Excise authorities must independently exercise prerogative in license cancellation without cognizance of biased applications from manufacturers against distributors, requiring scrutiny for official collusion.

JUDGMENT :

Rakesh Thapliyal, J.

1. The petitioner is the licensee of BWFL-2B license which is valid upto 31.03.2026. The respondent no. 3 herein is the manufacturer and the petitioner is the distributor of respondent no. 3. There is a dispute in between the petitioner - distributor and the manufacturer- respondent no. 3 and for resolving the dispute, the petitioner invoke Section 9 and 11 of the Arbitration Act before the High Court of Karnataka and the Commercial Court at Bangalore.

2. The petitioner is aggrieved by the notice dated 10.12.2025, issued by the Incharge Excise Officer whereby the petitioner has been asked to give response , since, respondent no. 3-manufacturer submitted an application for grant of BWFL-2B license for the excise year 2025-26 on 10.11.2025. Letter of respondent no. 3 is enclosed at page 51 wherein in para 6 reference of two applications has been given. One application, i.e., Application Ref. No. UTK2025035501 relates to cancellation of existing BWFL2B license of Maa Sheetla Distributor Pvt. Ltd., the petitioner herein and another one is online application no. UTK2025040622 dated 01.10.2025 for grant of BWFL-2B license.

3. It is argued by the learned counsel for the petitioner that the impugned notice has been issued by the official- respondent on the instance of respondent no. 3 who in fact wants to get a new license which is evident from Annexure-12, which is reflected from the letter issued by Excise Commissioner dated 16.09.2025. It is argued that Excise Commissioner never gave any such notice to the petitioner with regard to lack of supply and straightaway the Excise Commissioner wrote letter to the manufacturer, the respondent no. 3. He submits that in fact official of the Excise Department are hand in glove with the respondent no. 3 which is evident from the fact that respondent no. 3 make a request to cancel the license of the petitioner and to grant license in its own name. He submits that the impugned notice appears to be smack from malice. In para 68 a specific averment has been made that the petitioner also apprised the Department that large quantity of stock, worth of Rs. 4 crores still lying in it’s bonded warehouse, and any abrupt stoppage of operations would cause serious financial loss to both the petitioner and the State.

Learned counsel for the petitioner also placed before this Court copy of the FIR dated 22.11.2025, bearing FIR No. 0389 of 2025, registered at P.S. Haldwani wherein official of respondent no. 3 have been implicated with the serious allegations of mischievous act, giving assurance to give “Mercedes car” to the retailers and the FIR has been challenged wherein interim protection was granted to official of respondent no. 3 not to take any coercive action.

4. On the other side, Mr. Arvind Vashistha, learned senior counsel for respondent no. 3 submits that the purpose of issuing the impugned notice is only to collect the material to take final decision on the application of the manufacturer, since, two separate applications have been given by the manufacturer; one for the purpose of cancelling the license of the petitioner and other one for grant of license in favour of the manufacturer and both the applications for different case. He also pointed out that earlier the petitioner preferred Writ Petition No. 3262 of 2025 (M/S) challenging another notice dated 27.10.2025 which was dismissed by observing that the writ petition is premature. The notice which was subject matter of Writ Petition No. 3262 of 2025 is enclosed as Annexure 19 whereby the notices were given to the petitioner as well as to respondent no. 3 for the purpose of cancelling the licens