The petitioner has come up before this Court for a declaration that the petitioner's hotel having four star classification as evidenced by Ext.P2 certificate is entitled to get renewal of Ext.P1 licence for the year 2014-2015 and for other consequential directions.
2. The petitioner, which is a private limited company, alleges that it is holding a four star classified hotel and conducting the same with FL-3 licence issued under Rule 13(3) of the Foreign Liquor Rules as per Ext.P1 from June, 1998 onwards. The petitioner upgraded its hotel initially as two star and then as three star till 1996. Thereafter the hotel was modernised after purchasing land and now the hotel is classified as four star as per Ext.P2 certificate from 1997. The petitioner further alleges that Ext.P1 licence was renewed year to year as per the policy that all the existing licenses functional on 31st March is entitled to get renewal.
3. The petitioner points out that the Government in compliance of Ext.P3 judgment of the Apex Court have decided to renew the licence of three star and above classified hotels/standard hotels. Merely for the reason that the name of the petitioner's hotel was included as item no.13 in the list submitted to the Apex Court along with 65 upgraded hotels, the licence of the petitioner was not renewed as per Ext.P6 application. In the said decision, the apex Court discussed about the non-standard hotels/ unclassified hotels and directed to take action against the non-standard hotels. The Apex Court also directed to fix the minimum standard of the hotels for conducting FL-3 licence.
4. The petitioner further points out that the Government as per Cabinet decision dated 2.4.2014 decided that the minimum standard is three star and directed to renew all the bar licenses conducing hotels having three star classification and above. It was also pointed out that the petitioner's hotel which is having four star classification was denied renewal for the main reason that it was included in the list of 65 upgraded hotels submitted by the Apex Court. According to the petitioner, the delay is illegal and arbitrary. With this background, the petitioner has come up before this Court.
5. The respondent State has filed a counter affidavit contending as follows:
It is stated that as per GO(MS) No.187/2011/TD dated 8.11.2011, the Government have decided to dispense with the practice of granting FL-3 licenses to hotels having three star classification, and accordingly necessary amendment in the Foreign Liquor Rules was made to above effect vide G.O(P) No.192/2011/TD dated 9.12.2011. Further in the Abkari Policy for the year 2011- 2012, announced vide G.O(MS) No.107/ 2011/TD dated 17.8.2011, it was decided to fix the distance between two FL-3 licenses while issuing new licenses to hotels in panchayat areas as three kilometres, and that in municipality/corporation areas as one kilometre, and notification to that effect was issued, vide G.O(P) No.48/2012/TD dated 27.3.2012 (S.R.O No.202/2012 dated 27.3.2012) amending the Foreign Liquor Rules. Being aggrieved by the said changes in the rules, several writ petitions and writ appeals were filed before this Court and this Court in its judgment dated 27.7.2012 in W.A No.470 of 2012 and other connected cases Surendradas v. State of Kerala [2012 (3) KHC 693 (DB)] set aside the above amendments being unconstitutional and directed to consider and grant FL-3 licence based on unamended rules. Aggrieved by the said judgment, Government filed SLP(C) Nos.26241-26243/2012 before the Apex Court. The Apex Court during the course of hearing directed the Government to submit the list of 418 unclassified hotels which was mentioned in the CAG report. Accordingly, the 1st respondent filed an affidavit before this Court.
It was admitted that among the 418 hotels, some of the hotels have already been upgraded to two and above star classification and some have already seized functioning. The above facts were submitted before the Apex Court.
It was further contended that the Government have not taken any policy decision that the minimum standard of the hotel shall 3 star for granting FL-3 licences. The Government have decided to renew the FL-3 licenses provisionally except in the case of 418 hotels mentioned in the judgment of the Supreme Court as an ad- interim arrangement. The issue of renewal of the FL-3 licenses of the bar hotels mentioned in the Supreme Court order is deferred till the consideration of the recommendations of the Secretary (Taxes) on the report of the One Man Commission by the Government. The Secretary to Government, Taxes Department has already submitted his report and Government is actively considering the report and a decision would be taken very soon. It is stated that the Government have not decided not to renew any licenses till date. Government have only deferred the decision on the renewal of hotels mentioned in the judgment of the Apex Court.
