The court established that the licensee had no fundamental right under Art.19(1)(g) or Art.14 of the Constitution and upheld the conferment of exclusive rights in favor of the Beverages Corporation, a State enterprise, as sanctioned by law and supported by constitutional principles.

Headnote:
Challenges to the formation of a public sector Corporation exclusively licensed for possession and supply of foreign liquor in wholesale under the Kerala Abkari Act and rules. The Act consolidates and amends the law relating to the import, export, transport, manufacture, sale, and possession of intoxicating liquor and drugs in the State of Kerala. The Act and rules classify licenses for foreign liquor and regulate the sale and possession of intoxicating liquor. The Government accorded sanction to the Kerala Civil Supplies Corporation Ltd. to establish Bonded warehouses in the State. A public sector corporation, the Kerala State Beverages Ltd., was formed to procure spirit, arrange blending, bottling, sealing, and supply of arrack, and deal in the sale of foreign liquor. The rules were amended to grant the privilege of vending foreign liquor in wholesale shops to the Kerala State Civil Supplies Corporation Ltd. or any other Corporation formed by the Government without public auction. The licensee was required to purchase supplies of foreign liquor only from the Government-owned Corporation holding an FL 9 license in the State. The petitioners challenged the Abkari Policy of 1981 and 1984, the formation of the Beverages Corporation, and the amendment to the rules.
Fact of the Case:

The petitioners challenged the Abkari Policy of 1981 and 1984, the formation of the Beverages Corporation, and the amendment to the rules. They contended that the monopolistic right granted to the Beverages Corporation was discriminatory and violated Art.14 of the Constitution. The State and the Corporation argued that the petitioners had no fundamental right to carry on trade in liquor and that the Act and rules were within the legislative competence of the State.
Finding of the Court:

The court upheld the preliminary objection that the petitioners were not entitled to any relief, as they had no fundamental right to carry on trade in liquor. The court also found that the Kerala Abkari Act and the rules were within the legislative competence of the State and not ultra vires of the Act. The court dismissed the original petitions, stating that the licensee had no remedy under Art.226 of the Constitution to challenge the terms of the contract with the Government and had no fundamental right under Art.19(1)(g) or Art.14 of the Constitution.
Issues: The issues before the court included whether the Kerala Abkari Act and the rules were beyond the legislative competence of the State, whether the rules amended in 1984 transgressed the permissible limits of legislative delegation, and whether the Abkari policy of 1981 and 1984 and the amended rules violated the fundamental rights guaranteed under Art.14 and 19(1)(g) of the Constitution.
Ratio Decidendi: The court held that the Kerala Abkari Act and the rules were within the legislative competence of the State and not ultra vires of the Act. The court also found that the licensee had no fundamental right under Art.19(1)(g) or Art.14 of the Constitution. The court upheld the conferment of exclusive rights in favor of the Beverages Corporation, a State enterprise, as sanctioned by law and supported by constitutional principles.
Final Decision: The court dismissed the original petitions, stating that the licensee had no remedy under Art.226 of the Constitution to challenge the terms of the contract with the Government and had no fundamental right under Art.19(1)(g) or Art.14 of the Constitution. The court also held that the 1984 amendment to the rules was not ultra vires of the Act.

Judgment :-

1. The formation of a public sector Corporation exclusively licensed for possession and supply of foreign liquor in wholesale, in the entire State of Kerala is the main subject of challenge in these writ petitions.

2. Regulated and restrained by the Kerala Abkari Act and the rules, Cochin Wines and Allapat Brothers, two partnership concerns carrying on business in liquor held licences in Form FL.1 which assure them 'the privilege of supplying foreign liquor by wholesale and selling in retail' and the "right to vend foreign liquor in specified shops subject to the terms and conditions of their license. The conditions of the licence and the relevant rules insist that the licensee shall purchase his supplies of foreign liquor only from the Corporation owned by the Government and holding an FL. 9 licence.

3. Kerala Abkari Act consolidates and amends the law relating to the import, export, transport, manufacture, sale and possession of intoxicating liquor, and of intoxicating drugs in the State of Kerala.

4. The Act and the rules classify the licences for foreign liquor thus:

(1) Foreign liquor wholesale licence (FL 1) under this licence the sale of liquor in any quantity less than one pint at a time to one person is prohibited and liquor sold under this licence shall not be consumed on the premises.

(2) Foreign liquor (Tavern) licence (FL 2)

(3) Foreign liquor Hotel (Restaurant) licence (FL 3)

(4) Foreign liquor Club licence (FL 4)

(5) Foreign liquor for the sale of medicated wines etc. (FL 5)

(6) Foreign liquor special licences (FL 6)

(7) Foreign liquor licence in Military units (FL 8)

(8) Foreign liquor licence for possession and supply of foreign liquor in wholesale by the Bonded warehouse licensees to other foreign liquor licensees (FL 9)

5. Pursuant to the Abkari Policy of 1981, the Government accorded sanction to the Kerala Civil Supplies Corporation Ltd., a Government owned Corporation to establish Bonded warehouses in the State. R.3 of the Kerala Abkari Shops (Disposal in auction) Rules was amended by inserting a proviso to read thus:

"Provided that the Government shall have the right to permit the Kerala State Civil Supplies Corporation Limited to run two wholesale Foreign Liquor shops in the Ernakulam District and one such shop in each of the other Districts except Malappuram without public auction, at the rate of such rental as may be fixed by the Board of Revenue (Excise)".

6. In 1984, the Government again took a policy decision to establish a public sector corporation 'to procure spirit and arrange blending bottling, sealing and supply of arrack and also for dealing in the sale of foreign liquor now dealt with by the Kerala State Civil Supplies Corporation Ltd The Government therefore ordered on 1-2-1984 as per G.O.Ms.17/84/TD. that a Corporation under the Public sector by name, the Kerala State Beverages Ltd., with its headquarters at Trivandrum will be formed with immediate effect. The Kerala State Beverages (Manufacturing and Marketing) Corporation Ltd. hereinafter referred to as the Beverages Corporation, was thereafter incorporated on 23-2-1984. Meanwhile on 16/2/1984, R.3 mentioned above was amended by substituting the proviso extracted earlier thus:

"Provided that the Government shall have the right to grant the privilege of vending foreign liquor in ail or any of the independent wholesale shops, to the Kerala State Civil Supplies Corporation Ltd., or to any other Corporation that may be formed by the Government without public auction, at the rate of such rental as may be fixed by the Board of Revenue (Excise) "7. A new rule, R.11-A was introduced in Chapter IX of these rules, relating to the special conditions applicable to licensees of foreign liquor wholesale shops. This rule reads thus:

11A. The licensee shall purchase his supplies of foreign liquor only from the Corporation owned by the Government and holding FL 9 licence in the State."

8. On 21-2-1984, the Foreign Liquor rules also were amended. In R.13(i)

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