# THE KERALA BAR HOTELS ASSOCIATION &ANR v. STATE OF KERALA& ORS

- **Citation:** [2015] 11 S.C.R. 256
- **Court:** Supreme Court of India
- **Decided:** 2015-12-29
- **Case number:** Civil Appeal No. 4157 of2015
- **Bench:** Vikramajit Sen, Shiva Kirti Singh
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-kerala-bar-hotels-association-anr-v-state-of-kerala-ors-30288
- **Pages:** 43

## Headnote

Constitution of India, 1950:
C
Art.14 - Exclusion of Five star hotels in the State of
Kera/a from ban to serve alcohol in their bars - Constitutional
validity of - Held: Banning public consumption of alcohol is
a positive step toward bringing down the consumption of
alcohol- There is no illegality or irrationality with the intention
D of the State to clamp down on public consumption of alcohol
- The impugned policy, therefore, cannot be written off as
arbitrary or procedurally unsound - Foreign Liquor Rules
Abkari Act, 1077 - ss. 10 and 24 to 29.
E
Art.47- Duty of State to improve public health- Ban
on liquor- Held: Art.47 places responsibility on every State
Government to at least contain if not curtail consumption of
alcohol - Impugned policy permitting only Five star hotels
in the State of Kera/a to serve alcohol in their bars i.e. in
F public, therefore, is to be encouraged and not to be struck
down or discouraged by the courts.
Administrative law:
Judicial review- Intervention with State policy-Held:
G Courts must be loathe to venture into an evaluation of State
policy - It must be given a reasonable time to pan out.
Dismissing the appeals, the Court
HELD: 1. The State's policy to achieve a liquorH free Kerala has three constituents. The first is regarding
256
THE KERALA BAR HOTELS ASSOCIATION v. STATE OF 257
KERALA
manufacture. Manufacture is no longer in private hands, A
a_nd no licenses have been given since 1999. There is
only one Government distillery in the State, thus giving
the State the necessary control. Secondly, wholesale and
retail supply has been under the control of the State since
1984. The Government has taken steps to curb B
consumption by reducing the number of FL-1 shops by
over 10 per cent, from 384 to 332, between 2014 and
2015. The third element is regarding consumption which
is in alarming proportion in Kerala especially when
compared to other States. [Para 15] [283-8-D]
C
2. It is trite law thatArticle 14 allows for reasonable
classifications, where the classification fulfills the dual
criteria of being based on a reasonable differentia which
has a nexus with the object sought to be achieved. A D
·right under Article 19(1 )(g) to trade in liquor does exist
provided the State permits any person to undertake this
business. It is further qualified by Article 19(6) and Article
47. Article 47 of the Constitution places a responsibility
on every.State Government to at least contain if not E
curtail consumption of alcohol. The impugned Policy,
therefore, is to be encouraged and is certainly not to be
struck down or discouraged by the Courts. How this
policy is to be implemented, modified, adapted or F
restructured is the province of the State Governmentand
not of the Judiciary. The consumption of tobacco as well
as liquor is now undeniably deleterious to the health of
humankind. Advertising either of these intoxicants has
been banned in most parts of the world, the avowed G
purpose being to insulate persons who may not have
partaken of this habit from being seduced to start.
Banning pubic consumption of either of these inebriates
cannot be constrained as not being connected in any
manner with the effort to control consumption of H
258
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A tobacco, or with alcohol. Vulnerable persons, either
because of age or proclivity towards intoxication or as a
feature of peer pressure, more often than not, succumb
to this temptation. Banning public consumption of
alcohol, therefore, cannot but be seen as a positive step
B towards bringing down the consumption of alcohol, or
as preparatory to prohibition. [Paras 17, 24, 25] (284-GH; 291-A-B, G-H; 292-A-C]
3. To meet the tests of Article 14, i.e. the right to
C equality, there has to be intelligible differentia in the
classification or the categorisation that has been carved
out either by the Legislation or by the State policy has to
be discernable. So far as the State of Kerala is
concerned, steady progression in this regard is
D

## Text

_Characters 0–39,966 of 82,976. This is a partial read: ask again with offset=39966 for what follows._

[2015) 11 S.C.R. 256
A
THE KERALA BAR HOTELS ASSOCIATION &ANR.
B
v.
STATE OF KERALA& ORS.
(Civil Appeal No. 4157 of2015)
DECEMBER 29, 2015.
[VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.]
