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Wednesday, April 26, 2017

The amendment inter alia prescribes the minimum distance of 200 metres from an objectionable institution. The report submitted by the Deputy Commissioner of Excise records the distance between the gate of the hotel of the Respondent and the nearest objectionable institution (being Sree Bhagwati Ayappa Temple, Karuvannurthara) as 70 metres only. Consequent to the amendment to the Foreign Liquor Rules, the Government vide letter No. 8028/A2/2012/TD dated 26th April, 2012, called upon the Excise Commissioner, Thiruvananthapuram to examine the proposal of the Respondent. The Excise Commissioner, by a speaking order passed on 5th June, 2012, came to the conclusion that the application submitted by the Respondent deserved to be rejected and directed it to be returned to the Deputy Commissioner of Excise, Palakkad.= no fault can be found with the State Authority for calling upon the Excise Commissioner to examine the proposal and submit his fresh recommendation keeping in mind the amended provisions of the Foreign Liquor Rules. In other words, the application for grant of FL-11 licence submitted by the Respondent was required to be considered by the competent authority keeping in mind the amended provisions which came into force w.e.f. 18th April, 2012. That is precisely what has been done by the Excise Commissioner, as can be discerned from his speaking order dated 5th June, 2012, for invoking the restriction of distance of 200 metres from the objectionable site.Since the learned Single Judge of the High Court proceeded to decide the writ petition filed by the Respondent merely by referring to the pronouncement of the Division Bench of the same High Court in the case of Kallada Hotels and Resorts (supra), coupled with the fact that the Respondent had asked for a wider relief to declare the amendment of 18th April, 2012 as void to the extent it has introduced the restriction of distance of 200 meters from objectionable institutions for getting FL-11 licence, we deem it appropriate to relegate the parties before the learned Single Judge to decide the writ petition afresh, keeping in mind the settled legal position. Accordingly, we set aside the impugned judgment of the Division Bench dated 12th August, 2014 in Writ Appeal No.950 of 2014 as also the judgment of the Single Judge in Writ Petition (c) No.14220 of 2012 dated 4th February, 2014. Further, we remand the Writ Petition(C) No.14220 of 2012 and restore it to the file of the Single Judge of the High Court of Kerala for being decided afresh on other issues in accordance with law.

                                                           REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                      CIVIL APPEAL NO.  5204    OF 2017
                  (Arising out of SLP(C) No.35461 of 2014)

State of Kerala & Ors.                          …. Appellants

                                   Versus

M/s. Palakkad Heritage Hotels                        .... Respondent


                               J U D G M E N T

A.M.KHANWILKAR, J.


1.    The Respondent constructed  a  hotel  which  has  been  classified  as
Heritage (Basic) Category for five years (w.e.f. 1st March, 2012  till  28th
February, 2017).  The Respondent submitted an application  for  grant  of  a
Beer/Wine  Bar  FL-11  Licence  under  the  Foreign   Liquor   Rules.   That
application was processed by the Deputy Commissioner  of  Excise,  Palakkad.
On the basis of the report submitted  by  the  said  authority,  the  Excise
Commissioner of  Thiruvananthapuram  forwarded  his  recommendation  to  the
Secretary to Government Taxes  Department,  Government  of  Kerala,  vide  a
letter dated 28th March, 2012.  The  Excise  Commissioner  duly  recommended
grant of sanction for FL-11 License to the  Respondent  as  per  the  rules.
While the said recommendation was pending  consideration  before  the  State
Government, the Foreign Liquor Rules came  to  be  amended  on  18th  April,
2012.   The amendment inter alia prescribes  the  minimum  distance  of  200
metres from an objectionable institution.   The  report  submitted   by  the
Deputy Commissioner   of Excise records the distance  between  the  gate  of
the hotel of  the  Respondent  and  the  nearest  objectionable  institution
(being Sree Bhagwati Ayappa Temple, Karuvannurthara)  as   70  metres  only.
Consequent to the amendment to the  Foreign  Liquor  Rules,  the  Government
vide letter No. 8028/A2/2012/TD dated 26th  April,  2012,  called  upon  the
Excise Commissioner, Thiruvananthapuram  to  examine  the  proposal  of  the
Respondent.  The Excise Commissioner, by a  speaking  order  passed  on  5th
June, 2012, came to the conclusion that the  application  submitted  by  the
Respondent deserved to be rejected and directed it to  be  returned  to  the
Deputy Commissioner of  Excise, Palakkad.


