High Court of KeralaDivision Bench2022-12-12Appeals dismissed; Single Judge’s judgment uphe...

Avenue Hotels & Resorts; Muthoot Hotels (P) Ltd.; MPG Hotels & Infrastructure Ventures Pvt. Ltd. v. State of Kerala & Others

Case / Petition Number:W.A. Nos. 1446, 1447, 1448 & 1512 of 2022

Neutral Citation:/

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Vinod Chandran
C. Jayachandran
Judgment Date: 2022-12-12
Court Decision / Holding: Dismissed. The Division Bench held that the lockdown period was excluded and remission for subsequent years already granted was not to be extended; it found no extraneous reason attributable to the licensees for remission since the appellants themselves chose not to sell over the counter, despite permitted sale. The appeals were therefore dismissed with costs.
Final Disposition: Appeals dismissed; Single Judge’s judgment upheld; costs to be borne by the parties.

Parties to the Case

Appellants / Petitioners

AVENUE HOTELS & RESORTS, Kochi (represented by its Partner Issac Alexander)
MUTHOOT HOTELS (P) LTD., (Taj Green Cove Resort), Kovalam (represented by Thomas John Muthoot)
MPG HOTELS & INFRASTRUCTURE VENTURES PVT. LTD., (Hotel Novotel Kochi Info-Park), Thiruvananthapuram (represented by Thomas John Muthoot)

Respondents

State of Kerala rep. by Secretary, Taxes (A) Department, Govt. Secretariat, Thiruvananthapuram - 695 033
The Excise Commissioner, Commissionerate of Excise, Excise Head Quarters, Nandavanam, Thiruvananthapuram - 695 033
The Deputy Commissioner of Excise (for Ernakulam/Thiruvananthapuram variants as stated in the petitions)
The Circle Inspector of Excise, Ernakulam - 682 018

Legal Representation & Advocates

Counsels for Petitioners

• M.G. Karthikeyan
• Nireesh Mathew

Counsels for Respondents

• Sri. Sreejith V.S.

Case Synopsis & Summary

These writ appeals are filed by FL3 licensees challenging the Kerala High Court Single Judge’s dismissal of their claim for remission of foreign liquor license fees for periods during which the sale of liquor was permitted but operations were constrained by lockdowns and government restrictions during the COVID-19 pandemic. The appellants—Avenue Hotels & Resorts (Kochi), Muthoot Hotels (P) Ltd. (Taj Green Cove Resort, Kovalam), and MPG Hotels & Infrastructure Ventures Pvt. Ltd. (Hotel Novotel Kochi Info-Park)—assert that remission is warranted for the periods during which the license could not be profitably operated due to extraneous factors beyond their control, following the Supreme Court’s discussion in Chitra v. State of Kerala. The State and Excise authorities contend that a license is for sale of liquor and, although lockdowns were imposed and later exemptions granted, there was no embargo on sale during the relevant periods; further, the appellants themselves chose not to sell over the counter, which cannot be treated as an extraneous reason. The Division Bench clarifies that the lockdown periods were excluded and that remission for subsequent periods was already granted, and distinguishes Chitra, holding that the present cases do not warrant remission for periods when sale was permitted but counter sales were refused. The appeals are dismissed with costs, and the parties must bear their own.

Provisions of Law Cited

Foreign Liquor Rules, Rule 13(3)Foreign Liquor Rules, Rule 14

Legal Doctrines & Maxims

Extraneous reasons not attributable to the licensee (as discussed in Chitra)
Remission of license fee for periods of non-operation due to extraneous circumstances
Chitra v. State of Kerala (SC) doctrine (distinguished)

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellants contend that the pandemic-driven lockdowns and subsequent relaxations created a regime where FL3 licenses could not be operated effectively, and that remission of license fees is warranted for periods when extrinsic circumstances precluded operation. They assert that the decision in Chitra v. State of Kerala supports remission for periods precluded by extraneous causes beyond the licensee’s control, and point to the government’s exclusion of lockdown periods and the temporary moratorium as basis for relief. They also argue that five-star hotels, due to reputational concerns, chose not to sell over the counter during certain permitted periods, yet this cannot be deemed an extraneous reason justifying remission; nonetheless, they rely on the broader principle that licenses should be relieved when operation is precluded by external factors. They seek restoration of remission for the relevant periods and caution against treating mere choice not to operate as a defeasible basis for denial of relief.

