KERALA BAR HOTELS ASSOCIATION Vs. STATE OF KERALA

JUDGEMENT

(1.) These Appeals call into question the legal correctness of the Judgment of the Division Bench of the High Court of Kerala dated 31.3.2015 by which several Writ Appeals filed by some of the Writ Petitioners assailing the Judgment of the learned Single Judge came to be dismissed and the Writ Appeals filed by the State came to be allowed. The writ petitioners, which include hotels which have been classified as Two Star, Three Star, Four Star and Heritage hotels, challenged the Abkari Policy for the year 2014 -15 as well as the amendments to the Foreign Liquor Rules. While dismissing the writ petitions, the learned Single Judge carved out an exception vis -a -vis the eligibility of Four Star and Heritage category hotels to the grant of FL -3 licence, finding their exclusion to be arbitrary and violative of Article 14 of the Constitution. This holding resulted in the filing of appeals on behalf of the State. The impugned Judgment has reversed this conclusion of the learned Single Judge and consequently only Five Star hotels in the State of Kerala are presently permitted to serve alcohol in their bars i.e. in public.

(2.) The Abkari Act, 1077 was introduced in the erstwhile State of Cochin in 1902 and came to be extended throughout the State of Kerala in 1967. The Foreign Liquor Rules were promulgated by virtue of Sections 10 and 24 to 29 of the Abkari Act, relating to the sale of Indian Made Foreign Liquor (IMFL). As at present, the private sector is not permitted to manufacture IMFL and there is only one State owned distillery. Previous to the extant policy, FL -1 licences i.e. retail of licence sale of foreign liquor, were auctioned by the State to private parties, which practice, as is obvious, has been discontinued. It may also be relevant to mention that the State of Kerala made a futile foray into prohibition, but this was withdrawn in 1967. The existence of a Union Territory, Mahe, within the State of Kerala, and boundaries with the States of Karnataka and Tamil Nadu where the sale or consumption of liquor is not prohibited indubitably makes it almost impossible for the State to venture into prohibition.

(3.) It has not been disputed that the State of Kerala is facing an acute social problem because of the widespread and excessive consumption of alcohol. It appears that almost 14 per cent of the national consumption of alcohol occurs in this comparatively territorially small State (indeed a dubious distinction), which also justifiably boasts of 100 per cent literacy. Faced with this social malaise, the State Government appears to have considered that banning the consumption of hard alcohol in public may have the effect of bringing down and arresting the ever escalating addiction to liquor. But we must immediately record our reservation inasmuch as FL -11 licences for the sale of consumption of beer and wine are rampantly issued. If the addiction to alcohol or introduction into this pernicious habit is to be combated, there seems to us to be no justification to allow beer or wine to be publically consumed. There cannot be any caveat to the opinion that permitting the consumption of beer and wine is a gateway to the consumption of hard liquor, and indeed is a social malaise in itself. In 1992, the grant of FL -3 licence was restricted to hotels having Two Star and above classification. This was followed in 1996 by the banning of sale of arrack. In 2002, Rule 13(3) was amended thereby restricting grant of FL -3 licences to hotels possessing Three Star and above ratings; existing Two Star hotels possessing FL -3 licences were however renewed on the understanding that this was their bounden right. This policy was taken to the courts and was eventually settled by the decision of this Court in State of Kerala v. B.Six Hotels Resort Private Ltd. 2010 (5) SCC 186 which had upheld that policy. Obviously encouraged by this success, the State of Kerala in 2011 introduced further amendments to Rule 13(3) whereby only hotels with Four Star and above classifications were eligible for fresh FL -3 licenses. Again, on the predication that existing FL -3 licence holders were legally entitled to their renewal, this exception was recognised in the Rules. ''Distance criteria '' was raised and rejected and we are now no longer concerned therewith. In State of Kerala v. Surendra Das 2014 (3) SCALE 421; AIR 2014 SC 2762, this Court upheld the policy challenged by several writ petitioners insofar as it declined issuance of fresh FL -3 to Three Star hotels; the ''distance criteria '' was struck down. In the duration of this litigation the State Government had also made it known that it intended to extend the discontinuance of FL -3 licences to Four Star hotels, but this Court thought it appropriate to interdict that proposal till such time as the Report of the One -man Commission was published and considered and till the State took action against non -standard hotels. In what avowedly is the anticipated and logical progression, the State Government has now restricted FL -3 licences to Five Star hotels alone, and has also decided not to renew all existing FL -3 licences to any of the other hotels.