2.    For answering  the  controversy  at  hand,  we  deem  it  apposite  to
reproduce the said communication in its entirety:

“PROCEEDINGS OF THE EXCISE COMMISSIONER,
                                   KERALA
                             THIRUVANANTHAPURAM
                     (Present: Sri. A. Ajith Kumar IAS)

Sub:- Excise- Abkari-Application  for  FL-11  licence  to  Palkkad  Heritage
Hotels, Koduvayoor, Palakkad rejected –orders issued.

Read:- (1)  Govt. Letter No. 8028/A2/2012/TD dated 26/04/2012
  (2)       Letter No. CZ3-577/12  dated  19.03.2012  of  the  Joint  Excise
Commissioner, Central Zone, Ernakulam.
  (3)   Letter  No.  P-6-1611/12  dated  16/03/12  &  21/03/2012  of  Deputy
Commissioner of Excise, Palakkad.
(4)   Application dated 01/03/2012 of Sri. M.J. Thomas
      (5)   GO (Ms) No. 107/11/TD dated 17/08/11
      (6)   GO (P) No. 72/2012/TD dated 18/04/12

                ORDER NO. XC6-7476/12/K. Dis Dated 05.06.2012

      The Joint Excise Commissioner, Central Zone, Ernakulam has  forwarded,
vide letter read as 1st above,  an  application  submitted  by  Sri.  M.  J.
Thomas, Managing Partner, M/s Palakad Heritage Hotels, Eroor P.O.  Ernakulam
requesting sanction for FL-11 licence in his name to the  Palakkad  Heritage
Hotels,  Koduvayoor,  Palakkad  having  a  valid  heritage  basic   category
classification  certificate  vide  order  No.   27/HRACC   (08)/2011   dated
09.03.2012 of the Member Secretary (HRACC) Ministry of  Tourism,  Government
of India, Chennai. The hotel is situated in Re. Sy. No.  673/8-1  Koduvayoor
Village in Chittur  Taluk  bearing  door  No.  XI/324  of  Koduvayoor  Grama
Panchayat in Palakkad District.

      The Deputy Commisisoner of Excise,  Palakkad  has  reported  that  the
nearest objectionable institution is the  Sree  Bhagavathy  Ayyappa  Temple,
Karuvannurthara which is 70 meters away from the gate of the hotel.

      Before the amendment made vide Government order read as 6th above,  as
per rule 13 (3) of Forensic Liquor Rules, there was a  restriction  that  no
FL-3 licence shall be issued to hotels which are located within  200  meters
from objectionable site (educational institution, temple, church, mosque  or
burial ground, schedule caste/schedule  tribe  colony  )  but  those  hotels
other than in the private sector having four, five star,  five  star  deluxe
classification will be  exempted  from  the  distance  restrictions  in  the
interest of promotion of tourism and also in the case of hotels  in  private
sector of above categories and hotels having heritage,  heritage  grand  and
heritage  classic  classification  is  issued  by   Ministry   of   Tourism,
Government  of  India,  the  distance  limit  was  only   50   meters   from
objectionable site. Vide Government order read as 6th above, the  said  rule
is modified by deleting the exemption of distance restrictions in  the  case
of hotels in private sector of above  categories,  thereby  at  present  the
distance limit to those  hotels  in  private  sector  of  above  categories,
thereby at present the distance limit of those hotels in private  sector  of
all categories from the objectionable site is 200 meters.

      In the above  circumstances  and  as  reported  by  the  Joint  Excise
Commissioner, Central Zone, Executive and  Deputy  Commissioner  of  Excise,
Palakkad and since the  nearest  objectionable  institution  viz.  the  Sree
Bhagavathy Ayyappa Temple, Kanvannurthara is located  only  70  metres  away
from the gate of the hotel the application  read  as  4th  above  is  hereby
rejected and returned to the Deputy Commissioner of Excise, Palakkad.

