- 1 - WA No. 1186 of 2026 RESERVED ON 5TH JUNE 2026 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15TH DAY OF JUNE, 2026 PRESENT THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE AND THE HON'BLE MRS. JUSTICE K.S. HEMALEKHA WRIT APPEAL NO.1186 OF 2026 (EXCISE) BETWEEN: 1. THE STATE OF KARNATAKA, REPRESENTED BY ITS EXCISE COMMISSIONER, OFFICE OF THE EXCISE COMMISSIONER, TTMCA BLOCK, BMTC BUILDING, 2ND FLOOR, SHANTHINAGAR, BENGALURU - 560027. 2. THE DEPUTY COMMISSIONER OF EXCISE BENGALURU URBAN DISTRICT, BUD-5, BENGALURU - 560001. …APPELLANTS (BY SMT. NAMITHA MAHESH B.G., ADDITIONAL GOVERNMENT ADVOCATE) AND: SMT. M. SHOBHA, W/O J. MUNNAGAPPA, AGED ABOUT 54 YEARS, RESIDING AT NO.B-27/A, GM PALYA, NEW THIPPASANDRA POST, BENGALURU-560075. …RESPONDENT (BY SRI H.N. MANJUNATH PRASAD, ADVOCATE FOR C/R) Digitally signed by C K LATHA Location: High Court of Karnataka - 2 - WA No. 1186 of 2026 THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO CALL FOR THE RECORDS IN W.P. NO.24088/2025 (EXCISE) ON THE FILE OF THIS HON'BLE COURT; SET ASIDE THE ORDER DATED 10.03.2026 PASSED IN W.P.NO.24088/2025 (EXCISE) PASSED BY THE LEARNED SINGLE JUDGE OF THIS HON'BLE COURT. THIS WRIT APPEAL HAVING BEEN HEARD AND RESERVED FOR JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS DAY, JUDGMENT WAS PRONOUNCED AS UNDER: CORAM: HON'BLE MR. VIBHU BAKHRU ,CHIEF JUSTICE and HON'BLE MRS. JUSTICE K.S. HEMALEKHA C.A.V. JUDGMENT (PER: HON'BLE MRS. JUSTICE K.S. HEMALEKHA) 1. Impugning the order dated 10.03.2026 passed by the learned Single Judge in Writ Petition No. 24088/2025 (Excise), whereby the Writ Petition filed by the respondent was allowed, the endorsements dated 08.08.2025 were quashed and a direction was issued to the first appellant to consider and accord the respondent's request for renewal/revalidation of CL2 licences, the present appeal is filed by the State. 2. The respondent was holding a CL2 licence in the name and style of “My Drops”, situated at No. 202, Whitefield Main Road, Whitefield, Bengaluru and was also a partner of M/s. Chandana Enterprises holding a CL2 licence at No. 35-1-B, near Poorvankara Apartments, ITPL Main Road, Munekolalu, Marathahalli, Bengaluru, for the Excise Year 2021-2022 under the provisions of - 3 - WA No. 1186 of 2026 the Karnataka Excise (Sale of Indian and Foreign Liquors) Rules, 1968 [for short ‘the Rules, 1968’]. 3. Upon expiry of the licences, the respondent submitted an application seeking revalidation of the licences for the year 2022- 2023 and renewal thereof for the year 2023-2024. As no action was taken on the said request, the respondent approached this Court in Writ Petition No. 33368/2024, wherein the Deputy Commissioner of Excise was directed to consider the representation in accordance with law. 4. Pursuant thereto, the respondent remitted the requisite fees and sought revalidation and renewal of the licences. The Deputy Commissioner of Excise, by communication, sought prior approval from the Excise Commissioner for renewal of the licences. During the pendency of Writ Petition No. 24088/2025, originally filed seeking a writ of mandamus to process the proposal forwarded by the Deputy Commissioner, the Excise Commissioner directed verification of the quota position of CL2 licences in Bengaluru Urban District. Reports of the Joint Commissioner of Excise and the Deputy Commissioner of Excise disclosed that on 31.07.2025, 877 CL2 licences had been renewed and one additional licence had already been granted prior approval by order dated 24.07.2025 in favour of one Smt. K. T. Kamalamma pursuant to the orders - 4 - WA No. 1186 of 2026 passed by this Court in CCC No. 631/2023 c/w Writ Appeal No. 60/2023 on 25.10.2023. On the basis of the said reports, it was concluded that no CL2 quota was available in Bengaluru Urban District and consequently endorsements dated 08.08.2025 came to be issued rejecting the respondent's request for renewal/revalidation. 5. Aggrieved by the said endorsements, the respondent amended the Writ Petition and sought quashing of the endorsements together with consequential direction to grant approval for renewal/revalidation of CL2 licences. The learned Single Judge held that the controversy was not merely of one of quota, but concerned the processing of the respondent's pending application. The learned Single Judge further observed that while the prescribed quota was 878 CL2 licences, the material on record disclosed that as many as 897 CL2 licences were in existence and, therefore, rejection of respondent's request solely on the ground of non-availability of quota was unsustainable. The learned Single Judge also observed that the authorities have accepted licence fee from the respondent, thereby acknowledging the subsistence of licence. On the aforesaid reasoning, the endorsements dated 08.08.2025 were quashed and a direction was issued to the first - 5 - WA No. 1186 of 2026 appellant to consider and accord the respondent's request, aggrieved thereby the present Writ Appeal. 