No Fundamental Right To Do Business & Trade in Liquor: Jammu & Kashmir & Ladakh High Court Upholds Enhanced License Fee For Bars

A Division Bench of Justice Sanjay Parihar and Justice Sanjeev Kumar observed, “Potable liquor as a beverage is an intoxicating and depressant drink which is dangerous and injurious to health and is, therefore, an article which is res extra commercium, being inherently harmful. A citizen has, therefore, no fundamental right to do trade or business in liquor. Hence the trade or business in liquor can be completely prohibited.”

The Court added, “The trade license fee prescribed by the board can neither be said to be exorbitant, irrational nor arbitrary… the category of business undertaken by the respondent No. 1 stands on a different yardstick and the board… had all the power to generate its revenue… raising the annual realization by 30% does not make the same to be unreasonable nor can it be said to be arbitrary.”

Advocate Muzaffar A. Dar appeared for the Appellant, while Deputy Solicitor General T.M. Shamsi represented the Respodents.

Brief Facts

The Appellant, Chief Executive Officer of the Cantonment Board, Srinagar, challenged a judgment passed by the learned Single Judge in whereby the Board’s decision to enhance the annual license fee from Rs. 30,000/- to Rs. 5,00,000/- (with 30% annual increment thereafter) for a liquor bar was quashed. The Petitioner restaurant, argued that such a fee hike was exorbitant, arbitrary, and violative of Section 277(4) of the Cantonment Act, 2006, as well as Article 14 of the Constitution.

The Single Judge accepted the challenge, held that the fee was discriminatory and unsustainable in law, and directed the Board to fix a reasonable license fee in conformity with the rates levied in municipal areas in other States/UTs.

Reasoning of the Court

The Bench noted that the respondent’s business of running a liquor bar in the Cantonment Area was not grounded in a fundamental right but was a regulated privilege. Referring to the Constitution and precedent, the Court stated, “The right to practice any profession or to carry on any occupation, trade or business does not extend to practicing a profession or carrying on an occupation, trade or business which is inherently vicious and pernicious, and is condemned by all civilized societies. It does not entitle citizens to carry on trade or business in activities which are immoral and criminal and in articles or goods which are obnoxious and injurious to health, safety and welfare of the general public, i.e., res extra commercium, (outside commerce). There cannot be business in crime.”

The Court explained, “Potable liquor as a beverage is an intoxicating and depressant drink which is dangerous and injurious to health and is, therefore, an article which is res extra commercium, being inherently harmful. A citizen has, therefore, no fundamental right to do trade or business in liquor. Hence the trade or business in liquor can be completely prohibited.”

The Court further reiterated the mandate of Article 47 of the Constitution, and observed, “Article 47 of the Constitution considers intoxicating drinks and drugs as injurious to health and impeding the raising of level of nutrition and the standard of living of the people and improvement of the public health. It, therefore, ordains the State to bring about prohibition of the consumption of intoxicating drinks which obviously include liquor, except for medicinal purposes.”

The Bench held that the business of selling liquor is not a right but a privilege, and stated, “The respondent cannot, as a matter of right, seek reduction of license fee because what he was dealing with was not a fundamental right to have a particular profession or occupation rather was bound by the contractual obligations. The board being the appropriate authority to issue license for running bar within its precincts cannot be, as a matter of right, be asked to fix a particular sum of fee that too to the liking of the respondent No. 1.”

Responding to the argument that the fee lacked quid pro quo, the Court clarified, “The respondents fairly have conceded that board has the authority to charge a reasonable sum of fee for awarding such license. As already discussed above the business of selling wine within the precincts of Cantonment Board could only be undertaken on the strength of license and though there is no quid pro quo, however, the board cannot be stated to have been divested of its power to charge reasonable sum of fee.”

The Bench found that the writ court had misdirected itself by drawing comparisons with other businesses such as hotels and restaurants. “Learned writ court appears to have got swayed with the fact that since other business/occupations such as essential eatable businesses, hotel and restaurants are being charged less license fees as compared to bar for sale of liquor, it, therefore, proceeded to observe that the same is exorbitant and violative of Article 14. The said view of the learned writ court is erroneous in law because the business of sale of wine cannot be treated at par with other categories of business of eatables”, the Court added.

The Court held, “The trade license fee prescribed by the board can neither be said to be exorbitant, irrational nor arbitrary, rather there appears to be no discrimination because the category of business undertaken by the respondent No. 1 stands on a different yardstick and the board having regard to the mandate of Cantonment Act and its objectives had all the power to generate its revenue for effective administration of the cantonment area.”

Consequently, the Court dismissed the petition and set aside the judgment of the Writ Court.

Cause Title: Chief Executive Officer & Anr. v. M/s Highlander Bar and Restaurant & Ors. (LPA No. 163/2023)

Appearance:

Appellants: Advocate Muzaffar A. Dar

Respondents: Deputy Solicitor General T.M. Shamsi; Advocates Nazima, Arun Dev Singh