                                                                        Sd/-
                                                        Excise Commissioner”

3.    Against this decision, the Respondent filed  a  writ  petition  before
the High Court of Kerala, being Writ Petition (C) No.14220 of 2012  for  the
following reliefs:
“i)   call for the records leading to Ext. P7 and quash the same by  issuing
a writ of certiorari or other appropriate writ, order or direction;
ii)   declare that petitioner is entitled to get an  FL-11  licence  as  per
Ext. P-2 application.
iii)  Declare that Ext. P6 amendment to the extent it introduce distance  of
200 meters from objectionable institutions  for  getting  FL-11  license  is
discriminatory and without any basis;
iv)    Declare  that  if  the  hotels  located  within   200   meters   from
objectionable institutions  are  permitted  to  conduct  the  licenses,  the
petitioner is also entitled to get license as per Ext. P2 application;
v)    Issue  a  writ  of  mandamus  or  other  appropriate  writ,  order  or
direction commanding the respondent 1 to 5 to issue an FL-11  license  under
Rule 13 (11) of the Foreign Liquor Rules, beer/wine  parlour  license,  vide
Ext. P-2 application on the basis of the rule/law prevailed on the  date  of
Ext. P-5 (28.3.2012);
vi)   Issue  a  writ  of  mandamus  or  other  appropriate  writ,  order  or
direction commanding the respondents 1 to 5 not  to  renew  FL-3  and  FL-11
licenses, which are conducting within  200  meters  from  the  objectionable
institutions, if the petitioner is denied FL-11 license; and
vii)  Grant such other and further relief as this  Hon’ble  Court  may  deem
fit and proper in the interest of justice.”

4.    The learned Single Judge of the High Court  vide  Judgment  dated  4th
February, 2014, allowed the said writ  petition  on  the  finding  that  the
Excise Commissioner had issued an order in favour of  the  Respondent  (writ
petitioner) on 28th March, 2012,  sanctioning  FL-11  licence.   The  Single
Judge then placed reliance on the decision of  the  Division  Bench  of  the
same High Court in the case of Kallada  Hotels  and  Resorts  vs.  State  of
Kerala[1], wherein it was held that the law to be applied for  consideration
of the application submitted by the Respondent for grant of licence must  be
as on the date on which the  Excise  Commissioner  made  recommendation  for
grant of licence to the Respondent, as was  in  force  on  that  date.   The
appellant herein had pointed out to the learned Single Judge that  the  said
decision was challenged before this Court by the  Government  and  the  same
was pending.  The learned Single Judge, however,  rejected  that  contention
as follows:

“6. However, admittedly, as per the decisions of  this  Court,  which  stand
now, when the Excise Commissioner recommends the application  for  grant  of
licence on the basis of a Rule in force on that date,  subsequent  amendment
should not be relied on to assail the same.  Viewed  in  that  profile,  the
petitioner is entitled to  get  the  relief  as  sought  for  in  this  writ
petition.

      Therefore, the writ petition is allowed.

      Ext. P7 is quashed and respondents 1 to 5 are directed to issue  FL-11
licence to the petitioner under Rule 13(11) of  the  Foreign  Liquor  Rules,
beer/wine parlour licence vide Ext. P2 application on the basis of  rule/law
prevailed on the date of Ext. P5, i.e., 28.03.2012.

      This exercise shall be completed within a period of three months  from
today.”

5.    Against this decision, the appellant filed a Writ Appeal being  No.950
of 2014 before the Division Bench of the  High  Court.  The  same  has  been
dismissed on 12th August, 2014, in the following terms:

“1. Heard the learned Senior Government  Pleader  and  the  learned  counsel
appearing for the respondent/writ petitioner.

2. The impugned judgment  has  been  rendered  by  a  learned  Single  Judge
relying on the decision of a Division Bench in Kallada  Hotels  and  Resorts
v. State of Kerala  [2012(2) KLT 167].  That decision  notwithstanding,  the
fact of the matter remains that even as per  the  later  bench  decision  in
State of Kerala and Others v. M.  P.  Shiju  [2014(2)  KHC  343  (DB)],  the
respondent/writ petitioner is entitled to succeed, in view of the fact  that
the law has been succinctly stated to the effect that  the  eligibility  has
to be considered applying the law as on the date  of  consideration  of  the
matter by the Excise Commissioner.  This being, pointedly, the  legal  issue
involved in this writ appeal, the question raised has,  necessarily,  to  be
answered against the State.  This appeal, therefore, fails.

In the result, this writ appeal is dismissed. No costs.”


