The Commissioner Of Prohibition & Excise Government Of Telangana, Rep. By Its Additional Commissioner Of Prohibition And Excise, Mr. Syed Yaseen Qureshi, S/o. Syed Jalaluddin Qureshi vs M/s Nadhi Bio Products Private Limited Rep. By Its Director, Nakirikanti Ananth, S/o Ram Murthy,

(Hybrid Mode)

[Oral Judgment: Justice Sharad Kumar Sharma, Member (Judicial)]

Under List 2 of VII^th Schedule of the Constitution of India, the Excise is falling under the domain of State List under Article 246 of the Constitution of India. Since, being a "duty", a monetary extraction of liability imposted on sale, transport, storage, manufacture of liquor, etc., it takes a shape of having an effect of restrictive application of dues to be remitted by the license holder or its consumers to regulate the trade of liquor, which falls within the domain of the Excise Act.

The issue involved herein for consideration, before us would be very limited in its context, as regards to the principles flowing from the judgment of M/s. Embassy Property Developments Pvt. Ltd. v. State of Karnataka, as reported in 2020 Vol 13 SCC Page 308. The issue therein, that was decided was, as to what would be the ambit of exercise of powers under the provisions contained under Section 60 (5) of the Code, for the purposes of seeking mandatory direction for renewal of license, which is otherwise under law is a sovereign functioning of the State, with regards to the Excise / Distillery License and that too after waiving out of the statutory pre-requisites, which falls to be within a statutory domain of the excise of powers by the regulatory bodies and such other authorities, which cannot be permitted to be overriden by the provisions of the I&B Code. The aforesaid principle was laid down by the Hon'ble Apex Court in the matters of M/s. Embassy Property Developments Pvt. Ltd. v. State of Karnataka, 2020 Vol 13 SCC Page 308.

The relevant part is extracted here under:

Though in Thressiamma Jacob v. Deptt. of Mining & Geology this Court held that the mineral wealth in the sub-soil would go along with the ownership of the land, the question of entitlement of the Government to charge royalty was left open, as it was pending reference to the Constitution Bench. But in the case on hand, the land which formed the subject-matter of mining lease, belongs to the State of Karnataka. The liberties and privileges granted to the corporate debtor by the Government of Karnataka under the mining lease, are delineated in Part IV of the mining lease. The mining lease was issued in accordance with the statutory rules, namely, Mineral Concession Rules, 1960. Therefore the relationship between the corporate debtor and the Government of Karnataka under the mining lease is not just contractual but also statutorily governed.

As we have indicated elsewhere, the MMDR Act, 1957 is a Parliamentary enactment traceable to Entry 54 in List I of the Seventh Schedule. This Entry 54 speaks about regulation of mines and development of minerals to the extent to which such regulation and development under the control of the Union, is declared by Parliament by law to be expedient in public interest. In fact the expression "public interest" is used only in 3 out of 97 entries in List I, one of which is Entry 54, the other two being Entries 52 and 56. Interestingly, Entry 23 in List II does not use the expression "public interest", though it also deals with regulation of mines and mineral development, subject to the provisions of List I. It is this element of "public interest" that finds a place in Section 2 of the MMDR Act, 1957, in the form of a declaration. Section 2 of the MMDR Act, 1957 reads as follows:

Declaration as to the expediency of Union control.- It is hereby declared that it is expedient in the public interest that the Union should take under its control the regulation of mines and the development of minerals to the extent hereinafter provided."

Therefore as rightly contended by the learned Attorney General, the decision of the Government of Karnataka to refuse the benefit of deemed extension of lease, is in the public law domain and hence the correctness of the said decision can be called into question only in a superior court which is vested with the power of judicial review over administrative action. The NCLT, being a creature of a special statute to discharge certain specific functions, cannot be elevated to the status of a superior court having the power of judicial review over administrative action. Judicial review, as observed by this Court in Sub-Committee on Judicial Accountability v. Union of India flows from the concept of a higher law, namely, the Constitution. Para 61 of the said decision. captures this position as follows: (SCC pp. 738-39)

But where, as in this country and unlike in England, there is a written Constitution which constitutes the fundamental and in that sense a "higher law" and acts as a limitation upon the legislature and other organs of the State as grantees under the Constitution, the usual incidents of parliamentary sovereignty do not obtain and the concept is one of "limited government". Judicial review is, indeed, an incident of and flows from this concept of the fundamental and the higher law being the touchstone of the limits of the powers of the various organs of the State which derive power and authority under the Constitution and that the judicial wing is the interpreter of the Constitution and, therefore, of the limits of authority of the different organs of the State. It is to be noted that the British Parliament with the Crown is supreme and its powers are unlimited and courts have no power of judicial review of legislation."