6. In answer to the same, the petitioner filed a reply affidavit.
7. During the pendency of the writ petition, a third party has filed I.A No.8038 of 2014 to get himself impleaded as additional respondent as he is opposing the policy of the Government in granting bar licenses. The said petition was also taken along with the writ petition for hearing.
8. I have heard the learned Senior Counsel for the petitioner, the learned Senior Government Pleader and the learned counsel appearing for the impleading petitioner.
9. The petitioner who is aggrieved by the non-renewal of the licence points out that it amounts to discrimination and violative of Article 14 of the Constitution of India. Admittedly, the hotel of the petitioner is a four star classified hotel as evident from Ext.P2 certificate. It is also evident from the materials now placed on board that the hotel was a three star classified hotel for a long time. Originally when Ext.P1 licence was issued it was only a two star classified hotel. Thereafter the hotel of the petitioner has upgraded to three star and thereafter to four star. The hotel is four star classified with effect from 3.7.2012 for a period of five years as evident from the list appended to Ext.P4 which is the counter affidavit filed by the State Government before the Apex court in SLP (C) No.26241-43 of 2012. The petitioner's hotel figured as item no.31 in the said list. Therefore, the State Government cannot take a different stand now.
10. It is crucial to note that the reason pointed out by the respondent State is that the petitioner's hotel figured in the list of 65 hotels submitted before the Apex Court in the SLP(C). Ext.P3 is the judgment of the Apex Court in the aforesaid SLP(C). It is crucial to note that the Apex Court in Ext.P3 judgment has clearly held that non-standard hotels are hotels functioning with standard below the two star specification, as mentioned in the report of the Comptroller and Auditor General (CAG) of India, extracted in paragraph 35 of the said judgment. In this context, it is profitable to quote the observation made by the Apex Court in paragraphs (34) and (35) of of the said judgment:
“We must as well note that the two star and three star hotels stand on a different footing as against the hotels with four star and higher classification under the tourism policy of the Government of India. It is relevant to note that the Ministry of Tourism (H&R Division) of the Government of India has issued the amended guidelines for classification/re-classification of hotels on 28.6.2012. The classification of the hotels into star categories and heritage categories is done thereunder, and it is a voluntary scheme. Annexure- 2 contains the provisions concerning classification/ re-classification of operation hotels. Para 8(f) thereof provides as follows;
“8(f). Bar License (necessary for four star, five star, five star deluxe, heritage classic & heritage grand categories). Wherever bar license is prohibited for a hotel as per local law, the bar will not be mandatory and wherever bar is allowed as per local laws, then the hotel will have to obtain bar license first and then apply for classification to the Ministry of Tourism.”
This being the position, it is not necessary for a three star hotel to have a bar licence. In face as can be seen the para 8(f) above also states that if a local law prohibits the issuance of a bar licence to four star, five star, five star deluxe, heritage classic and heritage grand categories, which is otherwise necessary, such local law will prevail. In any case three star hotels will have to be placed in a different category as against the hotels with four star and higher classification, since it is not necessary for three star hotels to have an FL-3 licence.
The position with respect to the distance rule introduced in 2012 is, however, different. As far as the amendment brought in 2012 introducing the distance rule is concerned, we cannot ignore the hard realities which are recorded in the report of the concerned Comptroller and Auditor General which is a constitutional functionary, and who has made the report on receiving the necessary information from the State Government. This above referred para 5.3.1.1 of this report speaks for itself and reads as follows:
5.3.1.1. Were FL3 licenses issued and renewed to non-standard hotels/restaurants?
The minimum standard eligible for obtaining an FL3 licence was 2-star standards from April 1982 and 3-star and above from April 2002. We noticed that licenses were issued and renewed to 418 bar hotels, i.e., 61 per cent of the total bar hotels in the State even though they were not eligible for the FL- 3 licenses per the Rules.
We noticed that the Government first allowed time upto 30 June 1992 for those licensees who had attained the prescribed two star standards to attain the prescribed standard and subsequently extended the period. During the review period, we noticed that the Excise Commissioner submitted his proposals for the Abkari policy for the year 2007-08 vide letter dated 11 January 2007 which did not include the proposal for regularisation of 418 non standard bar hotels, the list of which was sent to the Government in January, 2006. However, based on a discussion with the Hon'ble Minister for Labour and Excise on 22 January 2007, the Excise Commissioner sent a revised proposal on 23 January 2007 including the proposal that “Bar Licenses (FL3 licences) which have not attained 2-star classification and functioning at present may be regularised.
