- 1 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MRS. JUSTICE K.S. HEMALEKHA WRIT PETITION NO.5761 OF 2025 (APMC) BETWEEN: M/S. KEERTHAN ENTERPRISES, (A PARTNERSHIP FIRM), NO.16/46, ONION POTATO COMPLEX, A.P.M.C., YESHWANTHPUR, REPRESENTED BY ITS PARTNER, SRI SRIRAMULU S/O VENKATASWAMY, AGED ABOUT 64 YEARS. …PETITIONER (BY SMT. SHILPA RANI, ADVOCATE) AND: 1. STATE OF KARNATAKA, REPRESENTED BY ITS PRL. SECRETARY, DEPARTMENT OF COOPERATION, M.S. BUILDING, BENGALURU-560 001. 2. THE DIRECTOR OF AGRICULTURAL MARKETING, NO.16, 2ND RAJABHAVANA ROAD, BENGALURU-560 001. 3. THE AGRICULTURAL PRODUCE MARKET COMMITTEE, MAHATMA GANDHI COMPLEX, A.P.M.C. MARKET YARD, YESHWANTHPUR, BENGALURU-560 022 REPRESENTED BY ITS SECRETARY. …RESPONDENTS (BY SMT. RASHMI M. RAO, HCGP FOR R-1 & R-2; SRI NANDAKISHORE, ADVOCATE FOR R-3) Digitally signed by MAHALAKSHMI B M Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THE RESPONDENTS TO CONSIDER THE REPRESENTATIONS OF THE PETITIONER DATED 14.02.2025 PER ANNEXURE-K AND TO ACCEPT THE BALANCE LEASE CUM SALE CONSIDERATION AS PER OFFER LETTER DATED 11.01.2023 BEARING NO.KRU HU MA SA(BEM)MALIGE/3648/2022-23 ISSUED BY THE RESPONDENT NO.3 IN RESPECT OF SUBJECT SHOP NO.16/46 AS PER ANNEXURE-E AND REGISTER THE SUBJECT SHOP IN THE NAME OF THE PETITIONER FORTHWITH AND ETC. THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MRS. JUSTICE K.S. HEMALEKHA ORAL ORDER The petitioner has approached this Court seeking a direction to the respondents to consider the petitioner's representation dated 14.02.2025 and to accept the balance lease-cum-sale consideration in terms of the offer letter dated 11.01.2023, issued by the respondent No.3 in respect of Shop No.16/46 situated in Onion and Potato Market Yard, earlier located at Yeshwanthpur. The petitioner, has also challenged, by way of amendment, the - 3 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 communication dated 28.03.2025, whereby respondent No.3 has rejected the request for conversion of lease and licence into lease cum sale and returned the amount earlier deposited. 2. The factual background reveals that the petitioner was initially allotted Shop No.16 on leave and licence basis in the year 2009 in Yeshwanthpur Main Market Yard and continued therein for several years. The petitioner thereafter applied for conversion for allotment into lease cum sale in the year 2022. Pursuant to which, offer letters were issued to the petitioner on 11.01.2023, and the petitioner remitted 25% of the revised value of `5,45,125/-. It is not in dispute that subsequent to the said process, the State Government issued a notification dated 17.01.2023 shifting the regulated trade of onion and potato to Dasanapura Sub-market Yard, and the Director of Agriculture Marketing issued a further notification dated 24.02.2023 de-notifying such trade from Yeshwanthpur yard. The validity of these notifications had been - 4 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 challenged by the certain trade holders which came to be upheld by this Court in the case of Athithi Trading Company and Others Vs. State of Karnataka and Others1 (Athithi Trading Company). 3. Respondent No.3 rejected the request for lease- cum-sale, stating that after shifting of the entire regulated trade from Yeshwanthpura to Dasanapura, the earlier premises ceased to operate as allotment units and the shifting is to be treated as afresh allotment, making the petitioner eligible only for allotment on leave and licence basis in accordance with the policy applicable to Dasanapura. The amount deposited by the petitioner has been returned through cheque, which the petitioner admits having received. 4. The principle issue concerns the applicability of Rule 12(2) of the Karnataka Agricultural Produce Marketing (Regulation of Allotment of Property In Market 1 W.P.No.3011/2025 and connected matters D.D18.07.2025 - 5 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 Yards) Rules 2004 (‘Rule, 2004’ for short), wherein it is provided that on completion of 55 months of continuous occupation, the market committee may consider conversion of lease and licence into lease-cum-sale. 5. The learned counsel for the petitioner contends that the period spent in Yeshwanthpura satisfies this statutory threshold, and the mere shifting of the market yard cannot deprive the petitioner of his eligibility. She further asserts that similarly placed traders have been granted conversion to lease-cum-sale and that the denial of the sale to the petitioner is arbitrary and discriminatory. 6. On the other hand, the learned counsel for the respondent-APMC contends that the Rule 12(2) of Rules, 2004 presupposes continuity of the same premises in the same market yard and cannot apply when the government has, by policy as statutory notification, shifted the entire regulated activity to another yard. He further contends that the conversion is not a matter of right and is only a - 6 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 discretionary power, which has been judicially affirmed in Athithi Trading Company’s case. Once the validity of the shifting notification has been upheld, there cannot be conversion of the earlier premises. It is contented that the petitioner is entitled only to allotment in Dasanapura on licence basis, as applicable uniformly to all traders. 