Biju Joseph vs Chacko P.A. and Others

Jagannadha Rao, C.J.—This reference to the Full Bench is by an order dated 3rd December 1987 by a Division Bench of this Court. The Division Bench observed that though the question raised by the Appellant is covered by the decision of a Division Bench in O.P. 4924 of 1981 decided on 22nd December 1981, a contrary view was taken by a learned Single Judge of this Court in O.P. 7537 of 1986 which decision stands affirmed in W.A. 317 of 1987. The Division Bench was of the opinion that there is prima facie divergence of opinion on the question as to whether Rule 6(2) of the general conditions is applicable to licensees of toady, arrack or foreign liquor retail and foreign liquor wholesale shops.

The following are the facts of the case: Appellant before us is the fourth Respondent in the Writ Petition. Appellant was granted foreign liquor 3 Hotel (restaurant) licence for conducting a Bar in Hotel Prasanth at Muvattupuzha. The licence was granted by the Commissioner of Excise on payment of annual rent of Rs. 1,50,000 pursuant to a recommendation made by the Assistant Excise Commissioner which recommendation was agreed to by the Deputy Commissioner. Sanction for grant of licence was given by the Board of Revenue as per order dated 26th July 1985 (Ext. R-4). Even thereafter licence was not issued and the Appellant filed O.P. 7510 of 1985 in this Court. Pursuant to certain directions issued therein as per Ext. R-4(e) judgment, a licence was given to the Appellant and he started running the Bat in the hotel from 9th August 1985. It was at that juncture that Respondents 1 and 2 (Writ Petitioners) filed O.P. 7893 of 1985 on 19th August 1985 contending that in view of Article 47 of the Constitution of India and also Rule 6(2) of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974 (hereinafter referred to as ''the Kerala Abkari Shops Auction Rules) licence ought not to have been granted inasmuch as the Bar in question is within 400 metres from several educational institutions including St. Augustine''s Girls High School, Muvattupuzha wherein the children of the Writ Petitioners and other students are studying. According to the Writ Petitioners, Appellant''s hotel is within 20 feet of the above said school. It is also stated that the Government High School is located within 90 meters from this hotel. There is also a Chapel within 35 meters from the hotel. The Writ Petitioners, therefore, sought for a declaration that the Bar is comprehended within the prohibition contained in Rule 6(2)(b) of the Kerala Abkari Shops Auction Rules and for a further direction to the Excise Commissioner (second Respondent in the Writ Petitioner) to see that the Bar is not opened.

A counter-affidavit has been filed on behalf of the Board of Revenue (Excise), the Excise Commissioner and the Assistant Excise Commissioner admitting that the distance between the hotel where the Bar is located and the educational institutions and Chapel is, no doubt, below 400 meters, but it is stated that the hotel in question has satisfied the requirements as per G.O. (Rt.) 255/82, dated 15th April 1982 for the issue of an FL-3 licence inasmuch as the hotel has ten lettable bed rooms and that the carpet area in respect of each of the room and bathrooms was within the prescribed limits. The hotel fell in the II Star category. It is then staled that as per the above Government Order dated 15th April 1982, there is no restriction for the issue of an FL-3 licence even though the Bar is within 400 metres from educational institutions or places of worship. It is contended that as per Rule 13(3) of the Foreign Liquor Rules, no liquor is sold under the Bar licence for consumption other than in a room specially approved for that purpose and liquor cannot be removed from the licenced premises nor sold otherwise than to the residents in the hotel and to their guests or casual visitors partaking in the meals. It is, therefore, contended that FL-3 licence does not come under the purview of Rule 6(2)(b) of the Kerala Abkari Shops Auction Rules. The functioning of the FL-3 licence Bar does riot adversely affect the religious sentiments of worshippers or the students of the educational institutions. In other words, the Government supported the case of the Appellant.