After we pointed out the matter the Government stated (November 2011) that there are certain bar hotels functioning with standard below two star specifications. As these hotels were functioning for long periods, they were regularised based on Abkari Policy 2007-08. The point is not acceptable for the reason that as per Rules the licences are issued each year and the standard for granting licence are still three star standard. We noticed that the Government, 15 years after extending time limit for the first time, again extended (12 March 2007) the time limit upto 31 March 2007 and stated that failure to comply with the standards would lead to cancellation of licences. However, on the very next day, i.e., 13 March 2007 the Government added a proviso to R. 13 that all existing licensees not having the above classification and which were functional as on 31 March 2007 shall be regularised. The Abkari Policy for 2008-09 (February 2008) stated that the Government would insist on minimum facility and hygienic conditions in all the 418 bar hotels which did not have 2-star status, but which were regularised during 2007-08. We noticed that the field officers of the Department had reported violation of licence conditions like unhygienic conditions, lack of facilities, non-adherence of the time schedule, selling on dry days, opening more than one counter, etc. in these bar hotels. However, no action was taken by the Department on these reports. The Excise Commissioner sent a letter (January 2011) to the Government highlighting the poor standards maintained by the 418 unclassified bars and requested not to grant fresh FL-3 licenses for areas other than tourism notified areas. In the letter the Excise Commissioner, inter alia, stated that the restaurant segment of the unclassified hotels were functioning for name sake only and during the last one year seven people had died due to excessive drinking in the unclassified hotels. He also pointed out that he had personally seen that almost all the customers were there to drink liquor and not for taking food. We noticed that even though the Excise Commissioner had requested not to issue fresh FL3 licenses, seven more FL3 licenses were issued between 12 January and 31 March 2011. Moreover in the Abkari Policy for 2010-11, the Government declared that the FL3 licensees not having the requisite star classification and who were functional during 2009-10 should be regularised. Thus, the Government has made it a regular feature to regularise ineligible licenses. We are of the opinion that the Government has not taken a firm stand to ensure that only hotels of a minimum standard are issued FL3 licenses. Further, we opine that the Government has seriously compromised public safety by (a) regularising 418 unclassified bars, though they were not able to attain the minimum standards despite repeated extension of time and (b) by turning a blind eye towards the various complaints against these unclassified bars. On this being pointed out in audit the Department stated (June 2011) that the Government is the competent authority to issue orders allowing relaxation, if any, for the functioning of FL3 licensees/bar hotels.”
11. As the petitioner's hotel is having four star classification, the non-renewal of the bar licence of the petitioner which was being conducted in a four star classified hotel is discriminatory and illegal. It is crucial to note that in the operative portion of Ext.P3 it is clearly stated that the State Government would not proceed to deny FL-3 licenses to hotels with a classification of four star and above. Hence, the non renewal of the licence of petitioner's hotel that is being conducted as a hotel is illegal and against the existing rules.
12. It is relevant to note that in Ext.P3 judgment it is stated that in order to get four star and above classification as per Rule 8 of the Guidelines of India Tourism Department, bar licence is a must. The petitioner apprehends that due to the non-renewal of licence, the classification granted to the petitioner would be revoked or cancelled.
13. The petitioner who seeks to get impleaded in this writ petition is advocating a total ban of liquor. It is a policy matter which comes within the domain of the Government. For the adjudication of the present dispute between the writ petitioner and the State, the presence of the impleading petitioner is not required. Therefore, I dismiss the I.A filed by the impleading petitioner.
In the result, the writ petition is allowed. It is hereby declared that the petitioner is entitled to the renewal of Ext.P1 licence for the year 2014-2015 since the petitioner's hotel is a four star classified hotel as evidenced by Ext.P2 certificate. The respondents shall consider and pass positive orders on Ext.P6 application for the renewal of Ext.P1 on the basis of four star classification and accept the proportionate licence fee within a period of two weeks from the date of receipt of a copy of this judgment.
However, it is made clear that the this decision shall be subject to any policy decision taken by the Government in the matter which gains judicial approval.
krj Sd/- A.V.RAMAKRISHNA PILLAI JUDGE