Bombay High Court Lashes Out At Hoteliers For Seeking Reduction Of Liquor License Fees Citing COVID; Dismisses Plea With One Lakh Each Cost

In a judgement on Tuesday, a division bench of Justices Gautam Patel and Madhav Jamdar, called the arguments made on behalf of the petitioners as that of "mind-numbing insensitivity" as the foreign liquor vending hotels "put themselves on the same level as the true victims who fell to the onslaught of the Covid-19 pandemic."

The bench, while dismissing the petitions with cost, observed, "The Petitions are entirely without merit. We express our gravest displeasure at the manner in which they were pressed, knowing full-well of the pressures on this Court with a massive increase in our roster caseloads. There are hundreds of Petitions by individuals, societies and so on pending. They have waited their turn. Their cases are now delayed by this self-indulgent and self-serving foreign liquor vending hotels, in whose petition there is not a shred of merit, and some of whose contentions border on the outrageous."

The court imposed a cost of Rs 1 lakh each on nine associations which had approached the court against restoration of the license fees, which was reduced by 15% due to the pandemic. All the nine associations have been directed to deposit the cost amount into the Chief Minister's Relief Fund within two weeks.

"We believe it is time to send a firm signal that the time of the court is not to be taken for granted, nor should there be any attempt to gamble on litigation. When a court's time is squandered on frivolous matters, there will be consequences," the bench observed.

The petitioners, represented by Senior Advocate Virag Tulzapurkar, had challenged a notification by the State Excise Commissioner on January 28, 2021, prescribing the license fees for Foreign Liquor–III license required for vending the same for the financial year 2021-2022. By this notification, the license fee was increased by 15% over the previous year 2020-2021. The petitions sought to challenge the notification citing loss of business due to Covid-19 pandemic restrictions. This, however, the Advocate General Ashutosh Kumbhakoni argued, was only restoring it back to the year before the pandemic – 2019-2020 level.

Tulzapurkar argued that they were allowed to operate only at 50 percent capacity during the relevant period due to the pandemic and had, therefore, sought reduction in fees.

The petitioners had paid 50% of the license fee and were unwilling to pay the balance citing permission to operate only at 50% capacity due to Covid-19 restrictions. The petitions also said that those who had paid 100% for the previous year should be allowed to adjust 50% for 2021-2022.

He further submitted that there was a duty cast upon the State Government to mitigate losses and provide rehabilitation to victims of disasters under the Disaster Management Act. He claimed that the hotels were victims of the pandemic and were entitled to be rehabilitated.

Tulzapurkar also argued that as per the Bombay Prohibition Act, 1949 the petitioners were entitled to a refund where the license was cancelled by the concerned authority for reasons which are not the licensee's fault or due to a breach on the part of the licensee. This, according to Tulzapurkar, amounted to curtailing the purpose for which licenses were granted and a 'virtual unilateral revocation' of the licenses for a specified period of time during the lockdown and therefore entitled the petitioners for a part rebate or an adjustment in the FL-III license fees for the succeeding year.

It was further argued that no reasons were disclosed for changing of the license fees and as per Rule 2 of the Periodicity Rules, any increase or decrease of over 10% from the previous year's fees required a prior direction from the State Government, which was absent. He sought the notification be struck down calling it as "unreasonable, irrational and arbitrary."

Kumbhakoni, contesting the petitions, argued that the notification did not increase the license fee for the year 2021–2022 "by even a paisa from the fees prescribed in 2019–2020." He argued that the comparison to the immediate previous year's license fee was specious and that there was a rebate or a reduction on account of the pandemic for the year prior to that of the impugned notification.

"Petitioners cannot have it both ways: they demand a reduction (and would complain if there is none) and then they take the reduction given as a baseline to protest a reversion to the pre-Covid lockdown levels. The comparison has to be of the rates between 2021–2022 and 2019–2020. Those rates are exactly the same. The intervening periods saw a reduction as a one-off concession precisely to mitigate business losses — the very demand the Petitioners make," he submitted.

He said that the government had already bent backwards to grant concessions to FL-III licensees to ameliorate the loss caused by the pandemic. He also submitted that 90% of the similarly placed FL-III license holders had already paid the revised license fee – 16,683 of the total 17,605. Another 922 have paid 50% as of the date of that hearing, he added.

The court observed that there was a "fatal flaw" in Tulzapurkar's arguments seeking compensation for the hotels and that it assumed "there were lines of people waiting to be served foreign liquor by the petitioners and their ilk, but the government restricted the petitioners from going about their business." The bench added, "It hardly needs to be pointed that this is the stuff of fantasy."

The court also observed that under no circumstances can the petitioners be heard to say or even suggest that the pandemic was not their fault and therefore they should be compensated. It observed that the pandemic was not the fault of the government either.

"The government had a mammoth responsibility, far beyond the narrow commercial concerns of the petitioners and their foreign liquor vending business. The Government was struggling with essential services and commodities; a class that emphatically excludes the petitioners — even if the name of one of its vendible products is from the Gaelic translation of a Latin phrase for 'water of life'. The needs of the many will always outweigh the needs of the few. The State was fully entitled to order the shut-down of petitioner's establishments in the general public interest amidst the pandemic," the bench ruled.

Observing that relevant material like various concessions granted by the State Government and that a number of similarly placed licensees had already paid the fees had been suppressed from the petition, the bench dismissed the petitions. The court also refused to extend the deadline for the petitioners to pay the balance fees – which ends on March 31, 2022 – as that would give the petitioners "an unfair advantage over others similarly placed."