M/S Swagath Inn v. State of Kerala and Others

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **MONDAY, THE 14TH DAY OF NOVEMBER 2016/23RD KARTHIKA, 1938** **WP(C).No. 29774 of 2016 (V)** **----------------------------** ## **PETITIONER:** ## **----------** ## **M/S.SWAGATH INN,** **VALANCHERRY, MALAPPURAM DISTRICT, REPRESENTED BY ITS MANAGING PARTNER, SRI JOSE J MANJALI, AGED 47 YEARS, S/O. M.D JOHN (LATE).** **BY ADVS.SRI.C.C.THOMAS (SR.) SRI.NIREESH MATHEW SRI.M.G.KARTHIKEYAN** **RESPONDENT(S):** **--------------** **1. STATE OF KERALA** **REPRESENTED BY SECRETARY, TAXES (A) DEPARTMENT,GOVT. SECRETARIAT, THIRUVANANTHAPURAM 695 001.** **2. THE EXCISE COMMISSIONER, COMMISSIONERATE OF EXCISE, THIRUVANANTHAPURAM 695 033.** **3. THE DEPUTY COMMISSIONER OF EXCISE MALAPPURAM 676 505.** **4. THE CIRCLE INSPECTOR OF EXCISE, TIRUR MALAPPURAM DISTRICT 676 101.** **BY SENIOR GOVERNMENT PLEADER SRI T.K.ARAVINDA KUMAR BABU** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14-11-2016, COC NO.1436/2016 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **K.V.** ## **WP(C).No. 29774 of 2016 (V)** ## **----------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS ----------------------EXHIBIT P1 PHOTOCOPY OF THE APPLICATION DATED 31-03-2016 SUBMITTED BEFORE THE 2ND RESPONDENT THROUGH PROPER CHANNEL. EXHIBIT P2 PHOTOCOPY OF THE JUDGMENT DATED 15-06-2016 IN WP(C) NO 13482/2016 PASSED BY THIS HON'BLE COURT. EXHIBIT P3 PHOTOCOPY OF THE ORDER GO(MS) NO 655/2016/TD DATED 23-08-2016 PASSED BY THE 1ST RESPONDENT EXHIBIT P4 PHOTOCOPY OF THE ORDER NO XC6-2870/2016 DATED 1-3-2016 PASSED BY THE 2ND RESPONDENT RESPONDENT(S)' EXHIBITS NIL -----------------------** **/TRUE COPY/ P.A.TO JUDGE** **K.V.** ## **SHAJI P. CHALY, J.** -------------------------------------------------- ## **W.P.(C) No.29774 of 2016 & Cont. Case (C) No.1436 of 2016 ----------------------------------------------Dated this the 14[th] day of November, 2016** ## **JUDGMENT** Subject matter of the captioned writ petition and the Contempt Case are materially connected, and therefore I propose to deliver a common judgment. The issue relates to rejection of application made by the petitioner to secure a FL-11 license as per Rule 13(11) of the Foreign Liquor Rules. As per the judgment dated 15.06.2016 in W.P.(C) No.13482 of 2016, respondents 1 and 2 were directed to consider Ext.P5 application submitted by the petitioner therein, bearing in mind that petitioner has already secured a deemed license from 5[th] respondent by virtue of law, and take a decision within one month from the date of receipt of a copy of the judgment. The direction was not complied with, and it was thereupon, petitioner has filed the Contempt Case seeking appropriate action under the Contempt of Courts Act, 1971. During the pendency of the contempt case, an order was passed declining license to the petitioner. The said order is under challenge in the writ petition captioned above. Therefore, virtually, the **W.P.(C) No.29774/16 & Cont. Case No.1436/16** 2 Contempt of Court Case has become inconsequential. Material facts for the disposal of the writ petition are as follows: 2. Petitioner is a partnership firm, which has constructed a hotel and having three star classification at Valancherry in Malappuram District. The three star classification was conferred on the petitioner by India Tourism, with effect from 25.02.2011, for a period of 5 years. Thereafter, according to the petitioner, the hotel is again reclassified as three star. Petitioner's hotel satisfies all the legal requirements prescribed under the Foreign Liquor Rules for the grant of FL-3 license on the date of classification and for grant of FL-11 license i.e. beer/wine parlour license under Rule 13 (11) of the Rules. According to the petitioner, petitioner was attempting to get FL-3 license from 2011 onwards. However, as per the policy and consequent amendment to the Rules, only five star and above hotels are entitled to get bar license with effect from 01.04.2015. The policy formulated by the State Government was upheld by this Court as well as the Apex Court in the judgment in ' _**K.G.A Hotels & Resorts Pvt. Ltd. v. State of Kerala'**_ [2015 (2) KLT 683]. **W.P.