Constitution of India, 1950:
C
Art.14 - Exclusion of Five star hotels in the State of
Kera/a from ban to serve alcohol in their bars - Constitutional
validity of - Held: Banning public consumption of alcohol is
a positive step toward bringing down the consumption of
alcohol- There is no illegality or irrationality with the intention
D of the State to clamp down on public consumption of alcohol
- The impugned policy, therefore, cannot be written off as
arbitrary or procedurally unsound - Foreign Liquor Rules
Abkari Act, 1077 - ss. 10 and 24 to 29.
E
Art.47- Duty of State to improve public health- Ban
on liquor- Held: Art.47 places responsibility on every State
Government to at least contain if not curtail consumption of
alcohol - Impugned policy permitting only Five star hotels
in the State of Kera/a to serve alcohol in their bars i.e. in
F public, therefore, is to be encouraged and not to be struck
down or discouraged by the courts.
Administrative law:
Judicial review- Intervention with State policy-Held:
G Courts must be loathe to venture into an evaluation of State
policy - It must be given a reasonable time to pan out.
Dismissing the appeals, the Court
HELD: 1. The State's policy to achieve a liquorH free Kerala has three constituents. The first is regarding
256
THE KERALA BAR HOTELS ASSOCIATION v. STATE OF 257
KERALA
manufacture. Manufacture is no longer in private hands, A
a_nd no licenses have been given since 1999. There is
only one Government distillery in the State, thus giving
the State the necessary control. Secondly, wholesale and
retail supply has been under the control of the State since
1984. The Government has taken steps to curb B
consumption by reducing the number of FL-1 shops by
over 10 per cent, from 384 to 332, between 2014 and
2015. The third element is regarding consumption which
is in alarming proportion in Kerala especially when
compared to other States. [Para 15] [283-8-D]
C
2. It is trite law thatArticle 14 allows for reasonable
classifications, where the classification fulfills the dual
criteria of being based on a reasonable differentia which
has a nexus with the object sought to be achieved. A D
·right under Article 19(1 )(g) to trade in liquor does exist
provided the State permits any person to undertake this
business. It is further qualified by Article 19(6) and Article
47. Article 47 of the Constitution places a responsibility
on every.State Government to at least contain if not E
curtail consumption of alcohol. The impugned Policy,
therefore, is to be encouraged and is certainly not to be
struck down or discouraged by the Courts. How this
policy is to be implemented, modified, adapted or F
restructured is the province of the State Governmentand
not of the Judiciary. The consumption of tobacco as well
as liquor is now undeniably deleterious to the health of
humankind. Advertising either of these intoxicants has
been banned in most parts of the world, the avowed G
purpose being to insulate persons who may not have
partaken of this habit from being seduced to start.
Banning pubic consumption of either of these inebriates
cannot be constrained as not being connected in any
manner with the effort to control consumption of H
258
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A tobacco, or with alcohol. Vulnerable persons, either
because of age or proclivity towards intoxication or as a
feature of peer pressure, more often than not, succumb
to this temptation. Banning public consumption of
alcohol, therefore, cannot but be seen as a positive step
B towards bringing down the consumption of alcohol, or
as preparatory to prohibition. [Paras 17, 24, 25] (284-GH; 291-A-B, G-H; 292-A-C]
3. To meet the tests of Article 14, i.e. the right to
C equality, there has to be intelligible differentia in the
classification or the categorisation that has been carved
out either by the Legislation or by the State policy has to
be discernable. So far as the State of Kerala is
concerned, steady progression in this regard is
D perceptible inasmuch as it had started by placing a ban
on the consumption of alcohol firstly on un-starred
hotels, followed by Two Star hotels, which re-:eived the
unqualified imprimatur of this Court in B.Six Hotels.
Encouraged and emboldened by this decision, the
E Government thereafter placed a bao on Three Stars
hotels, which was again assailed in Court on the
predication that a ban exempting Four Star, Five Star and
Heritage hotels created a hostile and unfair
F discrimination. There was another element in this
litigation, namely that those who had received licences
were found to possess vested rights towards their
renewal. There was also a challenge to the distance
criteria prescribed by the State. All these grounds of
G assailment did not find favour yet again with the Coordinate Bench in Surendra Das. Even at this stage it
has been clarified on behalf of the State of Kerala that
they intend to prohibit public consumption of alcohol
even in Four Star and Heritage hotels. It is important to
H note the fact that it is not the State which has imposed
THE KERALABAR HOTELS ASSOCIATION v. STATE OF 259
KERALA
the classification of Star gradation of hotels. This is done A
by the Ministry of Tourism, which in turn is further guided
by the criteria established in the hospitality trade ..
