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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. 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

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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 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

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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  1st 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 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

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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 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;

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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  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 Kerala1, 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 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:

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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 & Ors2.  

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

2AIR 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 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.  

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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.  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

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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

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.

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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