6. Learned Additional Government Advocate appearing for the appellants contends that the respondent's request for renewal/revalidation of CL2 licences could not have been granted in view of the non-availability of statutory quota fixed for Bengaluru Urban District of CL2 licences at 878 as per the Government Order dated 30.06.1987. It is submitted that although respondent had submitted representation on 20.08.2022 seeking renewal/revalidation of the licences, no renewal fee was remitted at that stage. According to the learned Additional Government Advocate, the amounts were paid only on 15.05.2025 and 09.06.2025, nearly 5 months thereafter by which the licences had already lapsed. 6.1. Reports obtained from the Joint Commissioner of Excise and Deputy Commissioner of Excise disclose that on 30.07.2025, 877 CL2 licences had already been renewed and were in operation. In addition, one CL2 licence had been granted in the interregnum by prior approval by the Excise Commissioner on 24.07.2025 in favour of Smt. K. T. Kamalamma pursuant to the orders passed by the Court in the earlier proceedings. Consequently, by 31.07.2025 the entire quota of 878 CL2 licences - 6 - WA No. 1186 of 2026 stood exhausted, leaving no licence available for renewal in favour of the respondent. 6.2. It is submitted that the figure of 897 CL2 licences placed reliance by the learned Single Judge does not represent licences available within Bengaluru Urban District alone. The material placed on record demonstrates that the original quota of 878 licences fixed in 1987 pertained to the then undivided Bengaluru urban and rural limits. Owing to subsequent administrative reorganization, the historical figures reflected in the reports cannot be equated with the presently available quota for renewal. It is submitted that the reports relied by the appellants specifically disclose that on 30.07.2025, 877 licences stood renewed and one additional licence had already been received prior approval thereby exhausting the quota of 878 licences. 6.3. The appellants also produced the list of 878 existing CL2 licences and the list of 19 discontinued/non-renewed CL2 licences as on 30.07.2025. According to the learned AGA, the existence of 19 discontinued licences did not create any available quota for renewal in favour of the respondent, particularly when the entire quota stood exhausted by the renewals already granted and prior approval issued in favour of Smt. Kamalamma and that the - 7 - WA No. 1186 of 2026 impugned endorsements issued on 08.08.2025 on the ground of non-availability of quota is valid and justified. 7. The learned counsel appearing for the respondent contends that the applications for renewal were pending from 2022. Fees had been accepted by the department. The licences were never cancelled. Counsel for the respondent would contend that the respondent had submitted representation seeking renewal/revalidation of CL2 licences as early as on 20.08.2022 and the delay in consideration of the request was entirely attributable to the excise authorities. It is contended that the authorities, having accepted the licence fees and processed the application, cannot subsequently deny renewal on the ground of non-availability of quota. According to the respondent, the application ought to have been considered with reference to the date on which the representations were originally submitted and not with reference to the date on which the authorities chose to process them. 7.1. It is submitted that the plea of exhaustion of quota is factually unsustainable. Reliance is placed on the material produced by the appellants themselves indicating that 897 CL2 licences were in existence, though the prescribed quota is stated to be 878 licences. It is contended that once the authorities themselves acknowledged the existence of licences in the excess of the prescribed quota, the - 8 - WA No. 1186 of 2026 respondent's request could not have been rejected solely on the ground that no quota was available. It is, therefore, contended that the endorsements dated 08.08.2025 are arbitrary and the learned Single Judge was fully justified in quashing the endorsements, directing consideration of the respondent's request for renewal or revalidation of the licences. 