Contentions of Respondents

The State and Excise authorities maintain that a license is for sale of liquor, and any periods of operation where sale was permitted cannot warrant remission simply because the licensee opted not to operate. They note that lockdown periods were previously excluded and proportional reductions granted; where there was no embargo on sale, remission cannot be granted for the periods in question if the licensee refused counter sales. They contend that the Supreme Court’s Chitra dictum does not apply to the present facts, as the circumstances do not involve extraneous factors attributable to third parties, and the appellants’ choice not to operate cannot be treated as extrinsic.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Chitra v. State of Kerala	2015 (3) KLT 956 (SC)	Distinguished	The judgment cites Chitra but states the dictum does not apply to these appeals because the appellants’ non-operation was a matter of their own decision, not an extraneous factor beyond their control.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** ## **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN** **MONDAY, THE 12[TH] DAY OF DECEMBER 2022 / 21ST AGRAHAYANA, 1944 W.A.NO.1446 OF 2022** **AGAINST THE JUDGMENT DATED 03.08.2022 IN WP(C) NO.18920/2020** **OF HIGH COURT OF KERALA** ## **APPELLANT/PETITIONER:** **AVENUE HOTELS & RESORTS, M.G.ROAD, KOCHI - 682 016 REPRESENTED BY ITS PARTNER SRI.ISSAC ALEXANDER, AGED 39 YEARS, S/O.O.T.ALEXANDER.** **BY ADVS. M.G.KARTHIKEYAN NIREESH MATHEW** ## **RESPONDENTS/RESPONDENTS:** - **1 STATE OF KERALA REP. BY SECRETARY, TAXES (A) DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM - 695 033.** - **2 THE EXCISE COMMISSIONER COMMISSIONERATE OF EXCISE, EXCISE HEAD QUARTERS, NANDAVANAM, THIRUVANANTHAPURAM - 695 033.** - **3 THE DEPUTY COMMISSIONER OF EXCISE KACHERIPADY, ERNAKULAM, PIN - 682 016.** - **4 THE CIRCLE INSPECTOR OF EXCISE ERNAKULAM, PIN - 682 018.** **BY GOVERNMENT PLEADER SRI.SREEJITH V.S.** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12.12.2022, ALONG WITH W.A.NO.1447/2022 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **W.A.Nos.1446,1447,1448 & 1512 of 2022 2** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN** **MONDAY, THE 12[TH] DAY OF DECEMBER 2022 / 21ST AGRAHAYANA, 1944** **W.A.NO.1447 OF 2022** **AGAINST THE JUDGMENT DATED 03.08.2022 IN WP(C) NO.18920/2020 OF** **HIGH COURT OF KERALA** ## **APPELLANT/PETITIONER:** **MUTHOOT HOTELS (P) LTD., (TAJ GREEN COVE RESORT), KOVALAM, THIRUVANANTHAPURAM - 695 527, REPRESENTED BY ITS MANAGING DIRECTOR THOMAS JOHN MUTHOOT, AGED 57 YEARS, S/O.MATHEW MUTHOOT THOMAS.** **BY ADVS. M.G.KARTHIKEYAN NIREESH MATHEW** ## **RESPONDENTS/RESPONDENTS:** - **1 STATE OF KERALA REP. BY SECRETARY, TAXES (A) DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM - 695 033.** - **2 THE EXCISE COMMISSIONER COMMISSIONERATE OF EXCISE, EXCISE HEAD QUARTERS NANDAVANAM, THIRUVANANTHAPURAM - 695 033.** - **3 THE DEPUTY COMMISSIONER OF EXCISE THIRUVANANTHAPURAM - 695 023.** ## **BY GOVERNMENT PLEADER SRI.T.K.VIPINDAS** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12.12.2022, ALONG WITH W.A.NO.1446/2022 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **W.A.Nos.1446,1447,1448 & 1512 of 2022 3** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN** **MONDAY, THE 12[TH] DAY OF DECEMBER 2022 / 21ST AGRAHAYANA, 1944** **W.A.NO.1448 OF 2022** **AGAINST THE JUDGMENT DATED 03.08.2022 IN WP(C) NO.18920/2020 OF** **HIGH COURT OF KERALA** ## **APPELLANT/PETITIONER:** **MPG HOTELS & INFRASTRUCTURE VENTURES PVT. LTD. (HILTON GARDEN INN), PUNNEN ROAD, THIRUVANANTHAPURAM-695034, REPRESENTED BY ITS MANAGING DIRECTOR THOMAS JOHN MUTHOOT, AGED 57 YEARS, S/O.MATHEW MUTHOOT THOMAS.** **BY ADVS. M.G.KARTHIKEYAN NIREESH MATHEW** ## **RESPONDENTS/RESPONDENTS:** - **1 STATE OF KERALA REP. BY SECRETARY, TAXES (A) DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM - 695 033.** - **2 THE EXCISE COMMISSIONER COMMISSIONERATE OF EXCISE, EXCISE HEAD QUARTERS NANDAVANAM, THIRUVANANTHAPURAM - 695 033.** - **3 THE DEPUTY COMMISSIONER OF EXCISE, THIRUVANANTHAPURAM-695 023.** **BY GOVERNMENT PLEADER SRI.SREEJITH V.S.** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON** **12.12.2022, ALONG WITH W.A.NO.1446/2022 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **W.A.Nos.1446,1447,1448 & 1512 of 2022 4** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** **&** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN** **MONDAY, THE 12[TH] DAY OF DECEMBER 2022 / 21ST AGRAHAYANA, 1944** **W.A.NO.1512 OF 2022** **AGAINST THE JUDGMENT DATED 03.08.2022 IN WP(C) NO.18920/2020 OF** **HIGH COURT OF KERALA** ## **APPELLANT/PETITIONER:** **MPG HOTELS & INFRASTRUCTURE VENTURES PVT. LTD., (HOTEL NOVOTEL KOCHI INFO-PARK), PUNNEN ROAD, THIRUVANANTHAPURAM-695034,REPRESENTED BY ITS MANAGING DIRECTOR THOMAS JOHN MUTHOOT, AGED 57 YEARS, S/O.MATHEW MUTHOOT THOMAS.** **BY ADVS. M.G.KARTHIKEYAN NIREESH MATHEW** ## **RESPONDENTS/RESPONDENTS::** - **1 STATE OF KERALA REP. BY SECRETARY, TAXES (A) DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM - 695 033.** - **2 THE EXCISE COMMISSIONER COMMISSIONERATE OF EXCISE, EXCISE HEAD QUARTERS NANDAVANAM, THIRUVANANTHAPURAM - 695 033.** - **3 THE DEPUTY COMMISSIONER OF EXCISE, ERNAKULAM-682018.** **BY GOVERNMENT PLEADER SRI.SREEJITH V.S.** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON** **12.12.2022, ALONG WITH WA.1446/2022 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **W.A.Nos.1446,1447,1448 & 1512 of 2022 5** **K.VINOD CHANDRAN & C.JAYACHANDRAN, JJ. --------------------------------------------W.A.Nos.1446,1447,1448 & 1512 of 2022 --------------------------------------------Dated this the 12[th] December, 2022** ## **JUDGMENT** **K.Vinod Chandran, J.** **The appeals are filed by FL3 licensees under the Foreign Liquor Rules. The appellants, who are the petitioners before the learned Single Judge, sought remission of the license fees, for the period they were not able to sell liquor, allegedly for extraneous reasons, over and above the periods on which a moratorium was granted by the Government. The appellants alleged that the judgment of the learned Single Judge was in conflict with the declaration of law in** _**Chitra v. State of Kerala [2015 (3) KLT 956 (SC)]**_ **.** **2. Heard Mr.M.G.Karthikeyan, learned Counsel for the appellants and Sri.Sreejith V.S, learned Government Pleader for the State.** **W.A.Nos.1446,1447,1448 & 1512 of 2022 6** **3. Suffice it to note the brief facts, which intertwined with the pandemic situation gave rise to the claim. The appellants were all FL3 licensees, who had valid licenses for the years 1999-2020, 2020-2021 and subsequently. Due to the pandemic situation, there was a lock-down of the entire country, effective from 24.03.2020, which remained up to 21.05.2020. On 14.05.2020, the State Government permitted the FL3 licensees to sell liquor that remained in stock, across the counter, without opening the restaurants. Even the restriction to open the restaurant was lifted on 21.12.2020. Later, again there was an embargo imposed on running bars between 24.04.2021 to 14.06.2021. The Government excluded the periods between 24.03.2020 to 21.05.2020 and between 24.04.2021 to 14.06.2021, as against all FL3, FL11 and FL4A licensees, totaling 111 days. The Government also, in January, 2021, extended the period in the proviso under Rule 13(3) from six months to ten months; being the period which disentitled a licensee** **W.A.Nos.1446,1447,1448 & 1512 of 2022 7** **from seeking renewal, if, despite a valid licence, the Bar remained defunct. The appellants, being five star hotels, could not make the counter sales as could the other licensees, since their clientele was in the higher financial bracket and they thought it best not to make, over the counter sales; which could damage their reputation of exclusivity.