(C) No.29774/16 & Cont. Case No.1436/16** 3 3. Matters being so, petitioner submitted Ext.P1 application dated 31.03.2016 seeking FL-11 license. Though petitioner submitted an application before the Municipality for securing a No Objection Certificate, same was not granted nor declined. Thereupon, petitioner has approached this Court and secured judgment in W.P.(C) No.13482 of 2016, in which it was declared that a deemed license is accrued to the petitioner by virtue of the provisions of the Municipalities Act, and accordingly, respondents 1 and 2 were directed to consider the application submitted by the petitioner, within a period of one month from the date of receipt of a copy of the judgment, evident from Ext.P2. As stated earlier, it was not complied with. Accordingly, contempt case was filed and during the pendency of the contempt case, now Ext.P3 order is issued by respondents 1 and 2. It is thus challenging Ext.P3, petitioner has preferred this writ petition. 4. First respondent has filed a counter affidavit stating that petitioner has three star classification at present. But, as per the existing Abkari Policy declared vide G.O.(MS) No.139/14/TD dated 22.08.2014, the intention of the Government is to reduce the availability of liquor in all levels. **W.P.(C) No.29774/16 & Cont. Case No.1436/16** 4 Hence, the Government have decided not to issue fresh foreign liquor licenses as applied for. It is also stated, the policy of the Government is affirmed by the Apex Court in the judgment in ' _**K.G.A Hotels & Resorts Pvt. Ltd.**_ ' referred _supra_ . The issue with respect to non-issuance of NOC by the Municipality is also traversed through in the counter affidavit. According to the 1[st] respondent, in compliance with the directions issued by this Court in Ext.P2, 1[st] respondent have considered the application of the petitioner, and on the basis of the declared policy of the Government, it is rejected. It is also submitted, main purpose of the policy is to reduce the availability of liquor and thereby protect the interest of the society and the Government have a duty to protect the people from alcoholism. 5. It is also stated, the hotels which were having FL-3 license functioned as on 31.03.2014 were granted FL-11 licenses at their request subject to the conditions incorporated into in Rule 13(11B) of Foreign Liquor Rules. Petitioner's request is to grant a fresh FL-11 license as per Rule 13(11) of the Foreign Liquor Rules and the circumstances of an existing FL-3 licensee and the petitioner's are different. That apart, it **W.P.(C) No.29774/16 & Cont. Case No.1436/16** 5 is stated, the Abkari business is not a fundamental right and the Government have a vested right according to its policy decisions from time to time. It was taking note of the entire factual and legal circumstances, the application submitted by the petitioner was rejected. 6. Petitioner has filed a reply affidavit reiterating the stand adopted in the writ petition. It is also stated, even after the policy dated 22.08.2014, and consequent amendment to the Rules, prohibiting issuance of bar license under Rule 13(3) of the Foreign Liquor Rules, except for five star and above hotels, FL-11 licenses are being issued under Rule 13(11). It is also stated, Rule 13(11B) of the Rules is introduced from 30.12.2014 after the policy dated 22.08.2014 for giving FL-11 licenses, beer/wine parlour licenses to all the hotels including 418 non-standard hotels, which held bar licenses as on 31.03.2014 and thereafter. It is also stated, after the policy dated 22.08.2014, nearly 700 hotels are granted FL-11 licenses, and the same are granted to hotels having three star and above classification, as per Rule 13(11) of the Foreign Liquor Rules. Therefore, according to the petitioner, as long as Rule 13(11) is still in existence, petitioner's application seeking **W.P.