Foreign Liquor; K.K. Builders Vs. State [Kerala High Court, 20-08-2011]

Foreign Liquor Rules, 1974 (Kerala) – Rules 13A, 13(3) – Grant of FL-3 Licence – The basic requirement for considering the application for FL-3 licence is the possession of a three star or above classified hotel certified by the Indian Tourism Department and that the hotel must be located outside the objectionable limit from certain institutions.

2011 (3) KLT 900 : 2011 (3) KHC 791

IN THE HIGH COURT OF KERALA AT ERNAKULAM

Harun Ul Rashid, J.

W. P. (C) No. 16893 of 2011

Dated this the 20th day of August, 2011

For Petitioner: C.C. Thomas, Nireesh Mathew, M.G. Karthikeyan; For Respondents: K. Ramesh, K.K. Chandran Pillai
A.S. Sajush Paul, Thomas James Mundackal, Bobby Thomas, Tony Thomas (Inchiparambil), S. Ambily.

J U D G M E N T

1. This writ petition is filed seeking to quash Ext. P12 order passed by the 2nd respondent – Excise Commissioner, for a declaration that the petitioner – firm is entitled to get FL – 3 licence / bar licence as per R.13(3) of the Foreign Liquor Rules as per Ext. P2 application and also for a direction commanding respondents 1 and 2 to issue FL – 3 licence to the petitioner – firm as per Ext. P2 application.

2. It is averred in the writ petition that as per BOT agreement executed between the petitioner – firm and the Kannur Municipality, the firm constructed Central Bus Terminal Complex, Thavakkara, Kannur and that as per the agreement, the firm is the concessionaire and entitled to operate inter alia commercial space in the complex and to charge, collect and retain revenues from fees collected for use of the commercial space by licensees. It is said that the commercial space in the complex was completed and started functioning. Thus the structure includes a guest house building shown in the plan attached to the agreement as ‘hotel block’. As per the aforesaid agreement, the petitioner – firm is permitted to use the guest house (hotel block). Petitioner – firm is at present running a three star hotel by name ‘Broad Bean’. Hotel is classified as a three star hotel by the Indian Tourism Department for a period of five years with effect from 30-11-2009. Ext. P1 is the copy of the star classification order. As per the BOT agreement, the petitioner – firm is entitled to occupy the hotel building and rest of the commercial complex for a period of 29 years and 3 months. The agreement was executed on 27-10-2004. It is said that the entire commercial complex is let out to third persons on lease arrangement.

3. After obtaining Ext. P1 order from the India Tourism Department, the petitioner submitted Ext. P2 application on 07-12-2009 for issuance of bar licence under R.13(3) of the Foreign Liquor Rules to the Excise Commissioner through proper channel. The Deputy Commissioner of Excise, Kannur, by letter No. Cl – 10311/09 dated 16-12-2009 recommended that FL – 3 licence may be granted to Hotel Broad Bean, Kannur. The recommendation was made, after conducting an enquiry, verifying the documents and after considering the eligibility of the petitioner – firm to obtain licence. Subsequently, the Deputy Commissioner of Excise also conducted site inspection and verified the records. By Ext. P3 dated 16-12-2009 the Deputy Commissioner of Excise recommended the application for issuance of FL – 3 licence. Ext. P3 communication issued by the Deputy Commissioner of Excise addressed to the Joint Excise Commissioner would show that every aspect of the matter was examined before making recommendation and also referred the relevant clauses in the BOT agreement. It is reported that hotel Broad Bean (Guest House) is functioning in a building of single structure having four stories, that India Tourism Department had given 3 star rating to the hotel for 5 years on 03-12-2009 and referring to para 28 of the tripartite agreement it is stated that the agreement provides provision for concessionaire to indulge in the sale of liquor in the hotel complex, for which valid licence on behalf of the petitioner was issued by the authority concealed. Copy of the tripartite agreement was also enclosed along with Ext. P3. It is also reported that the petitioner obtained non – liability certificate from the authorities concerned. Documents obtained from the said authorities are also enclosed. It is also reported that no objectionable site situates within the objectionable distance from the hotel. It is further reported that the granting of licence will justify the local needs and it will not adversely affect the revenue of the State. The Officer is convinced that the privilege will not be misused by the licensee or by his partners, if granted. It is reported that neither the licensee nor his partners are convicted of any cognizable offence, that the applicants are not Abkari defaulters and that the applicant is financially sound and capable of discharging his responsibilities. The officer further reported that the very same petitioner possesses two licences in the same district. The Joint Commissioner of Excise conducted a site inspection, made necessary enquiries and convinced that the petitioner is eligible to hold FL – 3 licence. The Joint Commissioner fully agreed in principle and the accepted reasons stated in Ext. P3 communication for recommending the grant of FL – 3 licence. Therefore, by Ext. P4 communication addressed to the Excise Commissioner, the Joint Commissioner recommended for grant of licence to the petitioner.

