Bombay High Court Quashes Third Transfer of Liquor Licence to Original Licensee’s Heirs; Holds State Cannot Defy Binding Judgments and Awards ₹2.5-Lakh Costs to Partner
Bombay High Court Pulls Up Maharashtra for Repeatedly Transferring Expired Liquor Licence Despite Two Earlier Judgments; Awards ₹2.5-Lakh Costs to 91-Year-Old Petitioner
Facts
The dispute concerns an FL-II foreign liquor licence originally granted in 1973 to Balkrishna Ramchandra Wadkar. In 1979, Wadkar entered into a partnership with Suryakant Baburao Khaladkar and his father, Baburao. Wadkar retained a 10% interest while the Khaladkars collectively held 90%. The State recognised the partnership under Rule 40 of the Bombay Foreign Liquor Rules, 1953, and the names of the partners were endorsed on the licence.
After Wadkar died in December 1985, competing claims arose. Khaladkar sought the licence in January 1986, while Wadkar’s widow, Shobha, applied in February 1986 for its transfer to her and deletion of the Khaladkars’ names. The licence was eventually transferred to Shobha.
That decision generated litigation spanning nearly four decades. In 2002, the Bombay High Court held that Wadkar’s death dissolved the partnership and the licence itself came to an end. Consequently, there was no existing licence capable of being transferred to Shobha. Both sides were instead required to have their respective 1986 applications considered afresh under Rule 25, according to the Government policy prevailing when those applications were made. That judgment was never challenged.
Nevertheless, the authorities again transferred the licence to Shobha. A second Bombay High Court judgment in 2016 set those orders aside, criticised the authorities for mechanically disregarding the 2002 judgment, and once again directed consideration under Rule 25 rather than as a transfer under Rule 61-A or Condition 8. This judgment too attained finality.
Despite this, the Collector in 2017 again confirmed the transfer to Shobha. The Commissioner in 2022 reversed that order and sought to recognise Khaladkar and Shobha in the 90:10 ratio of their historical interests. Shobha challenged that order before the State Excise Minister, who on 26 October 2023 restored the Collector’s order in her favour. Khaladkar therefore approached the High Court for the third time.
Issues
The principal questions were whether the State could once again transfer or “re-grant/revalidate” the FL-II licence to Shobha or her legal heirs despite the binding 2002 and 2016 judgments; whether the Khaladkars’ induction as partners in 1979 created a legally recognised interest for purposes of the licence; and whether subsequent Government policies could retrospectively extinguish that recognised position.
The Court also had to determine what relief could now practically be granted, given the State’s assertion that its policy since 1976 prohibited fresh FL-II licences.
Petitioner’s Arguments
Khaladkar argued that his and his father’s induction as partners had been validly recognised under Rule 40. Their names appeared on the licence, their photographs were endorsed, the business premises shifted to their premises, and licences were repeatedly renewed with all three partners’ names.
More importantly, the 2002 and 2016 judgments had attained finality. The State therefore had no jurisdiction to repeatedly transfer the licence to Shobha after the Court had already held that the licence expired upon Wadkar’s death.
Khaladkar contended that the 2022 Commissioner’s order, which recognised the historical 90:10 division, at least represented a middle course consistent with the parties’ recognised interests.
Respondent’s Arguments
The State contended that a policy prohibiting grant of fresh liquor licences had existed since 1976 and continued to operate. It acknowledged that the earlier writ judgments could not simply be ignored, but argued that those judgments themselves required the 1986 applications to be considered according to Government policy.
Shobha’s legal heirs argued that the licence had not technically been “transferred” but rather “re-granted” or “revalidated” in favour of the original licensee’s legal heirs. They relied upon a 1989 circular and contended that incoming partners did not acquire an independent interest in a licence originally granted to another person.
Analysis of the Law
The Court examined Rules 25, 40, 40(1A) and 61-A of the Bombay Foreign Liquor Rules, 1953.