8. At the outset, it requires to be noticed that no citizen has a fundamental right to trade or business in intoxicants. The issue requires no debate, as the matter is no longer res integra. A Constitution Bench of the Supreme Court in Khoday Distilleries Limited and Others vs State of Karnataka and Others1 dwelling into the issue, "whether a citizen had a fundamental right to carry on trade in liquor", upon referring to large number of decisions summarized the legal position as under : "60. We may now summarise the law on the subject as culled from the aforesaid decisions. (a) The rights protected by Article 19(1) are not absolute but qualified. The qualifications are stated in clauses (2) to (6) of Article 19. The fundamental rights guaranteed in Article 19(1)(a) to (g) are, therefore, to be read along with the said qualifications. Even the rights guaranteed under the Constitutions of the other civilized countries are not absolute but are read subject to the implied limitations on them. Those implied limitations are 1 1995 1 SCC 574 - 9 - WA No. 1186 of 2026 made explicit by clauses (2) to (6) of Article 19 of our Constitution. (b) The right to practise any profession or to carry on any occupation, trade or business does not extend to practising a profession or carrying on an occupation, trade or business which is inherently vicious and pernicious, and is condemned by all civilised societies. It does not entitle citizens to carry on trade or business in activities which are immoral and criminal and in articles or goods which are obnoxious and injurious to health, safety and welfare of the general public, i.e., res extra commercium, (outside commerce). There cannot be business in crime. (c) Potable liquor as a beverage is an intoxicating and depressant drink which is dangerous and injurious to health and is, therefore, an article which is res extra commercium being inherently harmful. A citizen has, therefore, no fundamental right to do trade or business in liquor. Hence the trade or business in liquor can be completely prohibited. (d) Article 47 of the Constitution considers intoxicating drinks and drugs as injurious to health and impeding the raising of level of nutrition and the standard of living of the people and improvement of the public health. It, therefore, ordains the State to bring about prohibition of the consumption of intoxicating drinks which obviously include liquor, except for medicinal purposes. Article 47 is one of the directive principles which is fundamental in the governance of the country. The State has, therefore, the power to completely prohibit the manufacture, sale, possession, distribution and consumption of potable liquor as a beverage, both because it is inherently a dangerous article of consumption and also because of the directive principle contained in Article 47, except when it is used and consumed for medicinal purposes. - 10 - WA No. 1186 of 2026 (e) For the same reason, the State can create a monopoly either in itself or in the agency created by it for the manufacture, possession, sale and distribution of the liquor as a beverage and also sell the licences to the citizens for the said purpose by charging fees. This can be done under Article 19(6) or even otherwise. (f) For the same reason, again, the State can impose limitations and restrictions on the trade or business in potable liquor as a beverage which restrictions are in nature different from those imposed on the trade or business in legitimate activities and goods and articles which are res commercium. The restrictions and limitations on the trade or business in potable liquor can again be both under Article 19(6) or otherwise. The restrictions and limitations can extend to the State carrying on the trade or business itself to the exclusion of and elimination of others and/or to preserving to itself the right to sell licences to do trade or business in the same, to others. (g) When the State permits trade or business in the potable liquor with or without limitation, the citizen has the right to carry on trade or business subject to the limitations, if any, and the State cannot make discrimination between the citizens who are qualified to carry on the trade or business. (h) The State can adopt any mode of selling the licences for trade or business with a view to maximise its revenue so long as the method adopted is not discriminatory. (i) The State can carry on trade or business in potable liquor notwithstanding that it is an intoxicating drink and Article 47 enjoins it to prohibit its consumption. When the State carries on such business, it does so to restrict and regulate production, supply and consumption of liquor which is also an aspect of reasonable restriction in the interest of general - 11 - WA No. 1186 of 2026 public. The State cannot on that account be said to be carrying on an illegitimate business. (j) The mere fact that the State levies taxes or fees on the production, sale and income derived from potable liquor whether the production, sale or income is legitimate or illegitimate, does not make the State a party to the said activities. The power of the State to raise revenue by levying taxes and fees should not be confused with the power of the State to prohibit or regulate the trade or business in question. The State exercises its two different powers on such occasions. Hence the mere fact that the State levies taxes and fees on trade or business in liquor or income derived from it, does