The Appellant has also filed a counter-affidavit. The Appellant contended that he applied for an FL-3 licence after complying with the conditions imposed in G.O. (Rt.) 255/82, dated 15th April 1982 and other relevant rules of the Foreign Liquor Rules. The prohibition contained in Rule 6(2)(b) of the Kerala Abkari Shops Auction Rules is not attracted to such Bars located in hotels. According to the Appellant, the Writ Petition was filed at the instance of certain other restaurant owners whose business will be affected if the Appellant was also, allowed to sell liquor in the Bar. The Assistant and Deputy Commissioners of Excise have recommended for the grant of the licence after inspection and the Appellant deposited a sum of Rs. 1,50,000 as required by the Rules. The licence was, therefore, issued for 1985-86. It is also contended that the second Writ Petitioner is a local political leader belonged to a different political party. The Kerala Abkari Shops Auction Rules are to apply only to individual shops and wholesale shops and not to Bars and restaurants. Therefore, a Bar attached to a hotel will not come under the purview of Rule 6(2)(b) of the Kerala Abkaii Shops Auction Rules and therefore, the prohibition of 400 metres does not apply to his case. Since Rule 6(2)(b) of the Kerala Abkari Shops Auction Rules is not applicable to hotel, there is no restriction imposed by the State under Article 19(6) of the Constitution.

A reply affidavit was filed by the second Writ Petitioner denying the allegation that the Writ Petitioners were set up by four other restaurant owners and the political rivalry is also denied. It is also stated that there was justification in the Board of Revenue not passing orders and the Assistant Excise Commissioner not releasing the licence because he became conscious of the applicability of Rule 6(2)(b) of the Kerala Abkari Shops Auction Rules.

A learned Single Judge of this Court allowed the Writ Petition holding that in view of the provisions contained in Article 47 of the Constitution of the India and Rule 6(2)(b) of the Kerala Abkari Shops Auction Rules, hotels are also prohibited from establishing Bars within. 400 metres from educational institutions and places of worship. The learned Judge also gave an alternate finding that even though Rule 6(2)(b) may not strictly apply, the conditions contained in Rule 13 of the Foreign Liquor Rules were themselves sufficient to deny a licence to the Appellant even assuming that the provisions of G.O. (Rt.) 255/82, dated 15th April 1982 were complied with. It is against this judgment the present Writ Appeal is preferred by the Appellant-fourth Respondent.

Rule 6(2) of the Kerala Abkari Shops (Disposal in Auction) Rules, 1974, as it stood prior to 28th February 1986 read as follows:

6(1) * * * * *

(2) No toddy, arrack or foreign liquor shop (other than a toddy or arrack sub-shop) shall be located outside the limits notified in the Gazette under Rule 4, but with the previous sanction of Assistant

Excise Commissioner, it may be removed from One place to Anr. within such limits. But no shop other than a Foreign Liquor wholesale shop shall be located in, or removed to a place-

(a) within an area declared as a project area; or

(b) within 400 metres from any Educational institutions, Temples, Church, Mosque or burial ground:

Provided that the Board of Revenue may for sufficient reasons, permit any shop to be located in or removed to a place referred to in Clause (a) or Clause (b) subject to such restrictions and conditions, if any, as may be imposed.

Rule 6(2) has been substituted by a new rule on 28th February 1986. Thereafter, Rule 6(2)(b) was substituted by Anr. rule with effect from 1st April 1989. The effect of this was that in so far as toddy, arrack of foreign liquor shop is concerned, it shall not be located in or removed to a place within 400 metres from an Educational Institution, Temple, Church, Mosque or Burial ground, whereas a restriction of 200 metres is made in so far as foreign liquor 1 shop is concerned. By amendment dated 27th August 1987 provisos were added below Rule 6(2)(b), and they were again modified on 5th October 1987. The second and third provisos were again substituted by new provisos on 2nd March 1989 with effect from 1st April 1989. So far as the first proviso as it now stands is concerned, it deals with the power of the Board of Revenue to pass orders removing from any place any toddy shop, or arrack shop or its allowed sub-shops or any retail foreign liquor shop or wholesale shop to a place outside the limits specified in Rule 6(a)(i), (ii) and (iii). The second and third provisos, as they now stand, read as follows:

Provided further that the toddy shop, arrack shop and Foreign Liquor retail shop shall be permitted to be located and licensed in such places where they were located and licencd in the Abkari year 1988-89 as a toddy shop or its sub-shop, an arrack shop or its sub-shop, or a foreign liquor retail shop respectively:

Provided further that such wholesale shops which were in existence in 1987-88 and converted into retail shops during 1989-90 shall be given licence to continue as retail shops in the same premises as in 1987-88, if such premises comes within the notified area of that shop.

