KARNATAKA HIGH COURT ON ONLINE SALE OF LIQUOR

KARNATAKA HIGH COURT ON ONLINE SALE OF LIQUOR 

BY- SNEHA CHAUHAN

Case background

The Karnataka High Court noted that there are no chances of Online Sale of Liquor in the absence of enabling provisions in the Karnataka Excise Act, 1965.

The company (HIP BAR PVT.LTD) was contributing its customer a Semi-Closed Prepaid Payment Instrument (Mobile Wallet) amid other services. Under the Payment and Settlement Systems Act, 2007, The Reserve Bank of India (RBI) had issued the petitioner a certificate of Authorization which is lawful till September 30, 2021.

The Government of Karnataka issued the license under FSS and Act allowed it to schlep on the business of distributor, supplier, transporter, whereas the petitioner is allowed to schlep on the food business such as savories, Beverages, apart from dairy products.  A Letter of Authority was issued dating august 1, 2017 by the appellant for e-commerce and Delivery of both Indian and Foreign Liquor along with Beer, Wine and LAB (Low Alcoholic Beverages) to HipBar with certain terms and conditions.

According to a news reports in a channel which provides ostensible pursuant, stating that the LOA was withdrawn suddenly without giving an opportunity for any justification. The respondent constrained the petitioner to accord an affidavit saying that it has take away the online delivery of liquor, without being a hinder to its rights. Therefore, the company lifted to the high court for searching declaration that  for Online Order processing and Delivery of  Indian and Foreign Liquor which  include Beer, Wine and Low Alcoholic Beverages ("LAB")  for conducting this business it does not does not require any license or permission .

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Current issue

Senior Advocates P Chidambaram and Dhyan Chinnappa, who are representing the company (HIP Bar Private Limited) has putted some arguments before the court as:

1. Cancellation of Letter of Authority without issuing show-cause notice as it is void ab initio and against the principles of natural justice.
2.  And the Letter of Authority was necessary for schlepping on the business under the provisions of PSS Act and RBI Regulations. There was no application filed by the petitioner for accord of Letter of Authority. Letter of Authority, if any issued has no effect in the eye of law.
3.  The action of the appellant says that Authority interfering with the business transaction of the petitioner is completely arbitrary and it violates the fundamental rights guaranteed under Articles 14 and 19(1)(g) of the Constitution of India .Therefore said that  neither sale of liquor is totally prohibited nor monopoly is taken by the State of Karnataka. 
   

 In the counter back the Government who is represented by Advocate General     Uday Holla clearly opposed the plaintiff stating:

1. Writ petition is misconceived. No fundamental right is vested with the petitioner to carry on trade / business in liquor, no writ of mandamus can be issued against the petitioner.
2. It is the contention of the State that the transaction of the petitioner is trade /business in liquor. There is no provision under the Act, for conducting the business on prepaid instruments for alcoholic beverages.
3. Petitioner using the mobile application initiates the transaction of purchasing the liquor from CL-2 customer and transports / delivers to the end consumer.

Court stated on the argument made by petitioner that his Fundamental right to do business is violated said that the fundamental right to carry on the present business claimed by the appellant on the premise i.e., sale of liquor is not ‘res extra commercium’ and the right which violates under Article 19 (1) (g) of Constitution there is not absolute but subject to the State allowing to undertake the business. Business of liquor is different from other trades; the State has all the right of control over all aspects of intoxicants. Even though there is no prohibition policy in the State it is most likely or mandatory by the State for Imposing fetters or restrictions. In such circumstances, a right is entrusted to the State to monitor, regulate, and prevent from conducting the activities / trade in liquor.

 “Any such restriction imposed to achieve the laudable object of the Act, cannot be termed as an infringement of fundamental right guaranteed under Article 19(1) (g) of the Constitution of India."

Later the court said that "Possessing and transporting of liquor by the petitioner to various end customers is not saved under Rule 21 of the Rules. The court also held that the letter of authority which was first issued and then revoked was not in allegiance with the provisions of the Act. On realizing this mistake, the same has been withdrawn at its own care in the interest of the state holders and for  public at large.

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CONCLUSION

"Indisputably, liquor is deleterious to the health of mankind. The social stigma attached to it as far as the family and the society is concerned cannot be lost sight of. Younger generation including the children below the permissible age succumbing to this temptation of liquor consumption may not be stringently regulated through online orders. The eligibility of the age and sound mind to receive and consume Liquor is difficult to monitor with the Online Sale carried out by the petitioner." said Justice S Sujatha, of Karnataka HC while dismissing the petition filed by HIP Bar private limited, a company offering e-commerce. Therefore the petitioner is not entitled to schlep on business of Online Sale of Liquor to the consumers in the state of Karnataka in the absence of enabling provisions available under the Karnataka Excise Act, 1965 to grant such license or permission hence the writ petition is dismissed.