In the instant Company Appeal, the order of 08.01.2026, that has been passed by the Learned NCLT, in IA(IBC)/1544/2025, as preferred in CP(IB) No.99/7/HDB/2022 by Respondents, whereby the Learned Adjudicating Authority has been pleased to allow the IA and had directed the renewal of License, with effect from 2025 – 2026, and that too without seeking renewal fee for the year's 2022 – 2023 & 2023 – 2024. In the IA, that was preferred by the Respondent by filing the same in September 2025, he came up with the case, before the Learned Adjudicating Authority, that, the Applicant therein is a private limited company, having been incorporated as such, under the Companies Act of 1956. In the said capacity, the Applicant / Corporate Debtor contends to have been engaged in the production of grain based Extra Neutral Alcohol (ENA), with the license manufacturing capacity of 60 Kilo Litres per day.

As against the Applicant / Corporate Debtor, Section 7 proceedings was drawn by the RK Distilleries Pvt Ltd, the Financial Creditor, consequent to which, by an order passed on 26.05.2023, the Applicant / Corporate Debtor was directed to be admitted to CIRP process, resulting into an appointment of an IRP and later on he was confirmed as to be the Resolution Professional by an order passed on 29.04.2024. While the said proceedings of the CIRP was been carried, the Committee of Creditors of 28 members, had admitted the claims amounting to Rs.66.70 Crores and later pursuant to the RFRP and information memorandum was too proceeded by the erstwhile Resolution Professional and was said to have shown to have received a total of 8 Resolution Plans, from the final list of 21 Expression Of Interest, which were placed before the CoC and in its 20^th CoC meeting, as held on 20.04.2024, upon elaborate deliberation and discussion and after compliance with the validity and viability of implementation of the plan, 8 prospective Resolution Applicants were put for e-voting from 23.04.2024 to 27.05.2024, and final resolution plan, which was jointly submitted by Mr. Nakkirikanti Rammurthy and Mr. Namburi Visweswara Rao, was approved by the CoC with 82.29 % of votes, which also stood approved by the Adjudicating Authority on 12.06.2025 in IA(plan)/13/2024. The said approved Resolution Plan was later on rectified, due to certain typographical error that had inadvertently crept in, and by an order that was passed on 12.06.2025, the claims admitted by the Resolution Professional was actually amounting to Rs.14,531.29 Lakhs, which was later on rectified by an order dated 26.06.2025.

But however, in these circumstances, while these processes were going on, the Respondent, in September 2025, is said to have filed an IA, being IA(IBC) No. 1544/2025, praying therein for the following relief:

Under the circumstances stated above, the Applicant most respectfully prays that this Hon'ble Tribunal may be pleased:

What is important to point out at this juncture, is that, when we go into the relief clause as extracted above, there was no relief sought by the Appellant with regards to the renewal fee for the year's 2022 – 2023 & 2023 – 2024 and quiet obviously it could not have been, so also, for the reason being that, when the said IA was preferred and was being considered by the Tribunal, the Learned Tribunal had directed the renewal of license, and in the mean time, the excise authorities had renewed the license on 16.12.2025, its only on payment of renewal fee for the previous years, with an observation that, the D2 (RG) License for manufacture of spirit utilizing greens and fermented base for industrial purposes, for the year 2023 – 2024, 2024 – 2025 & 2025 – 2026, was granted with the renewal subject to the conditions of the payment of the renewal fee, as it was observed there in the license of the renewal itself, that was granted in favour of the Respondent. The fact about the renewal, having been granted, being Cr. No. 500/2025/DDB/Ex/G3 dated 16.12.2025, the same was placed on record by the Respondent, submitting thereof that, as of now, there is no purpose for passing any orders on the instant Company Appeal for the reason being that, the renewal of the license has already taken place, and the same has been granted on 16.12.2025 and that too only on the payment of the renewal charges of the aforesaid years, which the Respondent had now contended that, they have deposited under the renewal charges protest with the rights reserved with them for its refund or reclaim.

The Telangana Excise Act of 1968, it governs the provision pertaining to the conditions for grant of licenses to the dealers and manufacturers, in the excise products and the grant of license or renewal of the same specifically stands covered with the self contained provisions of the Excise Act, in accordance with the provisions contained, which is a special act, i.e., Telangana Excise Act, 1968 and more particularly when any aspect pertaining to the grant or renewal of a license and the corresponding fees, which would be payable on the same, would too exclusively be the prerogative of the State Government, to be regulated by the Telangana Excise Act of 1968, which is to be read along with the Telangana Distillery (Manufacture of Spirits) Rules, 2006. Hence, if at all, any renewal was required to be granted in relation to D2 RG License, as possessed by the Respondent, that would be falling within the exclusive domain and decision making of the state functionary, as traceable from Entry 8, of List 2 of the State List in the VII^th Schedule of Indian Constitution and so would the Telangana Excise Act of 1968, which are the enactments in the excise of the Constitutional powers vested under Article 246 of the Constitution of India.