Now a new proviso has been added after the third proviso to Rule 6(2) to the following effect:

Provided further that if any educational institution, temple, church, Mosque or Burial ground comes into existence subsequent to the grant of licence, it shall not disentitle such shops for continuance.

This is so far as the Abkari Shops (Disposal in Auction) Rules, 1974 is concerned.

So far as Foreign Liquor Rules are concerned, Rule 13(3), as it stood at the relevant time, read as follows:

Licences for possession, use or sale. Licences for the possession and sale of foreign liquor or for possession of foreign liquor shall be of the following descriptions and in the forms appended hereto.

(1) * * * *

(2) * * * *

(3) Foreign Liquor 3 Hotel (Restaurant) Licences. Licence in this form may be issued by the Excise Commissioner to recognised hotels or restaurants where the privilege of sale of foreign liquor in such hotels or restaurants has been purchased on payment of an annual rental of Rs. 1,50,000. But no such licence shall be issued to hotels or restaurants which are located within 200 metres from any educational institution, temple, church, mosque or burial ground. However, renewal of licence to bars which are in existence on the date of commencement of the Foreign Liquor (Amendment) Rules, 1986, may be allowed subject to the condition that objections, if any, which had been raised, will be considered and decided by the Excise Commissioner. The hotels shall have at least ten lettable rooms. Fifty per cent of the rooms shall have attached bathrooms. There shall be sufficient common bathrooms. At least two rooms shall be air conditioned excepting in hill stations. All rooms shall be well furnished and fans shall be provided. There shall be a neat kitchen serving wholesome food. There shall be a well furnished separate dining room. There shall be a separate bar room. Telephone facility shall be available in places where there is a telephone exchange. No liquor shall be sold under these licences for consumption other than in a room specially approved for the purpose or for removal from the licensed premises, nor shall any liquor be sold otherwise than to residents in the hotel or boarding house, for the use of those residents and that of their guests or casual visitors partaking of meals. No licence shall be issued except to meet the, requirements of a bona fide hotel (restaurant) satisfying the foregoing conditions.

The licences issued prior to the 12th August 1981 shall be renewed only subject to the condition that the licensees shall comply with the requirements of the provisions of the first paragraph within three months from the date of renewal of the licence unless the hotel or restaurant already conforms to such requirements.

New licence shall be issued after the commencement of the Foreign Liquor (Amendment) Rules, 1982 published under notification No. G.O. Rt. 255/182/TD, dated 15th April 1982 only to hotel or restaurant conforming to the standard of Two Star hotel and the provisions of the first paragraph shall in its application to such licences, stand modified accordingly.

* * * *

Provided that where the Commissioner is satisfied that the conditions specified in this sub-rule are not capable of being imposed on restaurant situated in airports, railway stations and such other places, he may, with the previous sanction of the Government, relax any of the said conditions or impose any new conditions.

We have already mentioned that the learned Single Judge gave a finding that the Kerala Abkari Shops Auction Rules and in particular Rule 6(2)(b) prescribing distance limits are applicable to bars established in hotels. We do not however, think it necessary to go into the said question. We accordingly leave it open.

We, however, agree with the learned Single Judge that even if Rule 6(2)(b) of the Kerala Abkari Shops Auction Rules does not apply, the conclusion of the learned Single Judge based upon Rule 13 of the Foreign Liquor Rules is liable to be affirmed. Under the said Rule, Foreign Liquor 3 Hotel (restaurant) licence may be issued by the Excise Commissioner to recognised hotels or restaurants where the privilege of sale of foreign liquor in such hotels or restaurants has been purchased .provided that no such licence could be issued to hotels or restaurants which are located within 200 metres from any educational institution, temple, church, mosque or burial ground. Rule 13 has to be read along with the provisions of Rule 13 A of the Foreign Liquor Rules. That provision reads as follows:

13A. No licence of any of the above descriptions (FL 1 to FL 10) shall be issued:

