XAVIERS RESIDENCY Vs. STATE OF KERALA

JUDGEMENT

(1.) On 22.8.2014, as per G.O.Ms. No. 139/2014/TD dated 22.08.2014, the Government of Kerala notified its Abkari Policy for the year 2014-15. As per the new Abkari Policy, only hotels having Five Star classification and above granted by the Ministry of Tourism, Government of India are entitled to be granted Bar licences. Thereafter, the Foreign Liquor Rules under the Abkari Act of 1077 has also been amended, to give effect to the Abkari Policy. Since as per the new Abkari Policy, only hotels classified as Five Star and above are entitled to be granted bar licences, all existing bar attached hotels have been issued with notices by the Excise Commissioner informing them that, their bar licences would stand cancelled on the expiry of 15 days of the date of such notices. The hotels that face cancellation of their Bar licences (FL-3 licences) have filed these Writ Petitions challenging the Abkari Policy, the consequential amendments to the Foreign Liquor Rules and the notices issued to them, terminating their bar licences. The petitioners in these Writ Petitions are mostly hotels having three star classification. Three Writ Petitions, W.P.(C) Nos. 23391 of 2014, 23528 of 2014 and 22460 of 2014 relate to two star hotels. The hotel in W.P.(C) No. 22785 of 2014 has no star classification. The petitioners in W.P.(C).No. 22203 of 2014, 22993 of 2014, 23081 of 2014, 23179 of 2014, 23262 of 2014, 23317 of 2014, 23446 of 2014, 23569 of 2014, 22219 of 2014, 23896 of 2014, 22776 of 2014, 24048 of 2014, 23167 of 2014, 22410 of 2014, 23399, and 24926 of 2014 are filed by hotels having either Four Star or heritage category certification. W.P.(C) No. 24128 of 2014 is filed by the Kerala Bar Hotels Association and two others. The remaining Writ Petitions are filed by persons conducting three star hotels. Irrespective of their categorization into Three Star or Four Star, Heritage etc., all the petitioners challenge the Abkari Policy of the State and the consequential amendments. A wide spectrum of arguments have been put forward, attacking the constitutionality of the Abkari Policy, alleging violation of the fundamental rights enshrined in Articles 14 and 19(1)(g) of the Constitution, besides violation of the parent enactment, the Rule Making power conferred on the State by the Abkari Act and even violation of the Rules of Business of the Government. Before addressing the contentions advanced before me, it is necessary to have an overview of the scenario prevalent in the State of Kerala in relation to the trade of liquor.

(2.) The Abkari Act, 1077 is a pre-constitutional enactment, initially passed by His Highness the Maharaja of the erstwhile State of Cochin on the 5th of August 1902 as Act 1 of 1077 (Malayalam Era). The Act was later on extended to the entire State of Kerala by Act 10 of 1967. The Foreign Liquor Rules enacted in exercise of the powers conferred by Sections 10, 24 and 29 of the Abkari Act deal exclusively with the grant of licences to vend, what is described as the Indian Made Foreign Liquour (IMFL). Apart from the Abkari Act of 1077, there is another enactment by name, the Prohibition Act, 1950, which prohibits import, export, transport or possession of any liquor or intoxicating drug, its manufacture and dealing, including tapping of toddy from any trees, in short, imposing total prohibition in the State of Kerala. However, S. 2 of the said enactment has conferred power on the Government to suspend the operation thereof by issuing a notification. Though the Abkari Act, 1077 is stated to have been repealed with effect from the date of coming into force of the said enactment, in view of the specific provision made in S. 3 thereof, the said enactment would revive on the issue of a notification under S. 2 of the said Act. The State Government has accordingly issued a notification dated 28.04.1967 (S.R.O. No. 104/67) under S. 2 of the Prohibition Act suspending the operation of the provisions of the said Act except Sections 1, 7 and 11 thereof. Consequently, the Abkari Act and the Rules thereunder have revived and are continuing to be in operation ever since. The provisions that are not suspended, deal with punishments for offences. Licences for possession, use or sale of liquor are issued under R. 13 of the Foreign Liquor Rules.

(3.) Earlier licences to conduct retail sale in liquor (sale in bottles) were being auctioned by the State to private parties on payment of a fee. The system was subsequently changed and the privilege of conducting retail sale in liquor was granted exclusively to the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited (hereinafter referred to as 'the Beverages Corporation' for short), the Kerala State Civil Supplies Corporation Limited and the Kerala State Co-operative Consumers Federation Limited. The Corporations referred to above sell the liquor in bottles through a wide network of retail shops located along the length and breadth of Kerala. The Beverages Corporation also enjoys monopoly in the wholesale business of liquor. This is for the reason that an FL-9 licence that entitles the licensee to possess and sell foreign liquor in wholesale is granted only to the said Corporation. The persons who have been issued with a Foreign Liquor licence under any of the categories made mention of in Rule 13 of the Foreign Liquor Rules, can purchase the stock of Foreign Liquor required by them, only from the Beverages Corporation. Thus, apart from the holders of FL-3 licences or Bars, there are various other establishments conducting liquor business like the Beer and Wine Parlours that are operated only by the Kerala Tourism Development Corporation (a Government Company), recognized Clubs with licences to serve liquor to their members, Airport Transit Lounges licensees, Canteens and Messes attached to Military Units, Seamen and Marine Officers Clubs etc.