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TMI Blog2012 (7) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... dment by SRO No. 202/2012 dated 27-03-2012 [GO(P) No. 48/2012/TD] another prohibition was introduced by inserting sub-rule (3E) to Rule 13 whereunder even four star and above category hotels constructed within a radius of 3 Kms. in Grama Panchayats and 1 Km. in Municipal/Corporation limits, from another hotel/Restaurant with FL-3 licence, were declared disentitled for the grant of new FL-3 licence. 2. The appellants/petitioners contend that they have in the course of last 1-2 years constructed star hotels spending more than ₹ 10 crores for each Hotel, mostly with borrowed funds obtained from public sector financial institutions like Kerala Financial Corporation, Kerala State Industrial Development Corporation and from Nationalized Banks, and all these three star and above category hotels cannot be run viably without Bar licence. The Hotels of all appellants/petitioners are all having classification of "Three Star" and above. The petitioners in W.P.(C). Nos. 8878 of 2012, 9518 of 2012, 8152 of 2012 and 8840 of 2012 have "Four Star" classification and the petitioners in W.P.(C). Nos. 11555 of 2012 and 14225 of 2012 respectively have "Five Star" or "Heritage" classification. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us through the decision in Ugar Sugar Works Ltd. v. Delhi Administration [ (2001) 3 SCC 635], which held that mere business interests of a party cannot justify interference in the policy matters if the same is not touched by mala fides and is not unfair, unreasonable or arbitrary. Reliance was also placed on the decision in State of M.P. v. Narmada Bachao Andolan [ (2011) 7 SCC 639], by which the Hon'ble Supreme Court held that the High Court cannot strike down a policy decision merely because another decision would have been fairer, more logical or wiser. 5. The learned counsel for the appellants/petitioners, however have brought to our notice the Constitution Bench decision of the Supreme Court in Khoday Distilleries Ltd. & Ors v. State of Karnataka [ (1995) 1 SCC 574] wherein the Supreme Court has clearly stated that even though right to carry on liquor business is not a fundamental right, once it is permitted in the State, the State has to make Rules and permit the business without any arbitrariness or discrimination and in conformity with Article 14 of the Constitution of India. Keeping the principles laid down by the Supreme Court in mind, we proceed to consider the challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r compensation. The applicant shall produce from the Abkari Worker's Welfare Fund Inspector a Certificate to the effect that he has remitted before the date of application for the licence/renewal of licence, the arrears of contributions, if any, payable up to 31st day of December preceding year. The question whether a hotel or restaurant conforms to the standard of Two Star Hotel shall be determined in accordance with the specifications for classification of Star Hotels issued by the Department of Tourism and in case of doubt or dispute, the decision of the Excise Commissioner shall be final. The cost of liquor shall be billed along with the cost of meals. The cost of liquor shall be shown separately in the bill and the duplicate copies thereof shall be retained for inspection by the Officers of the Excise Department. The licensee shall purchase his supplies of Foreign Liquor only from such FL9 licensees in the State as may be permitted by the Excise Commissioner. xxx xxx xxx Provided also that such bar licences, having disputes on distance rules and shifting outside Municipal Corporation area, including those of Approved Restaurants, existing as on 1st April, 2004 shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government under Rule 13(1) of the Rules has issued licence to this Corporation for retail sale of liquor in bottles through their various outlets in the State. As of today, this Corporation alone has 384 retail depots selling liquor in bottles in the State. Apart from this Corporation, the Government has permitted retail sales through few outlets of other two Government controlled Corporations, which are the Kerala State Civil Supplies Corporation Limited and Kerala State Co-operative Consumer Marketing Federation Limited. These Government Companies are the sole retail sellers of liquor in bottles. All the three Government Companies with FL-1 licence issued under Rule 13(1) of the Rules are together running around 400 shops in the State. Beer-Wine Parlour licences are issued to several outlets of another Government company namely, the Kerala Tourism Development Corporation. 8. Besides the retail sale of foreign liquor, wine, etc. in bottles, the Government has issued FL-3 bar licence to 708 hotels and restaurants in the State as on 30/11/2011. These bar licences are issued mostly to restaurants and to large number of hotels without any star classification. Bar licence in Form N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting licensees. Hence, a Hotel having "four-Star" or above or with Heritage classification applying for FL-3 licence would be denied the same, if such Hotel is within the above prohibited distance from an FL-3 licence holder irrespective of whether such licensee is a Star Hotel or not. 10. The above is the background in which we are called upon to consider the challenge raised by the appellants/petitioners against the disqualification introduced to 3-Star and above category Hotels from getting bar licence through the amendments made to the Rules, which are challenged by them on the ground that hasty decisions taken are mala fide and discriminatory and is only to promote and protect the monopoly business of the existing Government Companies and also other existing bar hotels and restaurants. We are conscious of the position that unconstitutionality, arbitrariness and discrimination are not to be easily inferred. 