N. Suresh v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **FRIDAY, THE 26TH DAY OF AUGUST 2016/4TH BHADRA, 1938** ## **WP(C).No. 15938 of 2016 (N)** **----------------------------** ## **PETITIONER :** **----------------------** **N.SURESH, MANAGING DIRECTOR, CONTOUR HOLIDAY RESORTS PVT. LTD., CHANGANASSERY, KOTTAYAM DISTRICT.** ## **BY ADV. SRI.GEORGE POONTHOTTAM** ## **RESPONDENT(S):** **----------------------------** **1. STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001.** **2. THE COMMISSIONER OF EXCISE, COMMISSIONERATE OF EXCISE, THIRUVANANTHAPURAM-695 001.** **3. DEPUTY COMMISSIONER OF EXCISE, KOTTAYAM-686 001.** **BY SR GOVERNMENT PLEADER SRI.V.MANU** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18-08-2016, ALONG WITH WPC.NO. 19460/2016, THE COURT ON 26-08-2016 DELIVERED THE FOLLOWING:** **sts** ## **WP(C).No. 15938 of 2016 (N)** ## **------------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS ----------------------------------------** - **P1 COPY OF THE COMMUNICATION DATED 21/04/2016 BY THE GOVERNMENT OF INDIA, MINISTRY OF TOURISM.** - **P2 COPY OF THE CLASSIFICATION ORDER DTD. 4.11.2015.** - **P3 COPY OF THE REMINDER GIVEN TO THE MUNICIPALITY DTD. 30.12.2015.** - **P4 COPY OF THE ABKARI POLICY ANNOUNCED BY THE GOVERNMENT DTD. 22.8.2014.** - **P5 COPY OF THE AMENDMENT OF THE RULES DTD. 27.8.2014.** - **P6 COPY OF THE AMENDMENT OF THE RULES DTD. 30.12.2014.** - **P7 COPY OF THE LICENSE DTD. 30.4.2015.** - **P8 COPY OF THE APPLICATION FOR RENEWAL OF FL-3 LICENSE DTD. 22.3.2016.** - **P9 COPY OF THE ACKNOWLEDGMENT REGARDING THE PAYMENT AND THE RECEIPT OF THE PAYMENT DTD. 12.4.2016.** - **P10 COPY OF THE TRACK STATUS OF THE APPLICATION AS AVAILABLE IN THE OFFICIAL WEBSITE OF THE DEPARTMENT.** - **P11 COPY OF THE JUDGMENT IN WPC NO.36844/2015 DTD. 22.12.2015 PASSED BY THIS HON'BLE COURT.** - **P12 COPY OF THE JUDGMENT DTD. 1.2.2016 IN WA NO.189/2016 PASSED BY THIS HON'BLE COURT.** - **P13 COPY OF THE ORDER DTD. 1.4.2016 IN SLP NO.7965/2016 PASSED BY THE SUPREME COURT.** - **P14 COPY OF THE GOVERNMENT ORDER NO.GO(RT)NO.289/2016/TD DTD. 5.4.2016.** - **P15 COPY OF THE ORDER NO.XC7-3915/2016 DATED 23/07/2016** **RESPONDENT(S)' EXHIBITS: NIL ------------------------------------------** **/TRUE COPY/** **P.A.TO JUDGE** **sts** ## **SHAJI P. CHALY, J.** ----------------------------------------------- **W.P.(C). Nos.15938 & 19460 of 2016 ----------------------------------------------Dated this the 26[th] day of August, 2016** ## **JUDGMENT** These writ petitions are concerning rejection of application for FL-3 licence to, five star hotels and since the subject matter of the writ petitions are intrinsically connected, I propose to consider and pass a common judgment. 2. Facts discernible from W.P.(C) No.15938/2016 is recited for the disposal of the writ petitions. However, if and when separate facts are required, same will be provided separately. 3. Petitioner is the Managing Director of a Holiday Resort, a company engaged in the hospitality services and industry. The hotel was constructed in the year 2008 and was given three star classification in the year 2009. On the strength of the said star classification, petitioner was issued with FL-3 licence on 7.5.2009, evident from Ext.P1. Ext.P1 was renewed year to year and the licence continued till 2 W.P.(C). Nos.15938 & 19460 of 2016 31.3.2015. From August 2014 onwards, the licence was renewed in terms of the interim orders passed by this court and the Apex Court. Petitioner's hotel has been classified as a five star hotel by the Ministry of Tourism, Government of India as per Ext.P2, which is valid from 2.11.2015 to 1.11.2020. On receipt of Ext.P2, petitioner applied for NOC from the Municipality concerned, though not required in view of the grant of FL-3 licence earlier and the conversion of the said licence to FL-11 as a continuation of the earlier grant in terms of the amendment made to Foreign Liquor Rules. A reminder was also given to the Municipality on 30.12.2015, evident from Ext.P3. No communication has been received from the Municipality either rejecting or accepting the application and therefore, in terms of the provisions of the Kerala Municipality Act, deemed licence is accrued to the petitioner, is the contention. However, by an order dated 22.8.2014, 1[st] respondent announced its Abkari Policy. In terms of Ext.P4, FL-3 licences will be issued only to hotels having five star classification. The policy announced as per Ext.P4 has been transformed in the form of 3 W.P.