** **4. We are unable to accede to the request made by the appellants before this Court. It is admitted that the period in which there was a complete lockdown was excluded and proportionate reduction was granted in the license fee for the subsequent years. The appellants' claim is for the periods in which the Government had permitted sale of liquor, without opening the restaurants. The license essentially is for sale of liquor and there being no embargo for such sale, during the said period, necessarily the licensee cannot claim benefit of refund or adjustment of the license fee paid for the specified period. In fact though there was permission to effect sale of liquor,** **W.A.Nos.1446,1447,1448 & 1512 of 2022 8** **the appellants refused to sell liquor over the counters for reason of the appellants being five star hotels. Admittedly, it was the decision of the appellants to not sell liquor across the counter and whatever be the reason, it is not an extraneous reason or one caused by third party intervention as held in** _**Chitra**_ **[supra].** **5.** _**Chitra**_ **[supra] considered two appeals, which had distinctive facts, but both were granted the benefit of refund, for the period in which the license could not be operated. In the first case, though the Bar hotel had applied and obtained a license for the year 1990-1991, for reason only of an injunction issued by a Munsiff's Court, the Excise Commissioner was restrained from issuing the said license. The license was eventually granted only for the period 21.12.1999 to 31.03.2000, after the injunction stood vacated. It was held that the licensee was entitled to seek remission of license fee, to the extent it was '** _**precluded from transacting business on the strength**_ **W.A.Nos.1446,1447,1448 & 1512 of 2022 9** _**of that license' (sic)**_ **for reasons extraneous to itself. Likewise in the other appeal, the license expired on 31.03.2001 and a renewal could not be applied for the next year, ie:2001-2002, for reason of a dispute with the landlord, forcing the hotel to vacate the premises. Even then, an application was filed on 26.02.2002 for renewal in that succeeding year of 2001-2002 itself. The Excise Commissioner rejected the application for renewal on 04.09.2002, citing the proviso, which dis-entitle any licensee, whose Bar had been defunct for six months (as it stood then) during the currency of a license or after the last license expired; from claiming a renewal. In a writ appeal, a Division bench held that, for the year 2001-2002, there were extraneous reasons for the bar hotel becoming defunct and the licensee cannot be faulted for the same. However, despite the appellant having the benefit of conducting the Bar in the hotel, for less than a fortnight in the year 2002-2003, the appellant had to pay the full fee by reason of Rule** **W.A.Nos.1446,1447,1448 & 1512 of 2022 10** **14. Rule 14 of the Foreign Liquor Rules provides that even if a license under Rule 13, is granted in the course of a financial year, the full annual fee has to be paid, which license will also expire at the end of the financial year. The Hon'ble Supreme Court found in that case, that the application filed for the year 2001-2002 was rejected on 04.09.2002, citing the proviso under R.13. If that had not been occasioned and the application stood allowed, before the close of the year, then the licensee would have had the liability to pay the full annual fee as per R.14. When the application stood declined in the year and renewal was also only by virtue of an interim order by the High Court, coupled with the fact of discontinuation having occurred for reason of vacation of the premises, there existed extraneous reasons not attributable to the licensee; the licensee hence, was held entitled to remission of fees for the period they were disabled from operating the license. The said dictum does not apply in the above appeals.** **W.A.Nos.1446,1447,1448 & 1512 of 2022 11** **6. As we found, though it was the pandemic situation that brought in the lock-downs; the lockdown periods were excluded and remission granted in the subsequent years for the licensees. What is prayed for by the appellants is remission for the periods, when they were permitted to make counter sales; but the appellants, on their own volition, decided themselves not, so to do.** **We find no reason to interfere with the judgment of the learned Single Judge and dismiss the appeals, leaving the parties to suffer their respective costs.** **Sd/-** **K.VINOD CHANDRAN, JUDGE** **Sd/-** ## **C.JAYACHANDRAN, JUDGE** **sp/12/12/2022**