4. Ext. P5 is the communication of the Kannur Municipality addressed to the Excise Commissioner. The Kannur Municipality by Ext. P5 certified that they have no objection in granting licence to the petitioner. After receiving Exts.P3, P4 and P5 with supporting materials, the matter was considered by the Excise Commissioner. The Excise Commissioner took the view that there is no agreement for running a bar hotel by the concessionaire in the premises. Referring to the agreement, the Excise Commissioner opined that since there is no agreement for running a bar hotel by the concessionaire in the premises, clarification is sought for from the Principal Secretary to Government, Taxes Department as to whether bar licence can be issued to the concessionaire. Ext. P6 dated 26-05-2010 is the said communication. Ext. P7 is the reply to Ext. P6. The Principal Secretary to Government referred to paragraph 27 of the agreement. In paragraph 27 it is stated that except in the guest house premises in the complex that too upon the valid licence in this behalf issued by the authority concerned, the concessionaire shall not indulge in the sale of any liquor in the rest of the premises in the complex. The principal Secretary also noticed that no objection certificate for the sale of liquor in the hotel (guest house) has been issued by the Kannur Municipality. The Principal Secretary also took notice of the fact that the Tourism Department has granted three star classification to the above hotel. Referring to these aspects, the Principal Secretary directed the Excise Commissioner to examine the case afresh. The clarification sought for was answered by the. Principal Secretary referring to paragraph 27 of the agreement. A direction was issued answering the clarification sought for to issue licence to the petitioner – firm, if the firm satisfies other conditions for granting FL – 3 licence. The report of the Deputy Commissioner of Excise and the Joint Commissioner shows that the petitioner – satisfies all the conditions necessary for the grant of FL – 3 licence. The only doubt expressed by the Commissioner is as to whether FL – 3 licence can be granted, when there is no clause in the agreement specifically stating permission to run a bar hotel.

5. Though the principal Secretary to Government clarified the position, the Excise Commissioner again issued Ext. P8 communication on 03-08-2010 addressed to the Principal Secretary to Government. In Ext. P8 communication referring to paragraph 27 of the tripartite agreement the Excise Commissioner stated that only guest house is indicated, not the hotel. It is stated in Ext. P8 that he is not in a position to recommend to issue FL – 3 licence to the hotel as such.

6. After examining the facts and circumstances of the case and in the light of the materials on record, this Court is of the view that the reasons stated in Exts. P6 and P8 by the Excise Commissioner for not recommending the grant of FL – 3 licence cannot be sustained. So far as the issuance of FL – 3 licence is concerned, the excise authorities are called upon to examine the eligibility of the petitioner to hold FL – 3 licence. Reference to the building as ‘guest house’ is not a matter for consideration of an application for grant of FL – 3 licence. In this case though in the agreement the building is described as ‘guest house’, the petitioner is conducting a hotel in the said building. By the conduct of a hotel in the said building the name of the building as ‘guest house’ assumes no significance, thereafter. It is a fact that the petitioner is running a three star hotel. Whether there is any change in the user of the building is not a matter for the Excise Department to enquire. The Municipality has no objection in running a three star hotel by the petitioner in the building. There is also a provision contained in the agreement which indicates that after obtaining the licence, the petitioner has got absolute right to use the building as a hotel. Now the petitioner has started a hotel and for the conduct of the bar hotel, FL – 3 licence is required. There is nothing wrong in applying for FL – 3 licence. If there is any violation of the terms of agreement, the only affected party is the Kannur Municipality. Kannur Municipality in fact has issued no objection certificate. In the plan this particular building is shown as hotel complex. That also shows that the building is in fact intended to be used as a hotel. Whatever it be, the term used in the agreement is not a reason for denying the FL – 3 licence. Assuming that the party is intended to use the building as a guest house at the time of executing the agreement, nothing prevents the authorities from converting the use of the building for the purpose of doing any other business. The Municipality accepted the decision of the petitioner to conduct a hotel and the Municipality has no objection in the petitioner obtaining FL – 3 licence.

7. Ext. P9 is a reply communication issued by the Principal Secretary to the Excise Commissioner. The Principal Secretary pointed out that even though the building is mentioned as guest house in the tripartite agreement, the Tourism Department after examination, has given 3 star classification to the same. It is also stated that the building will come under the purview of the term ‘Hotel’ and therefore again directed the Excise Commissioner to confirm the status of the building in question urgently. A reply has been sent by the Excise Commissioner to Ext. P9 communication reiterating more or less same stand. Ext. P10 is the said communication. Subsequently, the Excise Commissioner passed Ext. P12 order rejecting the application stating the very same reasons in Exts. P6, 8 and P 10. The basic requirement for considering the application for FL – 3 licence is the possession of a three star or above classified hotel certified by the Indian Tourism Department and that the hotel must be located outside the objectionable limit from certain institutions. The other qualifications required are mentioned in R.13A. The Department has no case that the petitioner – firm did not satisfy the conditions stated in R.13A and R.13B of the Foreign Liquor Rules. On examining the materials on record, this Court is also: satisfied that the petitioner satisfies all the requirements under R.13A and R.13B of the Foreign Liquor Rules. The Circle Inspector of Excise, Kannur, Deputy Commissioner of Excise, Joint Excise Commissioner, Excise Commissioner and the Government, namely, all the authorities have no case that the petitioner did not satisfy the conditions laid down in R.13A and R.13B of the Rules. In the circumstances, this Court is of the view that the petitioner is entitled to get FL – 3 licence and no purpose will be served by directing the Excise Commissioner to consider the matter afresh.

8. In the circumstances, Ext. P12 order is quashed. A direction is issued to the Commissioner of Excise to issue FL – 3 licence to the petitioner on usual terms and conditions. Since the application for licence is pending consideration from 2009 onwards, licence shall be issued expeditiously, at any rate, within a period of three weeks from the date of receipt of a copy of this judgment.

Writ Petition is disposed of as above.

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