Placing a moratorium on all hotels other than Five Star
hotels, therefore, is not a violation of Article 14 of the
Constitution. It is nobody's case that some hotels ought B
to have been granted Five Star grade or that the State
has prohibited anyone from endeavouring to upgrade
their hotels from Four Star to Five Star. The least amount
of sale of alcohol (0.08 per cent) occurs in Five Star
hotels, which sale indubitably includes guest orders in C
room-service. There is no apparent arbitrariness or
capriciousness either in the classification, nay the unique .
treatment given by the State to hotels possessing Five
Star rating. There can be no gainsaying that the prices/ 0
tariff of alcohol in Five Star hotels is usually prohibitively
high, which acts as a deterrent to individuals going in
for binge or even casual drinking. There is also little
scope for cavil that the guests in Five Star hotels are of
a·mature age; they do not visit these hotels with the sole E
purpose of consuming alcohol. It is trite that since the
obligation on the State was to consider the Report, not
to incorporate it in its entirety, no legal requirement has
been transgressed. The policy cannot, therefore, be
written off as arbitrary or procedurally unsound. [Para F
26] [292-D-H; 293-A-H; 294-A-D]
4. It is not the State that makes classification of
Star Rating so far as hotels are concerned. · This is
intrinsically modulated by the Tourism Industry and not G
by the State Government. The impugned policy of
eradicating consumption of alcohol in public applies to ·
all stakeholders without exception. However, thereafter
a relaxation or exception, in the interest of tourism, has
been forged in favour of Five Star hotels alone so far as H
260
SUPREME COURT REPORTS
[2015) 11 S.C.R.
A the drive against public consumption of liquor is
concerned. In other words, were it not for considerations
of tourism, this exception in favour of Five Star Hotels
may have been struck down. Courts should be chary
from interfering in policy matters, by infusing or imposing
B its assessment of the policy. The Court may well opine
that there is close similarity between Five Star and Four
Star and Heritage Hotels with regard to foreign clientele;
but that segregation or selection is the preserve of the
State Government. This is altogether different from
C viewing the position from the stand point of creating a
classification in favour of Five Star hotels. The State can
draw support from Rule 13(3) which postulates that
special measures for the promotion of tourism can be
0
ordained by the State. [Para 28] [294-F-H; 295-A-C]
5. The Court cannot be blind to the fact that a
social stigma at least as far as the family unit is concerned
still attaches to the consumption of alcohol. Free trade
in alcohol denudes family resources and reserves and
E leaves women and children as its most vulnerable
victims. Purchasing alcohol from a FL-1 shop would
entail consuming it under the reproachful gaze of the
dependants, especially the female members of the family.
F This is certainly a discouragement to regular and
excessive consumption of alcohol. The possibility exists
that rooms may be rented in Three and Four Star hotels,
where alcohol can be brought from FL-1 shops and then
consumed. However, this does not constitute public
G consumption, and therefore is not fatal to the besieged
State's policy. The challenge to this policy in respect of
Three Star hotels and below has been repulsed by this
Court and there is no reason to depart from the path
traversed by this Court in B.Six Hotels and thereafter in
H Surendra Das. [Para 29] [295-F-G; 296-A-B]
THE KERALABAR HOTELSASSOCIATION v. STATE OF 261
KERA LA
6. There has been abundance of litigation on the A
question of the Courts' interference in State policy.
Judicial review is justified only if the policy is arbitrary,
unfair or violative of fundamental rights. Courts must
be loathe to venture into an evaluation of State policy. It
must be given a reasonable time to pan out. If a policy B
proves to be unwise, oppressive or mindless, the
electorate has been quick to make the Government aware
of its folly. There is n·o illegality or irrationality with the
intention of the State to clamp down on public
consumption of alcohol. The One Man Commission C
Report has been considered, so the policy does not
suffer .from the vice of arbitrariness. In these
circumstances, it is not for the Appellants to argue or to
hold that the goal of prohibition would be more likely to 0
be met by reducing the number of FL-1 shops or by
introducing any other measure. [Para 30] [296-C-D, G-H;
297-A]
7. If the sale of beer and wine as a consequence
of grant of FL-11 licenses discloses an increase or ifthere E
is a trend towards serving beer of a higher alcohol
content, the State will have to review its stand, failing
which it would inexorably invite further litigation. This
curial warning also applies to any laxity in policing or F
ensuring that no person below the permissible age is
allowed to consume alcohol in public. Additionally,
thousands of workers at bars that lost their FL-3 licenses
have been rendered unemployed as a result of the
impugned policy, leading to over a dozen suicides. G
[Para 31] [297-H; 298-A-C]
State of Kera/av. B.Six Hotels Resort Private Ltd.