(C). Nos.15938 & 19460 of 2016 Rules by amending the Foreign Liquor Rules. As per the said Rule also, FL-3 licence can be granted to hotels having five star classification. After amending the Foreign Liquor Rules as per Ext.P5, on 30.7.2014, in terms of the Abkari Policy, as per Ext.P4, the 1[st] respondent made a further amendment on 30.12.2014, whereby the licensing authorities are enabled to grant FL-11 licence on application by the FL-3 licensee, which was in force on 31.3.2014. The statutory amendment thus made is for conversion of the FL-3 licence as FL-11 licence as can be seen from the Rules itself. The said amendment is produced as Ext.P6. 4. Petitioner was having FL-3 licence till 31.3.2014 to qualify the issuance of FL-11 licence and accordingly consequent to the affirmation of the Abkari Policy, petitioner was granted with FL-11 licence, evident from Ext.P7. The licence granted as per Ext.P11 expired on 31.03.2016. Therefore, petitioner applied to the 3[rd] respondent seeking to renew the FL-3 licence consequent to the upgradation of the classification as a five star hotel, evident from Ext.P8. Since 4 W.P.(C). Nos.15938 & 19460 of 2016 there was no response, on-line application was given for the renewal of FL-11 licence on payment of Rs.4,00,000/- and accordingly the said licence was renewed for the abkari year 2016-2017. According to the petitioner, petitioner was told that, application for renewal of FL-3 licence will be considered only after payment of the licence fee. Accordingly, online payment for renewal of FL-3 licence for the year 20162017 was effected by remitting an amount of Rs.24,95,000/and the same was duly received by the Excise Authorities, evident from Ext.P9. However, on verification of the official website of the department, it is seen that application given for renewal of FL-3 licence was not considered as the petitioner is not possessing FL-3 licence, evident from Ext.P10. It is also the contention of the petitioner that, the stand adopted by the authority that, the licence cannot be renewed is against law and the binding judgment. That apart it is also stated that, a similar hotel which was upgraded to five star, had applied for the renewal of FL-3 licence was not considered by the Excise Authorities adopting the stand that, there cannot be a renewal 5 W.P.(C). Nos.15938 & 19460 of 2016 of licence since the applicant was not having an FL-3 licence for renewal at least after 31.3.2015 and FL-11 licence possessed by the applicant cannot be equated to an FL-3 licence. 5. However the said stand adopted by the 1[st] respondent was negatived by this court as per Ext.P11 judgment in W.P. (C) No.36844/2015 dated 22.12.2015, which was upheld by the Division Bench as per Ext.P12 judgment and affirmed by the Apex Court as per Ext.P13 order. In terms of the directives contained in Ext.P11 judgment, according to the petitioner, licence was issued to the petitioner in the said writ petition as per Ext.P14 Government Order. It is also contended that, the stand adopted by the Government in the said writ petition that, if the applicant is making the application for a fresh licence, as the licence granted under FL-11 licence cannot be treated as the renewal of FL-3 licence, the same will be considered by the State Government. It was contended therein that, the licensee did not renew the licence within 6 months and a licence remained defunct 6 W.P.(C). Nos.15938 & 19460 of 2016 beyond 6 months cannot be renewed. However, both the aforesaid contentions were negatived in Ext.P11 judgment, which was affirmed by the Division Bench as well as the Apex Court. The policy of the State in the matter of grant of FL-3 licence is statutorily regulated in terms of the prescriptions contained in the Abkari Act and the Foreign Liquor Rules and law enabled the issuance of an FL-3 licence as a fresh grant or as a renewal, provided, the hotel in question is having a valid classification issued by the Government of India, Ministry of Tourism classifying the hotel as a Five Star Hotel. In terms of law, as it stands, respondents have issued/renewed licences to several hotels, which had upgraded their status as a Five Star Hotel, on production of the star classification and the said licences are still operational and functional. It was in this background this writ petition was originally instituted. 6. This court has passed an interim order on 16.2.2016 directing the 2[nd] respondent to consider the application submitted by the petitioner taking into account Ext.P12 7 W.P.