9911796707
TMI Blog2014 (3) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... dharthan, Adv. Mr. Ramesh Babu M.R., Adv. Mr. Shiv Sagar Tiwari, Adv. JUDGMENT H.L. Gokhale J. Leave granted 2. This group of Civil Appeals raises the questions with respect to the legality and validity of two amendments introduced by the first appellant-State of Kerala, in pursuance of its Abkari Policy framed in 2011- 2012, in the Foreign Liquor Rules framed under the Kerala Abkari Act, since those amendments have been struck down as unconstitutional by the impugned judgment and order rendered by the High Court of Kerala. 3. Rule 13 of the Foreign Liquor Rules governs the grant of licences for the sale of the Indian Manufactured Foreign Liquor ('IMFL' for short). The two amendments which are disputed are as follows:- (i) Firstly, the words 'three star' were omitted from Rule 13(3) of these rules by Government of Kerala by issuing notification dated 9.12.2011. Consequently, after this amendment of the rule which has come into force immediately, three star hotels not already having a licence, will not be eligible to get a bar licence for retail sale of liquor in the hotels. Thus, no new hotels having the three star classification will be issued the licence k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by its common judgment and order dated 27.7.2012, which struck down the two amendments as unconstitutional. Being aggrieved by the said judgment and order, these appeals have been filed by the appellant-State of Kerala and its concerned officers of the Excise Department. Abkari Policy of the Government of Kerala for the year 2011-2012:- 6. Before we deal with the impugned judgment and the amendments, we must first refer to the Abkari Policy of the Government of Kerala which led to the two disputed amendments to Rule 13. The Government of Kerala announced the Abkari Policy on 17.8.2011. In the second sub-para of the very first paragraph of this policy, the Government noted as follows:- "This Government views with serious concern the rising trend of alcoholism and the consequential social issues arising in the Kerala society. Strong feelings against this have been emanating from the civil society. Fully realising, Government intends to formulate a stringent Abkari Policy." 7. The notable features of this policy were as follows:- "a. The Government noted the rising trend of alcoholism in the state and its consequences. b. Clarified that it did not wish to view the liquor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... star deluxe classification will be exempted from the distance restrictions in the interest of promotion of tourism in the State. In the case of hotels in the private sector of the above categories and hotels having heritage, heritage grand and heritage classic classification issued by the Ministry of Tourism, Government of India, no such licence shall be issued if located within 50 (fifty) metres from any educational institution, temple, church, mosque, burial ground or scheduled caste/scheduled tribe colony. The applicant shall produce from the Abkari Workers 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 upto the 31st of December of the preceding year. The existing licencees who do not maintain two star standards will be allowed time upto 31st March, 2007 to upgrade their standards to two star. Their licence will be renewed till that date. Failure to upgrade the standard of those hotels would lead to cancellation of licence and forfeiture of rental paid by them. Licencees shall have no claim for compensation. The applicant shall produce from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls which are located within a radius of three kilometers in Grama Panchayat and one kilometer in Municipal Corporation/City Corporation, from another hotel having an FL-3 licence granted under this rule]. 1. Deleted by impugned Amendment of 2011. 2. Introduced by impugned Amendment of 2012." Judgment of the Single Judge:- 9. The learned single Judge who heard the matter concerning the denial of licences to new three star hotels held that there was no vested right to get a licence, leave aside any Fundamental Right. It was held that there was no element of discrimination, nor that of legitimate expectation. He also held that the unamended rule cannot be applied once the amendment comes into force, and therefore rejected the petition. Judgment of the Division Bench:- 10. The Division Bench, on the other hand, noted in paragraph 5 of its judgment the submission of the respondents that although there was no Fundamental Right to carry on business in liquor, as held in Khoday Distilleries Ltd. & Ors. vs. State of Karnataka reported in 1995 (1) SCC 574, once the State permits such a trade, it has to make rules and permit the business without any arbitrariness or discrimination, and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s most of these hotels were set up in areas where there was a thriving tourism business like the Kovalam Beach near Thiruvanantapuram. The decision to set up hotels ought to be left to the hoteliers. The State Government will defeat the tourism policy by introducing, by amendment, the distance rule. For all these reasons the Court held that the two amendments were discriminatory, and will not achieve the policy which they intended to achieve. The Court, therefore, held the two amendments to be bad in law and unconstitutional. 