2010 (3) SCR 1 : 2010 (5) sec 186; State of
Kera/a v. Surendra Das 2014 (3) SCALE 421; AIR
H
262
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A
2014 SC 2762 : 2014 SCR1054; Census
Commissionerv. R. Krishnamurthy (2015) 2 SCC
796; Ba/co Employees' Union (Regd.) v. Union
of India and Ors. 2001 (5) Suppl. SCR 511: (2002)
2 sec 333- relied on.
B
P. N. Kaushal v. Union of/ndia 1979(1) SCR 122
: 1978 (3) SCC 558; Krishan Kumar Narula v.
State of Jammu and Kashmir AIR 1967 SC 1368
: 1967 SCR 50; Khoday Distilleries Ltd. v. State
c
of Kamatka 1994 (4) Suppl. SCR 477 :1995 (1)
SCC 574; In Re: The Special Courts Bi/I, 1978
1979 (2) SCR 476: 1979 (1) sec 380; State of
Maharashtra v. Indian Hotel and Restaurants
Association 2013 (7) SCR 654 : (2013) 8 SCC
D
519; Ashok Kumar Thakurv. Union oflndia (2011)
12 SCC 787; Reliance Airport Developers Pvt.
Ltd. v. Airports Authority of India and Ors. 2006 (8)
Suppl. SCR 398 : (2006) 10 SCC 1 - referred
to.
E
Case Law Reference
2010 (3) SCR 1
relied on.
Para 3
2014 SCR 1054
relied on.
Para 3
F
1979 (1) SCR 122
referred to.
Para 6
1967 SCR 50
referred to.
Para 7
1994 (4) Suppl. SCR 477
referred to.
Para 8
1979 (2) SCR 476
referred to.
Para 9
G
2013 (7) SCR 654
1·eferred to.
Para 13
(2011112 sec 787
referred to.
Para 17
2006 (8) Suppl. SCR 398
referred to.
Para 19
H
(2015) 2 sec 796
relied on.
Para 30
THE KERALA BAR HOTELS ASSOCIATION v. STATE OF 263
KERA LA
2001 (5) Suppl. SCR 511
relied on.
Para 30
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
4157 of2015
A
From the Judgment and Order dated 31.03.2015 of the
Division Bench of the High Court of Kerala at Ernakulam in W.
B
A. No.1554of2014
WITH
C.A. NOS. 4119, 4120, 4121, 4122, 4123, 4124, 4125, C
4126-4136, 4137-4156,. 4158-4159, 4160,
4161-4165,
4166, 4167, 4168, 4169, 4170, 4171, 4172, 4173, 4174,
4175, 4999, 5000, 5374, 4998, 5375, 5032, 5373, 6268,
5791, 5372, 5792, 5793, 5797, 5799, 5800, 5801-5803,
6271, 6272, 6269, 5790, 4118, 6273-6274, 6324 OF D
2015
C.A Sunderam, Mukul Rohtagi, Harin P. Raval, Harish
N. Salve, Rajeev Dhavan, Chander Uday Singh, L. Nageswara
Rao, C.C. Thomas, N. Venkatraman, Amit Singh Chadha, B.P.
E
Patil, Nidhesh Gupta, Rohini Musa, Zafar lnayat, Abhishek
Gupta, Romy Chacko, Arunabh Chowdhury, Anupam Lal Das,
Parthiv Goswami, Vaibhav Tamar, Karma Darbee, Swarvesh
Singh Baghel, Diksha Rai, Joe Joseph Kochikunnjel, Ranjeeta
Rohtagi, Dileep Poolakkot, Ashly Harshad, Harshad V.
F
Hameed, Sudhi Vasudevan, Sumita Hazarika, Kabir Ghosh,
Dhavan Mehrotra, Rishi K.S. Gautam, Parthiv K. Goswami,
Diksha Rai, Roy Abraham, Seema Jain, Himinder Lal, V. K.
Biju, Nishad LS., Maneesh N., Sathish,A. Sumathi, Sajith. P,
Kumar Gaurav, Nazia Hasan, Malini Poduval, Anu K. Joy, Nishe G
Rajen Shanker, P. K. Manohar, Venkita Subramoniam T. R.,
George Poonthottam, Dileep Pillai, Ajay K. Jain, Atul Shankar
Vinod, M. P. Vinod, Satheesh Mohanan, M.C. Ashi, A.
Raghunath, M. P. Shorawala, Sadhana Sandhu, lpsita Behura,
H
264
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A
Sanand Ramakrishnan, Rajeev Mishra, G. Prakash, Prerna
Prakash, Beena Prakash, Priyanka Parkash, M. L. Jishnu,
Dilpreet Singh, V. K. Sidharthan, Amjit Maqbool, Chinmoy
Deshpande, Anirudh Sanganeria, B.S. Prasad, D.P. Mohanty,
B
V.K. Sidharthan, Jishnu M. L. fortheAppellants.