Rule 40 expressly permits recognition of a person as a partner of a licence holder where the Collector approves the partnership and adds the partner’s name to the licence. Rule 40(1A) requires the Collector’s previous sanction before a recognised partner can withdraw and have his name deleted. Rule 61-A separately regulates transfer of a licence from one name to another and requires previous sanction of the State Government.
The evidence established that the Khaladkars’ induction had been formally recognised. The Court found that their names were placed on the licence, their participation continued through successive renewals, and the State’s own records confirmed sanction of the partnership with effect from August 1979.
The Court also rejected the attempt to apply later restrictions retrospectively. Condition 4A, which could extinguish an incoming partner’s interest when the original licensee ceased to have an interest, was introduced only in December 1989 and deleted in 1993. It could not retrospectively govern a partnership recognised in 1979.
Precedent Analysis
The decisive precedents were unusually the two earlier judgments in this very dispute.
The 2002 judgment finally determined that upon Wadkar’s death, the partnership came to an end and consequently the FL-II licence also expired. It expressly rejected transfer of that licence to Shobha and directed consideration of competing applications under Rule 25.
The 2016 judgment reiterated that conclusion after the authorities nevertheless transferred the licence to Shobha. It held that the Collector, Commissioner and Minister had acted mechanically and contrary to the earlier writ, set their orders aside, and again required consideration under Rule 25 according to the policy applicable to the original 1986 applications.
Both judgments remained unchallenged. The present Court therefore held that their conclusions had attained finality and could not be reopened either by the executive authorities or by a coordinate Bench of the High Court.
Court’s Reasoning
Justice Somasekhar Sundaresan strongly criticised the State’s repeated disregard of the earlier writ judgments.
The Court observed that the authorities had effectively repeated for the third time the very action that had already been set aside, despite clear judicial declarations that the original licence had expired. Judicial discipline required every arm of the State to honour those final decisions.
If the State genuinely maintained that its policy since 1976 prohibited issuance of any fresh licence, it had a legally available course: apply that policy equally to the competing Rule 25 applications and reject both. What it could not do was ignore the judgments and repeatedly transfer an already expired licence to Shobha.
The Court emphasised that “The State is not above the Writ Court.” Once two different Single Benches had finally adjudicated the matter, the executive could not adjudicate afresh what had already received judicial quietus.
At the same time, the Court declined simply to restore the Commissioner’s 90:10 solution. Doing so would itself effectively revisit the conclusions of the earlier judgments.
Conclusion
The High Court quashed and set aside the Minister’s impugned order restoring the licence to Shobha’s side.
Crucially, however, the Court did not itself direct issuance of the FL-II licence to Khaladkar or jointly in the 90:10 ratio. Given the existing policy against fresh licences and the binding earlier finding that the old licence had expired, the Court considered it appropriate that no FL-II licence be issued at present.
The Court nevertheless expressly left it open to the State, as policymaker, to consider moulding its policy in view of the extraordinary circumstances and issue a licence to both sides in the 10:90 ratio—10% to Shobha’s legal heirs and 90% to Khaladkar.
Recognising that Khaladkar, now about 91 years old, had been forced to approach the High Court three times and had spent roughly a quarter-century embroiled in repeated rounds before the Collector, Commissioner, Minister and High Court, the Court directed the State to pay him ₹2,50,000 as costs within four weeks. The Court clarified that this was not compensation, but an acknowledgement of the repeated litigation caused by the State’s conduct.
A request by Shobha’s legal heirs to stay the judgment was refused.
Case Details
Case: Suryakant Baburao Khaladkar v. State of Maharashtra & Ors.
Court: Bombay High Court, Civil Appellate Jurisdiction
Case Number: Writ Petition No. 15360 of 2024
Citation: 2026:BHC-AS:37389
Judge: Justice Somasekhar Sundaresan
Reserved: 6 April 2026
Pronounced: 10 September 2026
Result: Minister’s order transferring/restoring the FL-II licence to Shobha’s side quashed; no licence presently directed to either side; State left free to consider policy modification for a 10:90 licence; ₹2.5 lakh costs awarded to Khaladkar; stay refused.