11. What we notice from the Rules is that the retail licence conceived under Rule 13(1) is FL-1 licence which is for sale of liquor in bottles in retail shops, which are run only by the fully owned Government Company, the Beverages Corporation and partly by Kerala State Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to promote tourism and in this regard it would not be out of place to refer to the budget speech made by the Finance Minister presenting the Finance Bill, 2012 in the Assembly, wherein he states the Policy of the Government on tourism as follows:- "215. As per statistics for the year 2010, tourism sector has created around 12 lakh employment opportunities, earned an income of ₹ 17,000 crore, mobilized investments worth ₹ 1,000 crore and earned foreign currency worth ₹ 3,797 crore. A new tourism policy has, therefore, been formulated aimed at comprehensive development of Kerala. Emphasis has been given to infrastructural development of the tourism centres in Kerala in the 12th Plan. An amount of ₹ 15 crore is set apart for setting up a Tourism Promotion Board under public-private partnership which will identify fresh tourism markets and utilize tourism possibilities at national and international level". We also refer to the Liquor Policy of the State Government as expressed by the Finance Minister in his budget speech, 2012. which is as follows :- "363. An awareness campaign aimed at 'Liquor Free Kerala' will be organised in school and college campuses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/2012 stating that all hotels with three star facility will be issued licence up to 31/3/2012. However, abruptly, the new Government changed the Policy introducing prohibition against new 3-star hotels from getting bar licence including those who have completed construction and obtained star classification before 31/3/2012. Most of the appellants/petitioners would get the licence had the Policy originally announced was continued. In this context, learned Additional Advocate General argued in support of the Policy introduced through the amendment to the Rules by stating that the objective is to reduce consumption of alcohol in the State and the ultimate objective of the Government is to achieve the objective of Article 47 of the Constitution of India i.e. to bring total prohibition in the State. It is worthwhile to refer to Article 47 of the Constitution of India, which is as follows:- "47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health.- The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and in particular, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is attempting to confine the retail sales too to itself and the existing hotels and restaurants without any classification are also allowed to retain the licences. We have no doubt in our mind that if the impugned amendments achieve or at least are capable of achieving the objective, that is, to reduce consumption of liquor by people in the State, this court should not interfere with the amendments. It is only commonsense, argues the Counsel for petitioners, that no local man goes to stay in expensive three star hotels, which is intended to accommodate rich tourists both from India and abroad. Therefore, consumption cannot be reduced by denying liquor availability in Star Hotels above Three Star where the customers are not local people. 18. We have to, therefore, look at whether the objective of reduction in consumption and ultimately of Article 47 could be achieved with the amendment or whether the amendment will ultimately undermine the very objective of Rule 13(3) which is promotion of tourism in the State. We have to consider the rival contentions in a realistic manner and we therefore pose the question as to whether denial of bar licence to three-star hotels would achieve th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh, tried total prohibition of liquor, some years back, which was an utter failure leading to widespread sale of spurious liquor in the market, causing revenue loss and frequent liquor tragedies. Consequently, the State reversed the prohibition experiment in an attempt to ensure safe and quality liquor in the State. On the whole, the network allowed to be maintained by any Government for retail sale of liquor is not to promote alcoholism but only means that spurious liquor should not be permitted in the State. Therefore, the answer to the question posed by us above, as is evident, is in the negative in as much as under the present disposition of availability of liquor in every nook and corner of the State in ordinary restaurants and hotels and in retail shops run by the Government Companies, it would not be possible for the State to achieve any reduction in consumption of liquor by denying licence to three star hotels, which definitely are not set up to cater to the needs of the local people. Having exercised the wisdom to enact Rule 13 (3) and having retained the same; can the facility be denied on the strength of the very provision which promotes the grant with the objective o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt, we feel that the law makers were well aware of Article 47 of the Constitution of India while introducing Rule 13(3) in the Rules because liquor is an essential service in the tourism industry and providing it inside the said star hotels for controlled consumption within the premises is not going to encourage liquor consumption among local people. This cannot and will not stand in the way of achieving the objective of prohibition contained in Article 47 of the Constitution of India. 