6.    The later decision adverted to by the Division Bench in  the  case  of
M.P. Shiju (supra), was challenged  by  the  State  Government  before  this
Court by way of SLP(C) No.25780 of 2014.  The same was disposed of  on  22nd
July, 2016 in the following terms:

                                   “ORDER
      Learned counsel for the parties are  agreed  that  this  petition  has
become infructuous in view of the position rendered to this Court  in  Civil
Appeal No. 4157 of 2015 titled as The Kerala bar Hotels Association  &  Anr.
V. State of Kerala & Ors. decided on 29.12.2015.
       The  special  leave  petition   is   accordingly   disposed   of   as
infructuous.”

7.    Since the said relied upon decision in  M  P  Shiju’s  case  has  been
affirmed by this  Court,  even  this  appeal  must  follow  the  same  suit.
However, the said SLP has been disposed of by this court  on  the  basis  of
concession made by the  counsel  for  the  parties  -  that  it  had  become
infructuous in view of the judgment of this Court in the case of The  Kerala
Bar Hotels Association & Anr. V. State of Kerala & Ors[2].

8.     On  a  bare  perusal  of  the  decision  in  the  Kerala  Bar  Hotels
Association (supra), it is seen that the question  examined  by  this  Court
was whether the policy to ban  the  consumption  of  alcohol  in  public  or
exception carved out to the policy in favour of Five  Star  Hotels  violates
the rights of the  Hotels  of  Four  Star  and  below  classification  under
Articles 14 and 19.  The other decision considered by  the  High  Court  for
allowing the writ petition filed by the Respondent is the  case  of  Kallada
Hotels & Resorts (supra). The correctness of the decision  of  the  Division
Bench of the High Court was not in issue before this Court in  the  case  of
Kerala Bar Hotels Association (supra).


9.    Indeed, the decision of  the  Division  Bench  in   Kallada  Hotels  &
Resorts (supra) has been affirmed by  this  Court  by  dismissal  of  SLP(C)
No.18392 of 2012 on 20th June, 2012 in the following terms:

“O R D E R
      Heard Mr. Ramesh Babu M.R., learned counsel for the petitioners.

In the facts  and  circumstances  of  the  case,  we  are  not  inclined  to
interfere with the impugned judgment.

      The Special Leave Petition is, accordingly,  dismissed.   Question  of
law is kept open.”


Even the review petition filed by  the  State  against  the  said  decision,
being Review Petition(C) No.1409 of 2012,  came  to  be  dismissed  on  14th
August, 2012.

10.   What is relevant to note is that, in the  case  of  Kallada  Hotels  &
Resorts (supra), the Division Bench of the High Court had  adverted  to  the
decision of this Court in the  case  of  State  of  Kerala  &  Anr.  v.  B.6
Holidays  Resorts  Pvt.  Ltd.[3],    wherein  it  has  been  held  that   an
application for grant of liquor licence has to be considered with  reference
to the rules/law prevailing or in force on  the  date  of  consideration  of
application by the Excise Authorities and not with reference to the  law  as
on the date of the application. After noticing the decision of  this  Court,
the Division Bench on the facts of the  case  before  it  allowed  the  Writ
Appeal. It will be useful to advert to the relevant portion of the  Division
Bench decision:

      “4. ………………………………………………………Going by the judgment of the Hon’ble  Supreme
Court the law applicable is the  law  that  is  in  force  when  the  Excise
authorities at various levels consider an application for  FL3  licence,  as
is  evidenced  by  the  records  produced  in  this  case,  the  application
submitted before the Excise Commissioner goes  for  enquiry  to  the  Deputy
Commissioner who make his recommendations which in turn is endorsed  by  the
Joint  Commissioner  of  Excise.   Thereafter  the   application   goes   to
Government  and  with  the  permission  of   the   Government   the   Excise
Commissioner issues the  licence.   In  this  case  the  initial  denial  of
licence to the appellant was on account of the mistake  about  the  distance
from the  temple  which  was  wrongly  reported  as  within  the  prohibited
distance.  It is seen that within one month of issuance of the first  report
namely Ext. P6 dated 25/08/2011 the Joint Excise Commissioner corrected  the
mistake on  22/09/2011  vide  Ext.  P9  recommending  appellant’s  case  for
issuance of licence.  If Ext. P6 was issued with  correct  distance  without
committing a  mistake and at least if the  correct  report  namely  Ext.  P9
dated 22/09/2011 was acted  upon  in  time  the  appellant  would  have  got
licence even before the new  policy  was  introduced.   Respondent  has  not
brought to the notice of this Court any other objection against  entitlement
of the appellant for licence.  We feel appellant cannot be declined  licence
on account of the mistake committed by the Excise  authorities  in  Ext.  P6
report.  In any case since by 22/09/2011, correct report was submitted  vide
Ext. P9 we feel the amended rule which came into force on 09/12/2011  cannot
be applied to appellant.  So much so, we hold that appellant is entitled  to
have their application finally considered and disposed of by the  Government
and Excise Commissioner with reference to Rule 13 (3) as it stood  prior  to
the amendment introduced to it with  effect  from  09/12/2011.   Accordingly
the Writ Appeal is allowed vacating the observation of  the  learned  Single
Judge in this regard and with a direction to the respondent to consider  and
pass orders on appellant’s application at the earliest.”