(C) No.29774/16 & Cont. Case No.1436/16** 6 license ought to have been allowed. 7. Learned counsel for the petitioner has also invited my attention to I.A.No.454 of 2016 filed in the Contempt Case, and specifically to Annexure-E order dated 08.09.2016 issued by the 1[st] respondent granting FL-11 license to a hotel in Kasaragod functioning within the limits of Kanhangad Municipality. So also, yet another order dated 22.09.2016 issued by the 2[nd] respondent is brought to my notice, wherein, FL-3 license is granted to a five star hotel situated in Kodanad, in Ernakulam District. Therefore, it is the contention of the petitioner, contention raised by the Government that as per its policy enunciated in the year 2014, intention is to reduce the liquor consumption is without any _bonafides_ . These are the background facts of the writ petition. 8. Heard learned Senior Counsel for the petitioner and the learned Senior Government Pleader appearing for the respondents. 9. The sole question to be considered is whether any interference is warranted in Ext.P3 order passed by the 1[st] respondent declining FL-11 license to the petitioner. Certain things are admitted. While introducing the policy by the State **W.P.(C) No.29774/16 & Cont. Case No.1436/16** 7 Government during the year 2014, to withdraw/cancel all FL-3 licenses below five star category hotels, is with the intention of reducing the liquor consumption in the State of Kerala and the said action of the Government was affirmed continuously and finally by the Apex Court in the judgment cited _supra_ . However, Government have decided to grant FL-11 licenses to all licensees who held FL-3 license, which was based on the said decision of the Government and consequential introduction of Rule 13(11B) in the Foreign Liquor Rules, petitioner has submitted the application. 10. Annexure-E filed along with an I.A. in the contempt case will unequivocally make it clear, the Government have provided FL-11 licenses to a hotel in Kasaragod. It is also clear from yet another order produced by the petitioner in the contempt case that Government have granted FL-3 license to a five star hotel in Ernakulam District. Therefore, when such licenses are granted even after enunciating the policy in the year, 2014, and granting FL-11 licenses to all those licensees who held FL-3 licenses on request, and accordingly such licenses are issued and various people are conducting hotels with FL-11 licenses, I am of the considered opinion, petitioner **W.P.(C) No.29774/16 & Cont. Case No.1436/16** 8 who has applied for a FL-11 license cannot be singled out. 11. Discussion made above establishes arbitrariness and illegality on the part of the respondents, by discriminating the petitioner from among the similarly situated persons. Even though there is no fundamental right existing in the trade of liquor, many were issued with licenses within the class, and therefore eliminating petitioner is illegal and unsustainable. 12. In that view of the matter, I have no hesitation to hold, Ext.P3 order passed by the 1[st] respondent dated 23.08.2016, is arbitrary and illegal. Therefore, the same is set aside and direct the 1[st] respondent to issue necessary orders in accordance with the directions contained above and issue license to the petitioner, if there are no other legal impediments standing in the way to do so. The whole exercise shall be completed within a month from the date of receipt of a copy of this judgment. The writ petition is allowed accordingly, and the Contempt of Court Case is dismissed in view of the order passed by the Government, though belatedly, declining license **W.P.(C) No.29774/16 & Cont. Case No.1436/16** 9 to the petitioner, which is under challenge in the writ petition, and allowed as directed above. Sd/- **SHAJI P. CHALY JUDGE** //true copy// P.S. to Judge St/16.11.2016