Kapil Sibal, V. Giri, Ramesh Babu M. R., Mohammed
Sadique T.A., Mohan Kumar, Swati Setia, ManavVohra, Tom
K. Thomas, Ashok Kumar Juneja, Chand Qureshi, Zulfiker Ali
P. S., Renjith B. Marar, Lakshmi N. Kaimal, Anu Dixit Kaushik,
C Wills Mathews, Amit Kumar Pathak, Ginesh P., Shree Pal
Singh, Kaleeswaram Raj, Suvidutt M.S., C.R. Rekesh Sharma,
Syed Mehdi Imam for the Respondents.
D
The Judgment of the Court was delivered by
VIKRAMAJIT SEN, J.
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
E 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 2014F
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
G 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.
H
THE KERALA BAR HOTELS ASSOCIATION v. STATE OF 265
KERALA [VIKRAMAJIT SEN, J.]
2. TheAbkariAct, 1077was introduced ih the erstwhile A
State of Cochin in 1902 and came to be extended throughout
the State of Kera la 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).
A.c; at present, the private sector is not permitted to manufacture B
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 C
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 0
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 E
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
F
alcohol in public may have the effect of bringing down and
arresting the ever escalating addiction to liquor. But we must
immediately record o.ur 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 G
this pernicious habit is to be combated, there s·eems 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 H
the consumption of hard liquor, and indeed is a social malaise
266
SUPREME COURT REPORTS
[2015] 11 S.C.R.
A
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;
B 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
C had upheld that policy. Obviously encouraged by this success,
the State of Kerala in 2011 introduced further amenpments to
Rule 13(3) whereby only hotels with Four Star and above
classifications were eligible for fresh FL-3 licenses. Again,
0
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,
E 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
F
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
G 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.
H
4. We think it expedient to reproduce the relevant portion
of said Order dated 22.8.2014:
THE KERALABAR HOTELS ASSOCIATION v. STATE OF 267
KERALA [VIKRAMAJIT SEN, J.]
7. The Government being convinced the fact that in order A
to achieve the goal of "Liquor-Free Kerala", strict and
urgent measures are to be adopted, the Abkari Policy
2014-15 is hereby declared subject to the following
criteria.
1. Hereinafter Bar licenses will be issued only to 5
star hotels. The licenses of existing bar hotels which
are functioning on the basis of provisional renewal
of licenses except the licenses of 5 star hotels will
B
be cancelled. The Government has decided not to c
renew the licenses of 418 non standard bar hotels
mentioned in the Judgment of the Supreme Court.
2. 10% of outlets out of 338 FL-1 outlets of Kerala
.State Beverages Corporation and 46 outlets of
Consumer Fed will be closed each year from 2°d D
October, 2014onwards.
3. The sale of high strength alcoholic liquor through
Beverages Corporation will be gradually reduced.
4. In order to rehabilitate the employees who lose their E
job due to the closing of bar and to rehabilitate the
persons who are alcoholically addicted a special
plan namely "Punarjani 2030" will be commenced.
For that purpose, 5% Cess will be imposed on the
liquor which selling through the K.S.B.C.
F
5. The Liquor-Free propaganda program will be
strengthened in the society at large and especially
in educational institutions.
6. All Sundays will be declared as dry-day. This will G
implement from the Sunday of 5th October, 2014.
7. The traditional toddy tapping business will be
protected and job security will be ensured for toddy
tappers.
H
268
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS
[2015] 11 S.C.R.
8. In order to rehabilitate the employees of closing
bars and employees engaged in the job of affixing
stickers, measures will be adopted. KeralaAlcohol
Education
Research,
Rehabilitation
&
Compensation Fund (KAERCF) Fund will be
formed in order to protect the retrenched
employees. The said fund will be utilized for the
following purposes such as making propaganda
against drinking of alcohol, for collection of data
regarding this matter, to protect those who
destroyed themselves by alcohol consumption,
rehabilitation of the persons who lost job. The fund
for this purpose will also be found out from public.
9. To implement the order urgently, the Excise
Commissioner, K.S.B.C. Managing Director have
to take measures.to submit the recommendations
urgently to the Government.
By order of Governor
A.Ajithkumar
Secretary
5. The first paragraph of sub-rule (3) of Rule 13 was
substituted bywayofGO.(P) No. 141/2014 and now reads as
follows:
"(3) Foreign Liquor 3 Hotel (Restaurant) license. -
License in this form may be issued by the Excise
Commissioner under orders of 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 has been purchased on payment of an annual
rental of~23,00,000 (Rupees Twenty-three lakhs only).