23. It may be noticed that even in States where there is prohibition, star hotels are allowed to retain bar licence on strict licensing regime, to cater to the needs of tourists. Consequence of the amendment is such that new three star hotels will not have bar licence, whereas existing star hotels, whose licence are regularized through the provisos introduced to Rule 13(3) of the Rules will continue service of liquor to their guests. This discrimination is also not visualized by the Government of India, Ministry of Tourism, which classifies hotels into different classes by assigning them star categories. Therefore, in order to maintain equality and equal opportunity to star hotels, the facilities to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of its morality" (sic.). While the right to create a monopoly in favour of the State was conceded, it was also held: "The contention further that till prohibition is introduced, a citizen has a fundamental right to carry on trade or business in potable liquor has also no merit. All that the citizen can claim in such a situation is an equal right to carry on trade or business in potable liquor as against the other citizens. He cannot claim equal right to carry on the business against the State when the State reserves to itself the exclusive right to carry on such trade or business. When the State neither prohibits or monopolizes the said business, the citizens cannot be discriminated against while granting licences to carry on such business. But the said equal right cannot be elevated to the status of a fundamental right". Summarising the law on the subject, the Supreme Court culled out 13 principles enumerated as (a) to (m) in para 60, of which (f), (g) and (h) are extracted hereunder: "(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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The next category of hotels are four star, five star and Heritage hotels, which are denied licence by virtue of introduction of sub-Rule (3E) to Rule 13 of the Rules, where under it is stated that no bar licence to new four star and five star and heritage hotels, otherwise entitled to bar licence under Rule 13(3), will be issued, if there is in existence any other restaurant/hotel with bar licence within 1 Km. in Municipal areas and within 3 Km. in Panchayat area. In this context, all our observations and findings with regard to three-star hotels apply to four-star and five-star hotels, which cater exclusively to the rich and outstandingly rich Foreign and Indian tourists. As already found by us, objective of Rule 13(3) is to promote tourism in the State and in this regard to provide essential service of liquor availability in star hotels. The Government also by retaining four-star, five-star and heritage category hotels in Rule 13(3) accepts in principle the need to have bar licence in such hotels for complying with the object of tourism promotion. Our findings in the case of three star hotels with respect to the regularisation and renewal of licence periodically granted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it would only put an end to the expansion of the tourism industry. Therefore, realistically it can be noticed that all star hotels are mostly located in tourism centers and they are constructed side by side and are providing facilities exclusively to their guests. The distance regulation introduced in sub-rule (3E) to Rule 13 is completely destructive of the tourism policy of the government and the tourism industry by prohibiting promoters from venturing into hotel construction in places which are sought after tourist destinations. Competition is stultified and optional choices reduced. It is notorious that tourism sites are not fully developed anywhere in India, much less in Kerala, and there is tremendous potential for service industry like hotel industry that attracts tourists both from outside India and from North India to the beautiful hill stations such as Munnar, Wayanad, Periyar/Thekkadi and the peaceful beaches of Kovalam, Vizhinjam, Varkala and the like. Kerala has a tremendous potential for tourism with both hill stations and habitable beaches within short distances as also lush green plains with accessible water-ways. The Governments acceptability of this position is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to the amendment was reckoned and if so, the amended provision cannot be relied on by the respondents to deny the licence. The State has relied on the decision of the Supreme Court reported in Kuldeep Singh v. Govt. of NCT of Delhi [MANU/SC/8215/2006 : (2006) 5 SCC 702] and State of Kerala v. B. Six Holiday Resorts (P) Ltd., [MANU/SC/0173/2010 : (2010) 5 SCC 186], wherein the Supreme Court held that the law applicable as on the date of consideration of application for grant of licence is to be applied. The learned counsel for the appellants/petitioners have relied on a Division Bench judgment of this Court in W.A. No. 469 of 2012 dated 14.03.2012, wherein this Court held that the law to be applied is the law as on the date on which the Excise Commissioner reconsidered application for grant of licence and when he recommends it based on the Rule in force as on that date, then the subsequent amendment should not be relied on by the Government to deny licence. We also notice that the Special Leave Petition filed by the State against the judgment in W.A. No. 469 of 2012 has been dismissed by the Hon'ble Supreme Court by order dated 20.06.2012 in Petition for Special Leave to Appeal ( ..... 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