Yesterday (20 August), the petitioners in the ongoing Kerala Bar Hotels Association’s appeal against the Kerala high court’s decision approving the Kerala Government’s controversial liquor policy favouring the five-star hotels, concluded their arguments at Court No.11.

After senior advocate Chander Uday Singh finished his arguments, another senior counsel, Amit Singh Chadha, argued on behalf of hotelier, Emil T Paul in Civil Appeal No.6324. After him, advocate VK Biju, argued for All Kerala Bar Hotels and Restaurant Employees Association in Civil Appeal No.6271. Biju told the court that there are more than one lakh employees whose livelihoods are at stake in this case and the State can’t escape the rigour of Article 14.

In the afternoon, senior advocate Kapil Sibal began his arguments for the State of Kerala beginning with a conundrum.

Sibal said under Article 19(6), the State can impose reasonable restrictions on the exercise of the rights conferred by sub-clause (g) of Article 19(1) which guarantees the right to practise any profession, or to carry on any occupation, trade or business.

But the conundrum is Article 19(6) - unlike Article 19(2) which lists as many as nine grounds to test reasonableness of restrictions on freedom of expression - is silent on similar grounds, and therefore cannot be challenged on the ground of unreasonableness.

Citing several examples, Kapil Sibal said policy prescription is empirical, based on experimentation.

Citing the recent black money law, he said although the law has fixed September as the deadline to declare foreign accounts of individuals, there has been just one voluntary disclosure of unaccounted money in foreign accounts. Can we say the law is bad, he asked.

He then read out Article 47 which only says that “the state shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health”. It does not say that there shall be prohibition.

The very soul of experimentation is in Article 47, he said.

Arguing that every attempt to improve the standard of living can’t happen overnight, he said Article 47 has seeds of policy framework with certain socio-economic objective. The argument that there shall be either prohibition or no prohibition is contrary to the concept, he said. All decisions are basically ad hoc in nature, and governments must have freedom to experiment in economic policy, he suggested.

Policy prescriptions are such that sometimes they lead to partial success, and sometimes, they meet with failure. When the bench pointed out that the liquor policy cannot afford to be ad-hoc, and cannot be compared with other economic policy, Kapil Sibal said the nature of restriction has a direction connection with the nature of the trade.

There are different kinds of trade, and you can’t apply the principle of proportionality - which is more relevant in administrative and human rights law - to the liquor trade, he said in an oblique reference to the argument advanced by L Nageswara Rao, on behalf of the petitioners, on August 19.

He said, only if a person is qualified to get a licence, then Article 14 will apply. The State has the right to choose categories. Saying that liquor has an extremely deleterious impact on human health, he said star ratings are important, and we can’t open it for everybody.

The court cannot issue a mandamus to issue licence unless the trade is discriminatory.

Justice Shiva Kirti Singh was concerned about the impact of addiction to liquor on the youth, and therefore, felt that some restrictions might be justified. This led Sibal to cite from the One Man Commission (OMC) report, which had equally expressed concern about this menace. The OMC report had found that easy availability of liquor was a contributory factor in the rise of consumption among the youth.

According to Sibal, principles applicable to legitimate trade have no application to a matter in which citizens have no fundamental right.

Justice Vikramajit Sen repeated his question to Sibal why the state has not commissioned a study, if it is so concerned about the sociological implications of the policy.

Sibal answered that it is not that there has been no study. He then ventured an answer by suggesting that there has been a huge migration from Kerala, resulting in the rise of single person families. There has been a rise in the inflow of money, but people are not there.

This perhaps explains why Kerala accounts for 14 per cent of the liquor consumption in the country, he said, and added that even the One Man Commission was surprised at this figure.

Sibal argued that as it is an ongoing experiment, the State is prepared to review its policy, if the results suggest that the policy of favouring only five-star hotels with bar licences increases alcoholism, and reverse it.

On FL-1 licences, he said the state has stated that it will be zero in 10 years. (FL-1 licences are for sale of foreign liquor in sealed bottles, with the restriction that they cannot be consumed within the premises of the hotel. The state has a monopoly in this).

He justified the exemption in favour of the five-star hotels on the ground that the OMC itself has found that high-class bars will not increase consumption of liquor . If tourism suffers as a result, the State is prepared to suffer this loss, in the interest of the public, he said.

Arguing that the tourists can drink in their hotel rooms, Kapil Sibal said a balance has to be struck between the goals of tourism, and the need to curb local population and the young from excessive consumption of liquor.

Striking a parallel with the historic opium wars, he said, the petitioners are obviously interested in their trade, but the Government is trying to do something in response to a societal situation.

He then said restriction under Article 19(6) may be unreasonable, and it is ok, but it can’t be arbitrary under Article 14.

Further arguments will continue on August 21.

Wednesday’s hearing: Petitioners made nuanced arguments in favour of parity between 5-star and other hotels in the Kerala Bar licence case

Court No.11 of the Supreme Court on August 19  in [http://courtnic.nic.in/supremecourt/temp/ac%20415715p.txt The Kerala Bar Hotels Association & Others vs State of Kerala & others] witnessed interesting arguments, as five senior advocates, representing different petitioners, assailed the Kerala Government's liquor policy, which restricts the grant of bar licences to only five-star hotels. 

The senior advocates included N Venkataraman (represented Vanju Kamal, Proprietor of Hotel Hillway, Kodakkal, Kollam), Dr Rajeev Dhavan, (on behalf of Hotel Rose International, Nilambur, Malappuram), Harin P Rawal, (represents Yesar Regency), L Nageswara Rao (on behalf of Kerala Classified Hotels and Resorts Association and several others), and Chander Uday Singh (represents one Helena T.R., according to the causelist).

Nageswara Rao made nuanced arguments, explaining how proportionality approach, mainly considered in administrative law, could be relevant in this case also. According to him, the means adopted to achieve Prohibition should not be excessive, that is, a decision taken as a result of a policy (in this case, Prohibition) should not be disproportionate. He compared the State Government’s discriminative decision to deny bar licences to hotels other than the five-star hotels to using a sledgehammer against small fry. Taking another hypothetical example, he asked whether it would be wise to ban cyclists because the traffic on the roads is heavy. He said before the denial of bar licences to four-star hotels, their share in the sale of liquor was just .08 per cent.  Justice Shiva Kirti Singh said the Bench will think about his plea that proportionality approach could be considered in this case.

Chander Uday Singh, who represents a four star hotel in Thrissur, was surprised when Justice Vikramajit Sen asked him at the outset a pointed question whether his client held a FL-11 licence, and if so, why no one is arguing whether the FL-11 licence holders are also responsible for defeating the policy of Prohibition. [FL-11 licences are granted for sale of beer and wine for consumption by public in a separate room in the beer/wine parlour in the hotel.  The Kerala Government’s liquor policy restricts grant of only FL3 licences for sale of foreign liquor in bar hotels for consumption within the premises of the hotel.]  The Bench asked if the Government’s policy is to further Prohibition, then how it is giving wine and beer licences. 

When the Bench pointed out that beer and wine are equally potent, Kapil Sibal, who represents the State of Kerala, got up and said that the Government is simply following the recommendation of the One Man Commission, appointed by it, to review the liquor policy, in this regard.  Kapil Sibal also said that Kerala accounts for 14 per cent of alchohol consumption in India. The Bench, however, wanted to hear him separately on this, once the petitioners finished their arguments.