However, no such license shall be issued to hotels if
THE KERALABAR HOTELS ASSOCIATION v. STATE OF 269
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located within 200 (two Hundred) metres from any A
educational institution, temple, church, mosque, burial
ground or scheduled caste/scheduled tribe colony. The
applicant shall produce from the Abkari Workers' Welfare
Fund Inspector, a Certificate to the effect that he has
remitted before the date of application for license/renewal B
of license, the arrears of contributions if any payable up
to the 31 51 day of December of the preceding year."
The sixth proviso to the Rule was amended to read as follows:
"Provided also that the licences which have been renewed C
temporarily from 1'1April, 2014, other than those of the
hotels having Five Star classifications shall be C:ancelled."
6. Litigation pertaining to or challenging liquor policies
is legion in our land. In his inimitable style Justice V.R. Krishna D
Iyer commenced the Judgment of the Three-Judge Bench in
P.N. Kaushal v. Union of India 1978 (3) SCC 558 thus:
A raging rain of writ petitions by hundreds of merchants
of intoxicants hit by a recently amended rule declaring a E
break of two "dry" days in every "wet" week for licensed
liquor shops and other institutions of inebriation in the
private sector, puts in issue the constitutionality of Section
59(t)(v) and Rule 37 of the Punjab Excise Act and Liquor
Licence (Second Amendment) Rules, (hereinafter, for F
short, the Act and the Rules). The tragic irony of the legal
plea is that Articles 14 and 19 of the very Constitution,
which, in Article 47, makes it a fundamental obligation of
the State to bring about prohibition of intoxicating drinks,
is pressed into service to thwart the State's half-hearted G
prohibitionist gesture. Of course, it is on the cards that
the end may be good but the means may be bad,
constitutionally speaking. And there is a mystique about
legalese beyond the layman's ken!
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A
2. To set the record straight, we must state, right here,
that no frontal attack is made on the power of the State
to regulate any trade (even a trade where the turn-over
turns on tempting the customer to take reeling roiling trips
into the realm of the jocose, belliocose, lachrymose and
B
comatose).
7. A plethora of precedents on the subject in which we
are presently concerned compels us, in order to avoid prolixity,
to refer to only a few decisions of this Court. We have already
c a mentioned two of these - B.Six Hotels and Surendra Das
to which we will revert later. The Constitution Bench decision
in Krishan Kumar Narula v. State of Jammu and Kashmir
AIR 1967 SC 1368 concerned the challenge to the refusal to
renew licences for the year 1966-67 in respect of the liquor
D shop of that petitioner. This Court observed that "dealing in
liquor is business and a citizen has a right to do business in
that commodity, but the State can make a law imposing
reasonable restrictions on I.he said right, in public interest".
E
8. This very conundrum once again received the attention
of the Constitution Bench in Khoday Distilleries Ltd. v. State
of Karnatka 1995 (1) SCC 574, where the constitutional
provisions pertinent to transacting business in liquor were
considered in minute detail, alohg with decisions which had
F already been ·rendered by this Court. The paragraph extracted
below contains a precis and commends reading:
G
H
"60. We may now summarise the law on the subject
as culled from the aforesaid decisions.
(a) The rights protected by Article 19(1) are not
absolute but qualified. The qualifications are
stated in clauses (2) to (6) of Article 19. The
fundamental rights guaranteed in Article 19(1 )(a)
to (g) are, therefore, to be read along with the
said qualifications. Even the rights guaranteed
THE KERALABAR HOTELS ASSOCIATION v. STATE OF 271
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under the Constitutions of the other civilized A
countries are not absolute but are read subject
to the implied limitations on them. Those implied
limitations are made explicit by clauses (2) to (6)
of Article 19 of our Constitution.
(b) The right to practise any profession or to carry on
B
any occupation, trade or business does not
extend to practising a profession or carrying on
an occupation, trade or business which is
inherently vicious and pernicious, and is c
condemned by all civilised societies. It does not
entitle citizens to carry on trade or business in
activities which are immoral and criminal and in
articles or goods which are obnoxious and
injurious to health, safety and welfare of the 0
general public, i.e., res extra commercium,
(outside commerce). There cannot be business
in crime.
(c) Potable liquor as a beverage is an intoxicating
E
and depressant drink which is dangerous and
injurious to health and is, therefore, an article
which is res extra commercium being inherently
harmful. A citizen has, therefore, no fundamental
right to do trade or business in liquor. Hence the
F
trade or business in liquor can be completely
prohibited.