not make the right to carry on trade or business in liquor a fundamental right, or even a legal right when such trade or business is completely prohibited. (k) The State cannot prohibit trade or business in medicinal and toilet preparations containing liquor or alcohol. The State can, however, under Article 19(6) place reasonable restrictions on the right to trade or business in the same in the interests of general public. (l) Likewise, the State cannot prohibit trade or business in industrial alcohol which is not used as a beverage but used legitimately for industrial purposes. The State, however, can place reasonable restrictions on the said trade or business in the interests of the general public under Article 19(6) of the Constitution. (m) The restrictions placed on the trade or business in industrial alcohol or in medicinal and toilet preparations containing liquor or alcohol may also be for the purposes of preventing their abuse or diversion for use as or in beverage." - 12 - WA No. 1186 of 2026 9. The law is well settled that the trade in liquor stands on a different footing from ordinary commercial activities and the State enjoys wide latitude in regulating, restricting and controlling or even prohibiting such trade. A person seeking grant, renewal or revalidation of an excise licence can therefore claim only if such rights as are confirmed by the statute and rules framed there under and cannot assert renewal of licence as a matter of right. 10. In the present case, the respondent had submitted a representation seeking renewal/revalidation of CL2 licences on 20.08.2022. However, the requisite renewal fee was not remitted contemporaneously and the amounts came to be paid only during May and June 2025. The respondent's request was therefore required to be considered in accordance with the statutory framework governing renewal of licence and quota position prevailing on the date of such consideration. 11. The material on record discloses that the quota of CL2 licences for Bengaluru Urban was fixed at 878. The reports obtained by Excise Commissioners revealed that as on 30.07.2025, 877 CL2 licences had already been renewed and one additional licence had received prior approval from the Excise Commissioner on 24.07.2025, pursuant to the directions issued by this Court. Consequently, the entire quota stood exhausted. In - 13 - WA No. 1186 of 2026 such circumstances the respondent could not claim renewal/revalidation as a matter of right. 12. The learned Single Judge was persuaded by the circumstance that 897 CL2 licences were shown to be in existence. In our considered view, the said figure, by itself does not establish availability of quota. What is relevant is the operative quota position prevailing on the date of consideration of the respondent's application. The report placed before the Excise Commissioner clearly disclose that available quota stood exhausted. 13. Likewise, the existence of 19 discontinued or non-renewed licences does not automatically result in creation of corresponding vacancies available for grant or renewal. In the absence of any material demonstrating that such licences had reverted to the available quota pool and were capable of immediate reallocation, no enforceable rights accrued in favour of the respondent on that basis, we are of the considered opinion that the respondent could not have claimed revalidation/renewal of the CL2 licences as a matter of right and the endorsements dated 08.08.2025 rejecting the request on the ground of non-availability of quota cannot be said to be arbitrary or unsustainable. Accordingly, the impugned order passed by the learned Single Judge warrants interference by this Court. Accordingly, we pass the following : - 14 - WA No. 1186 of 2026 ORDER (i) The Writ Appeal is allowed. (ii) The order dated 10.03.2026 passed by the learned Single Judge in Writ Petition No. 24088/2025, is hereby set aside. Consequently, the Writ Petition stands dismissed. (iii) The endorsements dated 08.08.2025 issued by the Deputy Commissioner of Excise rejecting the respondent's request for revalidation/renewal of CL2 licences are upheld. (iv) It is, however, made clear that the dismissal of the respondent's request is on account of non availability of quota and should not be construed as attributing any disqualification or ineligibility to the respondent. (v) The appellants shall refund to the respondent the amounts remitted towards the renewal/revalidation of the CL2 licences after effecting such deduction as may be permissible in law within a period of eight weeks from date. (vi) The refund shall be made without prejudice to the respondent's right to participate in any process for grant/allotment of licence in accordance with law and subject to eligibility. - 15 - WA No. 1186 of 2026 (vii) Pending applications, if any, stands disposed of. Sd/- (VIBHU BAKHRU) CHIEF JUSTICE Sd/- (K.S. HEMALEKHA) JUDGE CKL