13. Learned senior counsel, Mr. V. Giri assisted by Mr. Ramesh Babu, learned counsel, has appeared for the appellants. He has been supported by Mr. P.K. Bali, learned senior counsel appearing for the Kerala Pradesh Madhya Virudh Samithy (i.e. committee opposing consumption of liquor in the area of Kerala). Senior counsel Mr. Mukul Rohtagi, Chander Udai Singh, Krishnan Venugopal and others have appeared for the respondents and the interveners. Submissions on behalf of the appellants:- 14. The principal submission of Mr. Giri, as well as Mr. Bali, has been that the consumption of liquor is the highest in the State of Kerala, as compared to all other states in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth 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." 17. He then emphasized that this Hon'ble Court has also held in Kuldip Singh vs. Government of NCT of Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh licences was removed by deleting the proviso which was inserted by the amendment dated 20.2.2002. It was contended that the amendments merely implemented the policies of the government from time to time. There is considerable force in the contention of the State. If the State on a periodical re-assessment of policy changed the policy, it may amend the Rules by adding, modifying or omitting any rule, to give effect to the policy. If the policy is not open to challenge, the amendments to implement the policy are also not open to challenge. When the amendment was made on 20.2.2002, the object of the newly added proviso was to stop the grant of fresh licences until a policy was finalized." 19. It was, therefore, submitted by Mr. Giri that when a policy was introduced with a good intention, after considering the serious problems in the society, and after consulting all affected interests including the hoteliers, there was no reason for the High Court to interfere therein by calling it arbitrary or discriminatory. In this context he relied upon a Constitution Bench Judgment in Khandige Sham Bhat and Ors. vs. The Agricultural Income Tax Officer reported in AIR 1963 SC 591 wherein t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir hotels as yet. The State was trying to do its best in furtherance to the Directive Principle contained in Article 47 of the Constitution, and as Article 37 of the Constitution states, the principles laid down in the Directive Principles are fundamental in the governance of the country, and the State has the duty to apply them in making the laws. He submitted that as held in Khoday Distilleries Ltd. (supra) the correct way to describe the Fundamental Rights under Article 19(1) is to call them 'Qualified Fundamental Rights'. The right to practice any profession, or to carry on any occupation, trade or business guaranteed under Article 19(1)(g) of the Constitution is subject to the reasonable restrictions under sub-article (6) thereof, and there was no reason to hold that the restrictions imposed under the present rules are in any way unreasonable. Mr. Giri, referred to Section 69 of Kerala Abkari Act, and submitted that the rules framed under the statute must be considered as a part of the statute. They are on a higher pedestal as against rules framed by notifications de hors any statute, and cannot be challenged on the grounds as sought by the respondents. He referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted by learned senior counsel Mr. Bali. He represented the earlier referred Kerala Pradesh Madhya Virudha Samithy. It has filed a separate SLP challenging the impugned judgment bearing No. 38251/2012. He drew our attention to various judgments. The salient from amongst them are mentioned hereafter. Firstly he referred to the judgment of this Court in State of Andhra Pradesh and Ors. vs. Mc Dowell and Co. reported in 1996 (3) SCC 709, wherein a bench of three Judges of this Court laid down:- "43........A law made by the Parliament or the Legislature can be struck down by Courts on two grounds and two grounds alone, viz., (1) lack of legislative competence and (2) violation of any of the fundamental rights guaranteed in Part-III of the constitution or of any other constitutional provision. There is no third ground. We do not wish to enter into a discussion of the concepts of procedural unreasonableness and substantive unreasonableness concepts inspired by the decisions of United States Supreme Court. Even in U.S.A., these concepts and in