Judgment :

H.L. Gokhale, J.–

1. Leave granted.

2. This group of Civil Appeals raises the questions with respect to the legality and validity of two amendments introduced by the first Appellant-State of Kerala, in pursuance of its Abkari Policy framed in 2011-2012, in the Foreign Liquor Rules framed under the Kerala Abkari Act, since those amendments have been struck down as unconstitutional by the impugned judgment and order rendered by the High Court of Kerala.

3. Rule 13 of the Foreign Liquor Rules governs the grant of licences for the sale of the Indian Manufactured Foreign Liquor ('IMFL' for short). The two amendments which are disputed are as follows:

(i) Firstly, the words three star' were omitted from Rule 13(3) of these rules by Government of Kerala by issuing notification dated 9.12.2011. Consequently, after this amendment of the rule which has come into force immediately, three star hotels not already having a licence, will not be eligible to get a bar licence for retail sale of liquor in the hotels. Thus, no new hotels having the three star classification will be issued the licence known as FL-3 licence for selling the IMFL. The hotels having the two star or lesser classification are already ineligible to get this licence by virtue of the pre-existing proviso to Rule 13(3), introduced by notification dated 20.12.2002.

(ii) Secondly, Rule (3E) has been added in this Rule 13 w.e.f. 27.3.2012 by issuing a notification of even date, whereby no new bar hotels of any classification will be permitted to be opened (a) if they are situated within a distance of 3 kms. from existing bar hotels in a panchayat area, and (b) within a distance of 1 km. from existing bar hotels in a municipal area.

4. The avowed object of this Abkari Policy is to curb the rampant alcoholism in the State of Kerala, which claims to have the highest consumption of alcohol as against the other states in India, and whereby the younger generation is getting addicted. Thus, the objective is in pursuance of Article 47 of the Constitution of India which declares it to be a Directive Policy for the State to endeavour to bring about prohibition of consumption of intoxicating drinks. These two amendments were challenged by the Respondents in the Kerala High Court on the touchstone of Article 14 of the Constitution of India, as being arbitrary, discriminatory, irrational, excessive, and even malafide. It is contended by them that the amendments will not succeed in achieving the objectives for which they have been introduced. On the contrary, the two amendments will affect the other objective of the policy of the State of Kerala viz. to encourage and increase tourism in the State.

5. The Respondent No. 1, B. Surendra Das, was one such person who filed a Writ Petition,

bearing Writ Petition (C) No. 5650/2012, to challenge the denial of the FL-3 licence to his three star hotel on the basis of the first amendment effected by notification dated 9.12.2011. The writ petition was dismissed by a Single Judge by his judgment and order dated 7.3.2012. Being aggrieved by the said judgment and order, he preferred Writ Appeal No. 470/2012. Some other persons whose writ petitions were rejected, filed similar Writ Appeals. The distance rule introduced with the addition of Rule (3E) in Rule 13 w.e.f. 27.3.2012 was also challenged by some other persons by filing Writ Petitions directly to the Division Bench. All these Writ Appeals and Writ Petitions were allowed by a Division Bench of the High Court by its common judgment and order dated 27.7.2012, which struck down the two amendments as unconstitutional. Being aggrieved by the said judgment and order, these appeals have been filed by the Appellant-State of Kerala and its concerned officers of the Excise Department.

Abkari Policy of the Government of Kerala for the year 2011-2012:

6. Before we deal with the impugned judgment and the amendments, we must first refer to the Abkari Policy of the Government of Kerala which led to the