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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. 1

st

March, 2012 till

28

th

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

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said authority, the Excise Commissioner of Thiruvananthapuram

forwarded his recommendation to the Secretary to Government

Taxes Department, Government of Kerala, vide a letter dated 28

th

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 18

th

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 26

th

April,

2012, called upon the Excise Commissioner, Thiruvananthapuram

to examine the proposal of the Respondent. The Excise

Commissioner, by a speaking order passed on 5

th

June, 2012, came

to the conclusion that the application submitted by the Respondent

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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 1

st

above, an application submitted by Sri. M. J.

Thomas, Managing Partner, M/s Palakad Heritage

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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 6

th

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 6

th

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

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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 4

th

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;

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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 4

th

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 28

th

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

1

2012(2) KLT 167

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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

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same has been dismissed on 12

th

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 22

nd

July, 2016 in the following terms:

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“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

2

AIR 2016 SC 163

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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 20

th

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 14

th

August, 2012.

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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

3. 2010 (5) SCC 186

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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

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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. 28

th

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 18

th

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

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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. 18

th

April, 2012. That is precisely what has been done by the Excise

Commissioner, as can be discerned from his speaking order dated

5

th

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 18

th

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.

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15.Accordingly, we set aside the impugned judgment of the

Division Bench dated 12

th

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 4

th

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