(C). Nos.15938 & 19460 of 2016 judgment of the Division Bench and affirmed by the Apex Court as per Ext.P13, and pass orders thereon within a period of two weeks. The said time provided was extended by this court as per an order dated 8.7.2016 in an application filed by respondents 1 to 3 by a further period of two weeks from 8.7.2016. Thereafter, as per Ext.15 the application submitted by the petitioner seeking renewal of the licence was rejected and thereby declined FL-3 licence to the hotel run by the petitioner. Accordingly the writ petition was amended challenging Ext.15 order. 7. W.P.(C) No.19460/2016 Petitioner's hotel has been upgraded as Five Star Hotel , evident from Ext.P1. Petitioner was holding an FL-3 licence till 31.3.2015 and thereafter, an FL-11 licence was issued in terms of the Rules. On upgradation of the hotel as Five Star, petitioner has submitted Ext.P7 application and remitted an amount of Rs.24,50,000/- towards the licence fee for FL-3 licence. However, as per Ext.P8, it was notified in the website of the 2[nd] respondent that, the application given by the 8 W.P.(C). Nos.15938 & 19460 of 2016 petitioner has been rejected on the ground that, there was no valid licence as on 31.3.2016. It is thus seeking to quash Ext.P8, above said writ petition is filed. Similar contentions raised in the other writ petition is raised in this writ petition also in respect of the factual and legal situations. 8. Separate statements are filed by the 1[st] respondent in the aforesaid writ petitions. The prime contention raised is that, the applications submitted by the respective petitioners for purported renewal of their alleged FL-3 licences were not considered by the authorities concerned, as they were of the opinion that, said applications could not be treated as one for renewal; that petitioners' FL-3 licence-3 licences expired on 31.3.2015 and therefore, petitioners did not have any right to get FL-3 licences which were cancelled and which were not in existence; renewal with FL-3 licences of the petitioners which were defunct for more than one year could not be renewed. Further petitioners had not submitted any application for grant of fresh FL-3 licences to the Commissioner of Excise, and that NOC of the local body was mandatory for issuance of 9 W.P.(C). Nos.15938 & 19460 of 2016 such fresh FL-3 or FL-11 licences as provided in the amended provisions of the Kerala Panchayat Raj Act and Kerala Municipality Act. First respondent as per G.O. dated 20.12.2014 decided to grant FL-11 licences to the hotels maintaining hygiene and high standards which had valid FL-3 licences as on 31.3.2014, subject to the condition that, all the displaced bar hotel workers were given employment in the hotel. The decision was taken to protect the interest of the displaced bar hotel workers, who lost job due to the Government policy and the Foreign Liquor Rules was amended accordingly. That, it is specifically mandated in the amendment, FL-11 licences were granted as fresh licences and not as renewal of FL-3 licences. The intention of the Government was to grant licences to all the bar hotels closed on 22.8.2014 to protect the workers. Thus Fl-11 licences were issued to the hotels of the petitioners, which was also closed in view of the new Abkari Policy for want of five star classification. In pursuance of the interim order dated 16.6.2016, 2[nd] respondent considered Ext.P8 application of W.P.(C). Nos.15938 & 19460 of 2016 10 the petitioner and the same was rejected as per Ext.P15 order. 9. It is also contended, policy of the Government is to reduce availability of liquor so as to achieve the target of liquor free Kerala. Government have closed 10% (68 Nos.) of FL-1 shops running by Public Sector Undertakings as part of its policy declared as per G.O. dated 22.8.2014. Moreover, National Highways Authority, Government of India has requested the State Government not to renew or issue fresh licences to abkari shops (FL-1, FL-3 and FL-11) along the National Highways/State Highways/Service Roads to avoid accidents. This court in its judgment in W.P.(C) No.4018/2014 dated 10.11.2014 directed the Chief Secretary to State Government, Secretary, Road Transport and Highways Ministry and the Excise Commissioner, Thiruvananthapuram to take appropriate measures to identify those shops located by the side of National Highways or State Highways or Service Roads and shift them as prayed for by the petitioners in the writ petition. Accordingly, earnest attempts are made W.P.(C). Nos.15938 & 19460 of 2016 11 to identity the FL-1 shops situated by the side of the roads and every endeavour is made to shift them. It is also stated that, the business in liquor is the privilege of the Government and the petitioners have no fundamental right to trade in liquor business. No fundamental right of the petitioners are infringed as alleged by the petitioner and petitioners are not subjected to any hostile discrimination. 