7. This Court has carefully considered the rival contentions urged by the learned counsel for the parties and material on record. 8. The petitioner's claim for conversion into lease- cum-sale is founded entirely on the premise that his occupation in Yeshwanthpura must be deemed continuous and transferable to the Dasanapura premises. The petitioner's conversion process had already been compensated and substantial compliance had taken place prior to the shifting of notification. The respondents have not disputed this factual position. - 7 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 9. Rule 12(2) of the Rules 2004 reads thus: “12. Restriction on transfer:- (1) x x x (2) Where any market functionary who has been allotted a shop or godown, shop-cum-godown or other building on lease and license basis under Rule 13 is continued in occupation of the same for a minimum period of 55 months and requests to convert the said leave and license into lease-cum- sale basis may be considered with prior approval of the Director of Agricultural Marketing and the value of the site, shop, godown or shop-cum-godown shall be determined by taking into consideration the following factors namely,- (i) site value at 40% of the guidance value determined under the Karnataka Stamp Act, 1957, and rules made thereby under or the value of the site approved by the Director of Agricultural Marketing under Rule 5, whichever is higher; (ii) The building value to be fixed by the Engineering Cell of the Department after considering the depreciation of the building; (iii) Any other expenditure incurred by the market committee on the site or building.” 10. The Rule contemplates conversion into lease- cum-sale when the allottee has completed 55 months of - 8 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 continuous occupation of the same premises, the petitioner has been in possession for more than 15 years. The Rule when read purposively, applies to the allottee and his continuous tenure and not the physical structure of the market yard. The shifting of yard by a notification does not extinguish the accrued rights, nor the writ petition which has affirmed the notification anyway states that the shifting of the yard would extinguish the rights of the petitioner to seek for lease-cum-sale as nor does it resets the tenure of an otherwise eligible allottee. Once the petitioner has satisfied the statutory requirement under Rule 12(2) of the Rules, 2004 and the process of conversion had already been initiated by the respondents much prior to the notification of shifting and acted upon by both the parties. 11. The respondents cannot unilaterally withdraw from the statutory and contractual process by shifting of the market yard, which has been done due to the congestion that was there in the Yeshwanthpura yard. The - 9 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 impugned communication dated 28.03.2025, returning the petitioner amount is mechanical, not speaking and does not consider Rule 13, the petitioner’s eligibility seeking for conversion in light of his being in occupation in the market yard Yeshwanthpura for more than 15 years. This Court is unable to accept the impugned communication and this action is arbitrarily, discriminatory and contrary to the statutory law. 12. The respondents have also not disputed that the petitioner's continuous possession, occupation and compliance with the offer conditions placed him squarely within the zone of consideration under Rule 12(2) of Rules, 2004. Once such eligibility is established, denial of consideration amounts to violation of Article 14 of the Constitution of India. Accordingly, this Court pass the following: ORDER i. The writ petition is allowed. - 10 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 ii. The communication dated 28.03.2025 issued by the respondent No.3 is quashed. iii. Respondent No.3 is directed to consider the petitioner's case for conversion from leave and licence to lease-cum-sale basis, in terms of Rule 12(2) of Rules, 2004 and in continuation of the earlier offer letter dated 11.01.2023 by accepting the balance consideration, within a period of eight weeks. While doing so, the respondents shall also consider the petitioner's claim for parity with similarly placed traders, if any, who have been extended lease-cum-sale basis. iv. The execution of the lease-cum-sale basis to be in accordance with law subject to the fulfillment of remaining formalities. v. This Court has not expressed any opinion, and all the issues regarding thereto are left open to the Competent Authority. - 11 - HC-KAR NC: 2025:KHC:47573 WP No. 5761 of 2025 vi. This order is passed in the peculiar facts and circumstance of the case and shall not be a precedent. Sd/- ______________________ JUSTICE K.S. HEMALEKHA AT List No.: 1 Sl No.: 42