NH No.766C thus violating 40 meters “no construction zone” and that the petitioners have suppressed the original building licence which required statutory setback from the highway. 5. It is averred that the amended proviso to Rule 5 of the Rules, 1967 does not apply because it governs only the distance of liquor shops from highways and not the legality of the construction itself, which remain governed by NHAI and PWD building guideline restrictions and that further the impugned endorsement is reasoned valid and the writ petition is liable to be dismissed. 6. Heard the learned counsel for the parties and perused the material on record. 7. By the endorsement dated 05.04.2025, the Deputy Commissioner rejected the petitioners’ application primarily on the ground that the building is situated within 25.6 meters of NH No.766C, which is - 6 - HC-KAR NC: 2025:KHC:48391 WP No. 27095 of 2025 stated to be in violation of the 40 meters mandatory setback prescribed under the NHAI guidelines, Government circular dated 30.03.2022 and the earlier directions in W.P.No.36314/2019. A perusal of the endorsement would indicate that the Deputy Commissioner has relied upon the reports but has not referred to consider the amended proviso to Rule 5 of the Rules, 1967 or nor does it indicate any opportunity was afforded to hear the petitioners. 8. The main contention of the learned Senior Counsel is that the rejection is illegal because the amended proviso to Rule 5 of the Rules, 1967 removes the highway distance restrictions for CL-7 in Gram Panchayat with population above 3000 which squarely covers the present case. 9. It is argued that the Deputy Commissioner ought to have considered their documents, the NOC, the statutory approvals and ought to have heard them. While - 7 - HC-KAR NC: 2025:KHC:48391 WP No. 27095 of 2025 an appeal against the order of the Deputy Commissioner lies to the Excise Commissioner, the Apex Court in Whirlpool Corporation Vs. Register of Trade Marks2 (Whirlpool Corporation) and Harbansal Saniya Vs. Indian Oil Corporation3 (Harbansal Saniya) has held that the writ jurisdiction is maintainable despite alternative remedy where the impugned order suffers from violation of natural justice, is passed without jurisdiction or disregard statutory provisions. 10. In the present case, the endorsement suffers from all these defects i) absence of hearing ii) non- consideration of the amended Rule 5 and iii) non- application of mind and this Court interferes with the order of the Deputy Commissioner despite the availability of an alternative remedy. This Court pass the following: ORDER i. The writ petition is allowed. 2 (1998) 8 SCC 1 3 (2003) 2 SCC 107 - 8 - HC-KAR NC: 2025:KHC:48391 WP No. 27095 of 2025 ii. The impugned endorsement dated 05.04.2025 is hereby quashed. iii. The matter is remitted back to the Deputy Commissioner, Udupi to reconsider the petitioners’ application dated 14.02.2024 for grant of CL-7 licence afresh and also considered the applicability of amended proviso to Rule 5 of the Rules, 1967 after affording the petitioners’ a reasonable opportunity of hearing. iv. The petitioners to be present before the Deputy Commissioner, Udupi on 04.12.2025 and the Deputy Commissioner shall pass an order within a period of six weeks’ from the date of appearance in accordance with law. v. All the contentions are kept open. Sd/- ______________________ JUSTICE K.S. HEMALEKHA AT List No.: 1 Sl No.: 13