10. Heard learned counsel for the petitioners, learned Senior Government Pleader and perused the documents on record and the pleadings. 11. The question to be considered is whether the petitioners are entitled to get FL-3 licence to their five star hotels in view of the Abkari Policy launched by the Government as per Ext.P4 dated 22.8.2014, whereby, FL-3 licence granted to all hotels up to the category of four star was taken away and decided not to renew licences of FL-3. The said policy was under challenge before this court, same was upheld fully in appeal before Division Bench of this court and affirmed by the Apex Court. On a reading of Ext.P4 W.P.(C). Nos.15938 & 19460 of 2016 12 Policy what is discernible is that, Government have introduced the said Policy in order to attain complete prohibition of liquor in due course. However, as per clause 8 (1) of the said policy, 1[st] respondent decided that in future FL3 licence will be provided only to five star hotels. Further the licence of all the bar hotels except five star hotels functioning on licences will be cancelled. It is thus basing thrust on the said policy of the Government, petitioners are contenting that, since petitioners have obtained five star classification, they are entitled to FL-3 licences in continuation of FL-3 licence held by them, which was later converted as FL-11 licences consequent to Exts.P5 and P6 amendments of the Foreign Liquor Rules. As per rule 9(a)(iii) of the Foreign Liquor Rules, licence may be issued by the Excise Commissioner under orders of the Government in the interest of promotion of tourism in the State, to hotels which have obtained five star, five star deluxe classifications from the Ministry of Tourism, Government of India, where the privilege of sale of foreign liquor in such hotels have been purchased on payment of an W.P.(C). Nos.15938 & 19460 of 2016 13 annual rental of Rs.23 lacks subject to the distance rule with various identified institutions. Consequent to Ext.P4 liquor policy, Foreign Liquor Rules was again amended and sub rule 11(B) is introduced to rule 13, which read thus: “(11B) Notwithstanding anything contained in sub-rule (11), a licence in Form FL-11 shall be issued by the Deputy Commissioner of Excise to hotel where an FL-3 licence granted was in force as on 31[st] March, 2014, on request by the licensee. The licence under this sub-rule shall be issued subject to the following conditions:- (a) the licensee shall not treat the licence granted under this sub-rule as a renewal of FL-3 licence in his name. The FL-3 licence granted to him earlier shall be deemed to be an FL-11 licence for the purpose of the issuance of licence under this sub-rule and the licence issued under this sub-rule shall be deemed to be renewal of the same. (b) the licence shall be subject to all the conditions stipulated under an FL-11 licence issued under these rules. (c) there shall not be any change in the nature, content or scope with respect to the licence or the licensed premises. (d) the licensee shall employ all the W.P.(C). Nos.15938 & 19460 of 2016 14 workers who were in his employment in the hotel as on 31[st] March, 2014. (e) the licensed premises shall satisfy the standards of hygiene, which shall be certified by the Deputy Commissioner of Excise concerned.” 12. On a reading of sub-rule 11(B) it is clearly discernible, that licence in Form FL-11 shall be issued by the Deputy Commissioner of Excise to hotels, where FL-3 licence granted was in force as on 31[st] March, 2014, on request by the licensee. The conditions thereunder as per clause (a) reveals that, the licence granted under the said sub-rule shall not be treated as a renewal of FL-3 licence. FL-3 licence granted to the licensee earlier shall be deemed to be the FL-11 licence for the purpose of issuance of licence under this sub-rule and the licence issued under the sub-rule shall be deemed to be renewal of the same. 13. Taking into account the very same circumstances, this court rendered a judgment as per Ext.P11, wherein this court held that, the issue of licence remaining defunct should be at the instance of the very same licensee and that in the W.P.