The provisions of the Telangana Excise Act, 1968, unequivocally provides that, there is no provision contemplated under the Telangana Excise Act, or the Rules of 2006 of providing with an automatic renewal without payment or after an exemption in payment of renewal fee, renewal is discretionary and is always subject to fulfilment of certain mandatory pre-conditions be satisfied as contemplated under the Rules. The renewal of the license too is preceded by a condition that, it has had to be only after the payment of the prescribed fee and the late fee too as the facts maybe, which is abundantly conditioned for the purposes of grant of renewal of the license. In context thereto, the controversy herein in the instant case be with regards to the non renewal, would be confined in relation to the year 2023 – 2024 & 2024 – 2025, even then too the aspect of renewal for these years too will be State's exclusive privilege to renew license for manufacture alcohol in accordance with Section 17 and Section 23 of Telangana Excise Act of 1968, which exclusively provides to restrict the privileges with the State Government, with renewal of license too its subject, subject to the satisfaction of the statutory conditions, vested with this State, which is to be excised within the precents of the state laws framed under the Constitution of India, as there is no automatically vested right those have been created or ever intended to be created for the renewal of the license, because non-renewal will automatically lead to its consequences contemplated under Rule 14 (7) i.e., forfeiture of the right of renewal and henceforth.

What is surprising in the instant case is that, when the IA was preferred by the Respondent, and the same was being considered, the Tribunal while observing, was under the fact that the license has not been renewed, because the Corporate Debtor was placed to CIRP process, even the Resolution Professional had not applied for the renewal of the license, as the CD at the relevant time was not operational, the application was made, for the grant of renewal of license, but the Respondent refused to renew the license, in the absence of any payment of renewal fee and penalty, which are necessarily leviable as per the Telangana Excise Act, 1968 and the rules framed there under. The Learned Tribunal in the impugned order, while observing the restrictions imposed by Clause 6.4 (a), 6.4 (b) and 18.1 of the Resolution Plan, by misinterpreting it, proceeded to pass the following directions. The relevant part of the order passed by the Learned Tribunal is extracted hereunder:

Thus, the Respondent is directed to renew the license w.e.f. 2025 – 2026 without seeking for the renewal fee for the year 2022 – 2023 and 2023 – 2024.

Direction for renewal of the license, with effect from 2025 – 2026, would always be preceded with the payment of the renewal fee of the excise duties or the license fee as the case maybe, depending upon the conditions for renewal and applicable law, but so far as the observation that has been made by the Learned Tribunal of issuing a directions to the Respondent therein, i.e., M/s. Nadhi Bio Products Pvt Ltd., which does not impugnes the Telangana State Excise Department, no such direction of the nature, given in the order by way of a direction to renew the license with effect from 2022 – 2023 onwards and that too without seeking for renewal of fee, could not at all have been granted and that too in the absence of the Appellant, being made as a party and being heard and more particularly when the excise laws, being a law predominantly covered by the Constitutional mandate, there could not have been any direction by the Learned Adjudicating Authority, to renew the license and that too without payment of fee. Such type of a direction, could not have been issued, since apparently being beyond the ambit and the scope of the exercise of powers of the Adjudicating Authority, which is restricted to exercise its powers, within the ambit of the subjects covered under the I&B Code, as renewal of a license and that too when the excise license, since being exclusively within the prerogative of the state subject under the Constitution. No such direction for renewal of license could have been issued, that too without taking a renewal fee and that too without the Appellant, being made as a party to the proceedings and being heard. Hence, the impugned order would stand quashed.

Having said so, the Respondent Counsel submitted that, consequentially the renewal has already been granted on 16.12.2025, but that was subsequent to the filing of the IA, which was preferred in September 2025 and thus the renewal as granted on 16.12.2025 thus, quiet obviously the relief, which was subject matter of consideration before the Tribunal would not have included the aspect of payment of the renewal fee for the years 2022 – 2023 & 2023 – 2024, because that would not have been made a subject when the application was preferred before the Tribunal in September 2025, and that would not have been a subject, which could have at all been considered or observed in the impugned order of 08.01.2026, which was rendered thereafter.

But however, since as of now, the license has already been renewed after the payment of the excise dues of the license fee, for the year 2022 – 2023 & 2023 – 2024, we are not embarking upon the propriety of the grant of license to the Appellant by the renewal granted on 16.12.2025, that will be subject to operation of relevant excise laws and any decision taken by us, as regards to the impugned order where we have observed that, the Adjudicating Authority has got no authority as such, to issue any directions of the nature for renewal of an excise license and that too without payment of the excise fee or the license fee. Being beyond the ambit of excise of powers vested with the Adjudicating Authority, and since being contrary to Para 27 & 28 of the M/s. Embassy Property Developments Pvt. Ltd. v. State of Karnataka Judgment, no such direction could have been issued, but quashing of the order by us on that limited count itself will not preclude the Respondent to resort to any appropriate remedy available to them under law for seeking refund or adjustment of the renewal fee paid by him or renewal of the license for the year 2022 – 2023 & 2023 – 2024, in accordance with law. Subject to the aforesaid exception, the Company Appeal stands allowed. The Impugned Order would stand quashed.