particular the concept of substantive due process have proved to be of unending controversy, the latest thinking tending towards a severe curtailm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission was that he should be heard in case a licence is to be given to set up a hotel in that village. He supported the policy of the State Government and the submission of Mr. Giri and Mr. Bali. Reply on behalf of the respondents:- 25. The learned senior counsel appearing for the respondents submitted that as can be seen from paragraph 5 of the impugned judgment, the High Court has considered the relevant observations of this Court in Khoday Distilleries (supra), wherein this Court has held that although there is no right to carry on liquor business as a Fundamental right, wherever it is permitted by the state, there should not be any room for discrimination. It was submitted that this observation is supported by paragraph 60(g) of the very judgment which reads as follows:- "(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." 26. The judgment of this Court in State of M.P. vs. Nandlal Jaiswal & Ors. reported in 1986 (4) SCC 566 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69 (1) SCC 414. This case involved the creation of a monopoly, with respect to Kendu leaves, by the Government, in favour of those licensees who had worked satisfactorily in the previous year and had paid the amounts due from them regularly, to continue their licences with the added provision that the agents with whom they had been working in 1967 will also work during 1968. This was challenged on the ground that the Government, by offering to enter into agreements for advance purchases of Kendu leaves by private offers, in preference to open competition, was favoring existing licensees, and this was hit by Article 14 of the Constitution. This Court accepted the contention and directed that the tenders for purchase of Kendu Leaves be invited by the Government, in the next season, from all persons interested in the trade. The Respondents relied on certain observations made by this Court, with respect to the creation of a monopoly that favours private individuals, in the cloak of public interest. These are as follows: "19. Validity of the law by which the State assumed the monopoly to trade in a given commodity has to be judged by the test whether the entire benefit arising therefro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitution of India. In paragraph 5.3.1.1, the report deals with the issue as to whether the FL3 licences were issued and renewed to non- standard hotels/restaurants. The report was relied upon to point out that many hotels which were not meeting the standards were permitted and regularized, initially upto 30.6.1992. Thereafter, the regularization was extended till 31.3.2007, and on the next day (that is on 1.4.2007) all existing licences were regularized. Subsequently, on 1.4.2010 all FL3 licences functional during 2009-2010 were regularized. The report points that the licences were issued to hotels, with poor hygiene standards, which did not abide by the working hours prescribed for hotels, and which sold liquor even on dry days. The report also pointed out that in January 2011 the Excise Commissioner of the State had sent a letter to the Government of Kerela, highlighting the poor standards maintained by 418 unclassified bars, and requested it not to grant fresh FL-3 licences for areas other than tourism notified areas. The Commissioner had also pointed out that during the last one year seven people had died due to excessive drinking in the unclassified hotels. The report record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es (supra) and particularly in para 60(g) where the Apex Court has laid down that where such a trade is permitted, there can not be any room for discrimination. 33. There are two amendments which are under challenge. We will have to deal with these two amendments in the light of the factual scenario and the law governing the same. As far as the deletion of three star hotels is concerned, we do have a judgment of this Court in the case of B. Six Holiday Resorts (supra), wherein, the previous deletion of two star hotels from the eligibility of FL-3 licences was upheld by this Court. It has been submitted by the respondents that the plea under Article 14 was not specifically canvassed when the matter was considered and decided. In this behalf we have already referred to paragraphs 30 and 31 of this judgment. In paragraph 30 this Court has held that promotion of tourism should be balanced with general public interest. Paragraph 31 permits a periodical reassessment of policy, and holds that if policy is not open to challenge the amendment of the rules to effect the policy can also not be challenged This being the position the grievances made by the hoteliers with respect to the deletio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary information from the State Government. This above referred para 5.3.1.1 of this report speaks for itself and reads as follows:- "5.3.1.1 Were FL3 licenses issued and renewed to non-standard hotels/restaurants? The minimum standard eligible for obtaining an FL3 licence was 2-star standards from April 1982 and 3-star and above from April 2002. We noticed that licenses were issued and renewed to 418 bar hotels, ie. 61 per cent of the total bar hotels in the state even though they were not eligible for the FL3 licenses as per the Rules. We noticed that the Government first allowed time up to 30 June 1992 for those licensees who had not attained the prescribed two star standards to attain the prescribed standard and subsequently extended the period. During the review period, we noticed that the Excise Commissioner submitted his proposals for the Abkari policy for the year 2007-08 vide letter dated 11 January 2007 which did not include the proposal for regularisation of 418 non standard bar hotels, the list of which was sent to the Government in January 2006. However, based on a discussion with the Hon'ble Minister for Labour and Excise on 22 January 2007, the Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seven more FL3 licenses were issued between 12 January and 31 March 2011. Moreover in the Abkari Policy for 2010-11, the Government declared that the FL3 licensees not having the requisite star qualification and who were functional during 2009-10 should be regularised. Thus, the Government has made it a regular feature to regularise ineligible licensees. We are of the opinion that the Government has not taken a firm stand to ensure that only hotels of a minimum standard are issued FL3 licenses. Further, we opine that the Government has seriously compromised public safety by (a) regularising 418 unclassified bars, though they were not able to attain the minimum standards despite repeated extension of time and (b) by turning a blind eye towards the various complaints against these unclassified bars. On this being pointed out in audit the Department stated (June 2011) that the Government is the competent authority to issue orders allowing relaxation, if any, for the functioning of FL3 licensees/bar hotels. 36. As rightly submitted by the counsel for the respondents the consequences of the amendment of 2012 will be that four star and five star hotels would not be permitted to have FL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a bench of three Judges "It suggests a dubious dealing by State Power". The Learned Judge observed that "such hollow homage to Article 47 and the Father of the Nation gives diminishing credibility mileage in a democratic polity". Thankfully, the Additional Solicitor General made a statement to the Court which is recorded in paragraph 42 of that judgment that the Government readily agreed that the ban would be observed by the State Government also. Paragraph 42 of the said judgment reads as follows:- "42. We must here record an undertaking by the Punjab Government and eliminate a possible confusion. The amended rule partially prohibits liquor sales in the sense that on Tuesdays and Fridays no hotel, restaurant or other institution covered by it shall trade in liquor. But this prohibition is made non-applicable to like institutions run by the Government or its agencies. We, prima facie, felt that this was discriminatory on its face. Further, Article 47 charged the State with promotion of prohibition as a fundamental policy and it is indefensible for Government to enforce prohibitionist restraints on others and itself practise the opposite and betray the constitutional mandate. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25.01.2013 that they had considered the applications, some of them were rejected, and in the rest further information was sought. These steps were initiated within the time stipulated by this court, and due to the large number of applications, the decision was taking its own time. On 8.02.2013, this court directed that the Contempt Petitions be heard alongwith the special leave petitions. Since the Civil appeals arising out of these SLPs are being disposed of with this order, no separate orders are required on the contempt petitions. The Appellants will have to act now in terms of the order being passed herein. 41. For the reasons stated above we allow these appeals in part and hold as follows: (i) The judgment rendered by the Division Bench is set-aside to the extent it interferes with the amendment brought in the year 2011. The deletion of three star hotels from the category of hotels eligible for FL3 licenses under Rule 13(3) is held valid. (ii) As far as the amendment brought in 2012 introducing the distance rule by way of addition of Rule (3E) in Rule 13(3) is concerned, the same is held to be bad in law. The judgment of the High Court is confirmed to that extent. (iii) T ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