(C). Nos.15938 & 19460 of 2016 15 present instance supervening statutory developments have stultified the efforts of all the FL-3 licensees to have the licence renewed. It cannot be treated as a break and on the other hand, the break should be attributable to the conduct of the licensee who did not choose to renew the licence despite the provision or possibility for the renewal. It is also held that, it was due to the statute, it became impossible for a licensee to have his licence renewed and therefore, compelling the licensee to perform the impossible and penalizing him for his putative failure cannot be sustained. It was also held that all along in terms of the then prevailing policy, the petitioner had an FL-3 licence and later he could not have it renewed only because of the change in the Government policy and in that policy the Government did not impose a condition that in order to secure FL-3 licence one must have a five star classification and the petitioner therein having secured the five star classification was entitled for a FL-3 licence. Since the petitioner was holding a licence continuously in terms of the Abkari Policy, in continuation of W.P.(C). Nos.15938 & 19460 of 2016 16 his FL-3 licence, there is no relevance for the contention put forth by the State that the licence has ceased and it cannot be renewed since one year has elapsed. In that view of the matter, the learned Single Judge directed to grant FL-3 licence to the petitioner to run the five star hotel. The said judgment was approved by a Division Bench of this court, evident from Ext.P12, which was affirmed by the Apex Court as per Ext.P13 order by dismissing the appeal preferred by the State. Thereafter, as per Ext.P14, licence was granted to the petitioner in the said writ petition. 14. However, as per Ext.P15, in the very same circumstance, licence is declined to the petitioner in W.P.(C) No.14938/2016 and as per Ext.P8 on-line order refused licence to the petitioner in the other writ petition. On a reading of Ext.15, it is clear that, 2[nd] respondent was directed to reject the application in the light of the policy decision already taken in the Abkari Policy to reduce the availability of liquor. True, as per Ext.5 amendment of the Foreign Liquor Rules, the Excise Commissioner is enabled only to issue FL-3 W.P.(C). Nos.15938 & 19460 of 2016 17 licence under orders of the Government. However, from subrule(3) of rule 13 of the Foreign Liquor Rules, it is clear that in the interest of promotion of tourism in the State, respondents 1 and 2 are vested with powers to grant FL-3 licence to hotels with five star classification. Moreover, in Ext.P4 policy, nowhere it is stated that, FL-3 licence will not be granted to five star hotels in future. That apart, in view of the authoritative pronouncement in Exts.P11 and P12 judgments with respect to the issues raised by the respondents in these writ petitions, may not have much bearing. I am also bound by the findings rendered in Ext.P12 judgment of the Division Bench, affirming the findings in Ext.P11 judgment of the learned Single Judge since I have no difference of opinion with respect to the principles of law laid down thereunder. That apart when other five star hotels are functioning with FL-3 licence, declining licence to the petitioners, who have secured five star classification is nothing but arbitrary exercise of power. 15. Learned counsel for the petitioners has invited my W.P.(C). Nos.15938 & 19460 of 2016 18 attention to the judgment of the Apex Court in **Khoday Distilleries Ltd. v. State of Karnataka** [(1995) 1 SCC 574] and specifically to paragraphs 56, 57 and 60, where the question with respect to the fundamental right to carry on a trade or business in potable liquor vis-a-vis., the discrimination was considered and held that, when the State permits trade or business in potable liquor with or without limitation, the right to carry on trade or business is 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. In that view of the matter and also the law laid down by this court in Ext.P11 judgment with respect to the very same issues in these writ petitions affirmed by Ext.P12 Division Bench judgment and further affirmed in Ext.P13 order by the Apex Court, I am of the considered opinion that, petitioners in these writ petitions situated in the very same legal and factual circumstances are also entitled to get similar treatment at the hands of respondents 1 and 2. Therefore, I quash Ext.P15 order of the W.P.(C). Nos.15938 & 19460 of 2016 19 State Government in W.P.(C) No.15938/2016 and Ext.P8 order issued on-line in W.P.(C)19460/2016 and direct respondents 1 and 2 to issue licence to the petitioners in terms of the provisions of law and as held by this court in Exts.P11 and P12 judgments, without further delay, and at any rate within one month from the date of receipt of a copy of this judgment, subject to satisfaction of other parameters provided under the respective statutes, and in accordance with law. The writ petitions are allowed accordingly. Sd/- **SHAJI P. CHALY JUDGE** smv 22.08.2016