(d) Article 47 of the Constitution considers
intoxicating drinks and drugs as injurious to
health and impeding the raising of level of nutrition G
and the standard of living of the people and
improvement of the public health. It, therefore,
ordains the State to bring about prohibition of the
consumption of intoxicating drinks which
obviously include liquor, except for medicinal H
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purposes. Article 47 is one of the directive
principles which is fundamental in the governance
of the country. The State has, therefore, the power
to completely prohibit the manufacture, sale,
possession, distribution and consumption of
potable liquor as a beverage, both because it is
inherently a dangerous article of consumption
and also because of the directive principle
contained in Article 47, except when it is used
and consumed for medicinal purposes.
(e) For the same reason, the State can create a
monopoly either in itself or in the agency created
by it for the manufacture, possession, sale and
distribution of the liquor as a beverage and also
sell the licences to the citizens for the said
purpose by charging fees. This can be done
under Article 19(6) or even otherwise.
(f)
For the same reason, again, the State can impose
limitations ,and restrictions on the trade or
business in potable liquor as a beverage which
restrictions are in nature different from those
imposed on the trade or business in legitimate
activities and goods and articles which are res
commercium. The restrictions and limitations on
the trade or business in potable liquor can again
be both under Article 19(6) or otherwise. The
restrictions and limitations can extend to the
State carrying on the trade or business itself to
the exclusion of and elimination of others and/or
to preserving to itself the right to sell licences to
do trade or business in the same, to others.
{g) When the State permits trade or business in the
potable liquor with or without limitation, the citizen
has the right to carry on trade or business subject
THE KERALABAR HOTELS ASSOCIATION v. STATE OF 273
KERALA [VIKRAMAJIT SEN, J.]
to the limitations, if any, and the State cannot A
make discrimination between the citizens who
are qualified to carry on the trade or business.
(h) The State can adopt any mode of selling the
licences for trade or business with a view to 8
maximise its revenue so long as the method
adopted is not discriminatory.
(1) The State can carry on trade or business in potable
liquor notwithstanding that it is an intoxicating C
drink and Article 47 enjoins it to prohibit its
consumption. When the State carries on such
business, it does so to restrict and regulate
production, supply and consumption of liquor
which is also an aspect of reasonable restriction 0
in the interest of general public. The State cannot
on that account be said to be carrying on an
illegitimate business.
9. So far as the essential concomitants of Article 14 are E
concerned, we need not, nay, cannot travel beyond the decision
of the Seven-Judge Bench of this Court in In Re: The Special
Courts Bill, 1978, 1979 (1) SCC 380. We shall reproduce
the first 11 propositions carved out in that judgment:
(1) The first part of Article 14, which was adopted from
F
the Irish Constitution, is a declaration of equality of the
civil rights of all persons within the territories of India. It
enshrines a basic principle of republicanism. The second
part, which is a corollary of the first and is based on the
last clause of the first section of the Fourteenth G
Amendment of the American Constitution, enjoins that
equal protection shall be secured to all such persons in
the enjoyment of their rights and liberties without
discrimination of favouritism. It is a pledge of the H
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protection of equal laws, that is, laws that operate alike
on all persons under like circumstances.
(2) The State, in the exercise of its governmental power,
has of necessity to make laws operating differently on
different groups or classes of persons within its territory
to attain particular ends in giving effect to its policies,
and it must possess for that purpose large powers of
distinguishing and classifying persons or things to be
subjected to such laws.
(3) The constitutional command to the State to afford
equal protection of its laws sets a goal not attainable by
the invention and application of a precise formula.
Therefore, classification need not be constituted by an
exact or scientific exclusion or inclusion of persons or
things. The courts should not insist on delusive exactness
or apply doctrinaire tests for determining the validity of
classification in any given case. Classification is justified
if it is not palpably arbitrary.
(4) The principle underlying the guarantee of Article 14
is not that the same rules of law should be applicable to
all persons within the Indian territory or that the same
remedies should be made available to them irrespective
of differences of circumstances. It only means that all
persons similarly circumstanced shall be treated alike
both in privileges conferred and liabilities imposed. Equal
laws would have to be applied to all in the same situation,
and there should be no discrimination between one
person and another if as regards the subject-matter of
the legislation their position is substantially the same.
(5) By the process of classification, the State has the
power of determining who should be regarded as a class
for purposes of legislation and in relation to a law enacted
on a particular subject. This power, no doubt, in some
THE KERALA BAR HOTELS ASSOCIATION v. STATE OF 275
KERALA [VIKRAMAJIT SEN, J.)
degree is likely to produce some inequality; but if a law A
deals-with the liberties of a number of well defined
classes, it is not open to the charge of denial of equal
protection on the ground that it has no application to other
persons. Classification thus means segregation in
classes which have a systematic relation, usually found
B
in common properties and characteristics. It postulates
a rational basis and does not mean herding together of
certain persons and classes arbitrarily.