11.   In our view, the question as to what date should be  reckoned  as  the
date of consideration of licence has not been squarely dealt  with  in  this
decision.  Indubitably, the processing  of  the  application  for  grant  of
licence commences from the date of application. The final  decision  on  the
proposal is required to be taken by  the  State  Government.   The  date  on
which a formal, final decision is taken by the competent  authority,  alone,
would be the relevant date.  The  recommendation  made  by  the  subordinate
authority,  even  if  significant  for  taking  a  formal  decision  by  the
competent authority, will be of no avail.

12.     In the present case, the learned Single Judge has assumed  the  date
on which recommendation was  made  by  the  Excise  Commissioner  i.e.  28th
March, 2012, as the relevant date.  That assumption is untenable. For,  that
was not the date on which the final decision  was  taken  by  the  competent
authority. Whereas, before a final decision could be taken by the  competent
authority on the  application  submitted  by  the  Respondent,  the  Foreign
Liquor Rules were amended on 18th April, 2012.   The  application  submitted
by the Respondent for grant of licence, unquestionably, must be  treated  as
pending and under consideration on this date.


13.   A priori, no fault can be found with the State Authority  for  calling
upon the Excise Commissioner to examine the proposal and  submit  his  fresh
recommendation keeping in mind the amended provisions of the Foreign  Liquor
Rules. In other words, the application for grant of FL-11 licence  submitted
by the Respondent was required to be considered by the  competent  authority
keeping in mind the amended provisions which came into  force   w.e.f.  18th
April,  2012.   That  is  precisely  what  has  been  done  by  the   Excise
Commissioner, as can be discerned from his speaking order  dated  5th  June,
2012, for invoking the restriction  of  distance  of  200  metres  from  the
objectionable site.


14.   Since the learned Single Judge of the High Court proceeded  to  decide
the writ petition filed  by  the  Respondent  merely  by  referring  to  the
pronouncement of the Division Bench of the same High Court in  the  case  of
Kallada  Hotels  and  Resorts  (supra),  coupled  with  the  fact  that  the
Respondent had asked for a wider relief to declare  the  amendment  of  18th
April, 2012 as void to the extent  it  has  introduced  the  restriction  of
distance of 200 meters from objectionable  institutions  for  getting  FL-11
licence, we deem it appropriate to relegate the parties before  the  learned
Single Judge to decide the  writ  petition  afresh,  keeping   in  mind  the
settled legal position.


15.   Accordingly, we set aside the impugned judgment of the Division  Bench
dated 12th August, 2014 in Writ Appeal No.950 of 2014 as also  the  judgment
of the Single Judge  in  Writ  Petition  (c)  No.14220  of  2012  dated  4th
February, 2014.  Further, we remand the Writ Petition(C)  No.14220  of  2012
and restore it to the file of the Single Judge of the High Court  of  Kerala
for being decided afresh  on other issues in accordance with law.


16.   The appeal is partly allowed in the above terms with no  order  as  to
costs.

                                       …..……………………………..J.
                                     (Dipak Misra)



                                              .…..…………………………..J.
                                  (A.M.Khanwilkar)
New Delhi,
Dated: April 13, 2017

-----------------------
[1]    2012(2) KLT 167
[2]   AIR 2016 SC 163
[3]   .     2010 (5) SCC 186


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