(1) If the local needs do not justify the grant of a licence;

(2) If the Commissioner considers for reasons to be recorded in writing that the grant of a licence is likely to have an adverse effect on the revenues of the State;

(3) If the Commissioner considers that there is likelihood of the privilege being misused;

(4) If the applicant has been convicted of any cognisable or non-bailable offence or any offence under the Abkari Act, 1977;

* * *

We are here concerned with Foreign Liquor 3 Hotel (restaurant licence) which is clearly subject to the provisions of Rule 13A. In this context, it is also pertinent to refer to Clause 22 of the conditions under FL 3 Hotel (restaurant) licence. That clause reads as follows:

Clause 22. No licence will be issued for a shop which is situated or which is intended to be opened in a place where on grounds of public interest or expediency it is objectionable to permit any traffic in liquor.

It is, therefore, clear that while granting a licence to a bar in a hotel in FL 3 form, it is necessary for the authorities to consider (i) where the local needs do not justify the grant of a licence, (ii) whether the licence is likely to have an adverse effect on the revenues of the State, (iii) whether there is likelihood of the privilege being misused etc. as mentioned in Rule 13A and it will also be necessary for the authorities to consider whether the shop is situated or is intended to be opened in a place where on grounds of public interest or expediency it is objectionable to permit any traffic in liquor. This Court can came to the conclusion that if while granting any licence in FL 3 form to a hotel or restaurant opening a bar, this principles is violated, the same is clearly liable to be quashed.

In the present case, the learned Judge clearly found as follows:

I have absolutely no hesitation, therefore, in holding that the proximity of licenced premises within 20 feet of the Girl''s High School, 90 metres of a Government High School, 35 metres of a Chapel and in close proximity of a Girls Boarding School and a Convent is a matter which should have been considered by the licensing authority in the light of Clause 22 of the conditions of licence.

The learned Judge further observed:

The provisions of Clause 22 of the conditions of licence deal with the objectionable nature of the location for purposes of traffic in liquor in the context of public interest or expediency. That condition was imposed in spite of all the safeguards and all detailed requirements for issue of the licence. It is evident, that an application for. licence shall be rejected in spite of compliance with all the detailed provisions of G.O. (Rt.) 255/32, dated 15th April 1982, if in the opinion of the licensing authority, the location if objectionable in public interest or expediency. There is, therefore, an obligation on the part of the licensing authority to consider these two important aspects before the grant of the licence.

Finally, the learned Judge observed:

I have searched the records of the licensing authority, but in vain, to find any indication as to whether the mandate of Article 47 of the Constitution was borne in mind by the licensing authority, and whether the licensing authority did consider whether it was objectionable in public interest or expediency to permit traffic in liquor within a distance of 20 feet from a Girls'' High School, 90 metres from a Government High School, 35 metres from a Chapel and within close proximity to a Convent and Girls'' . Boarding School. These most important and relevant factors having been excluded from consideration, the grant of the licence by the Board of Revenue cannot be treated as having been validly made.

Having heard learned Counsel for the Appellant at length and the Government Pleader and having heard the submissions for the Respondents-writ Petitioners, we have no hesitation to accept the above said observations made by the learned Single Judge. We are of the view that the records do not show that the Board of Revenue has kept in mind either the broad provisions of Article 47 of the Constitution or the particular specific factors mentioned in Rule 13A and Clause 22 of the Conditions of FL 3 licence, namely, whether the location of the shop is objectionable from the point of view of "public interest or expediency" which are principles prescribed as the guiding principles in the matter of a grant of an FL 3 licence to bars in hotels or restaurants.

As we are basing our conclusion on the language of Rule 13 A of the Foreign Liquor Rules and Clause 22 of the Conditions of FL 3 licence to be issued to bars in hotels or restaurants, it has not become necessary to refer to the various other rulings cited by learned Counsel on both sides. The learned Single Judge was, therefore, right in quashing the original grant of licence to the Appellant-fourth Respondent. In that view of the matter, it has not become necessary to go into the question of any entitlement of the Appellant for a renewal.

For the aforesaid reasons, the Writ Appeal fails and it is accordingly dismissed. No costs.