(6) The law can make and set apart the classes according c
to the needs and exigencies of the society and as
suggested by experience. It can recognise even degree
of evil, but the classification should never be arbitrary,
artificial or evasive.
(7) The classification must not be arbitrary but must be D
rational, that is to say, it must not only be based on some
qualities or characteristics which are to be found in all
the persons grouped together and not in others who are
left out but those qualities or characteristics must have a E
reasonable relation to the object of the legislation. In order
to pass the test, two conditions must be fulfilled, namely,
(1) that the classification must be founded on an
intelligible differentia which distinguishes those that are
grouped together from others and (2) that that differentia
F
must have a rational relation to the object sought to be
achieved by the Act.
(8) The differentia which is the basis of the classification
'
and the object of the Act are distinct things and what is
necessary is that there must be a nexus between them. G
In short, while Article 14 forbids class discrimination by
conferring privileges or imposing liabilities upon persons
arbitrarily selected out of a large number of other persons
similarly situated in relation to the privileges sought to H
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be conferred or the liabilities proposed to be imposed,
it does not forbid classification for the purpose of
legislation, provided such classification is not arbitrary
in the sense abovementioned.
(9) If the legislative policy is clear and definite and as an
effective method of carrying out that policy a discretion
is vested by the statute upon a body of administrators or
officers to make selective application of the law to certain
classes or groups of persons, the statute itself cannot
be condemned as a piece of discriminatory legislation.
In such cases, the power given to the executive body
would import a duty on it to classify the subject-matter of
legislation in accordance with the objective indicated in
the statute. If the administrative body proceeds to classify
persons or things on a basis which has no rational relation
to the objective of the legislature, its action can be
annulled as offending against the equal protection clause.
On the other hand, if the statute itself does not disclose a
definite policy or objective a nd it confers authority on
another to make selection at its pleasure, the statute
would be held on the face of it to be discriminatory,
irrespective of the way in which it is applied.
( 10) Whether a law conferring discretionary powers on
an administrative authority is constitutionally valid or not
should not be determined on the assumption that such
authority will act in an arbitrary manner in exercising the
discretion committed to it. Abuse of power given by law
does occur; but the validity of the law cannot be contested
because of such an apprehension. Discretionary power
is not necessarily a discriminatory power.
( 11) Classification necessarily implies the making of a
distinction or discrimination between persons classified
and those who are not members of that class. It is the
THE KERALABAR HOTELS ASSOCIATION v. STATE OF 277
KERALA [VIKRAMAJIT SEN, J.]
essence of a classification that upon the class are cast A
duties and burdens different from those resting upon the
general public. Indeed, the very idea of classification is
that of inequality, so that it goes without saying that the
mere fact of inequality in no manner determines the
matter of constitutionality.
B
10. It would now be apposite to discuss both 8.Six
Hotels and Surendra Das in some detail. In 8.Six Hotels,
the Applicant's application for an FL-3 license was rejected
by the Excise Authorities resulting in the filing of a writ petition c
before the High Court, pursuant to which the Excise
Commissioner was directed to decide the matter afresh.
During the ensuing litigation, Rule 13(3) was amended and a
proviso was added stating that "no new licenses under this
Rule shall be issued". This was the 2002 amendment whereby D
fresh FL-3 licenses were to be allowed only for Three Star hotels
and above. Consequently, the Excise Commissioner rejected
the Applicant's license in view of the abovementioned proviso.
The High Court upheld the amendment but found that the
application had to be considered with reference to the Rules
E
as they existed on the date of the application and not the date
of consideration of the application. When the matter reached
this Court, we held that the Rules had to be considered as
extant on the date of consideration of the application. This Court
opined that since "the State has exclusive privilege of F
manufacture and sale of liquor, and no citizen has a fundamental
right to carry on trade or business in liquor, the applicant did
not have a vested right to get a licence. Where there is no
vested right, the application for licence requires verification,
G
inspection and processing. In such circumstances it has to be
held that the consideration of application of FL-3 licence should
be only with reference to the rules/law prevailing or in force on
the date of consideration of the application by the excise
authorities, with reference to the law and not as on the date of H
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A application." It was also noted that the promotion of tourism is
to be balanced with general public interest. If the State finds
that sufficient licenses have already been granted or that no
more should be granted in the public interest, it can take a
policy decision not to grant any further licenses.