LEFT HIGH AND DRY
THE APEX COURT’S PROHIBITORY ORDER ALONG HIGHWAYS TRIGGERS A RARE FLURRY OF ACTIVITY BY STATE GOVERNMENTS DESPERATE TO FIND LOOPHOLES AND EXEMPTIONS THAT WILL PROTECT THE LIQUOR TRADE—AND THEIR EXCISE REVENUE
Days after the Supreme Court’s December 15, 2016, verdict banned liquor vends within 500 metres of national and state highways, India’s Federation of Hotel Associations had a query. Did the verdict also apply to the thousands of restaurants and hotels along the highways, they wondered. On March 31, the hotel association’s lawyer, Aryama Sundaram, thought he would put doubts at rest and on his own sought a clarification from the Supreme Court on whether this applied only to shops serving alcohol. The response from the three-judge bench, including Chief Justice J.S. Khehar,
hearing pleas for modifying the court’s December 2016 judgment, stunned states and hoteliers. The ban on shutting liquor vends 500 metres from state and national highways also applied to hotels and restaurants, the court ruled, “extending the prohibition to include stretches of such highways which fall within the limits of a municipal corporation, city, town or local authority”. The order mortified the hospitality industry and indeed most state governments and unleashed a prohibition-era nightmare. Thousands of hotels and restaurants across the country, within the path of highways snaking
INDUSTRY ESTIMATES IT WILL LOSE Rs 1,000 CRORE A DAY DUE TO THE BAN. THE STATES, MEANWHILE, ESTIMATE ANNUAL REVENUE LOSSES OF OVER Rs 1 LAKH CRORE
through cities, had to shutter their bars. Attempts by states to relocate the bars away from the 500 metre no-go zone on highways and into villages have met with fierce resistance from locals in states like Uttarakhand and Kerala.
The travel and tourism sector, which includes bars and restaurants, is one of the largest employers in the country. Technopak’s India Food Services Report 2016 says it gives direct employment to 5.8 million people, and indirectly to another 7.5 to 8.5 million. Industry estimates it will lose Rs 1,000 crore a day on account of the ban. The states, meanwhile, estimate annual revenue losses of over Rs 1 lakh crore. Maharashtra, one of the largest excise earners, estimates it will bleed revenues of Rs 7,000 crore and see nearly 100,000 people lose their livelihood. Goa, which saw nearly a fourth of its liquor shops shut due to the ban, is staring at over 10,000 job losses.
In Punjab, where liquor vends will be able to relocate, the worst hit by the SC judgment will be the scores of marriage and party palaces dotting almost every national and state highway. Besides causing massive losses to marriage palace owners, it will also mean job losses, mostly impacting migrant workers who find temporary employment here during the winter wedding season. PROHIBITION ON THE HIGHWAY The nub of the Supreme Court’s decision to ban liquor near highways lies in the fact that India has one of the world’s highest accident rates. A March 2013 advisory to chief secretaries of the states and Union territories quoted a 2011 Ministry of Road Transport & Highways (MoRTH) study which showed that of the 142,000 people killed in 490,000 road accidents that year, 24,655 were caused due to drunken driving resulting in 10,553 deaths and injuries to 21,148 persons. Overspeeding was the cause in some 40 per cent cases. A 2015 study says intake of alcohol/drugs by drivers resulted in 16,298 road accidents and 6,755 fatalities in that year. Alcohol/ drug usage accounted for 4.2 and 6.4 per cent of all driver faults.
Some of the blame can be attributed to the easy availability of liquor along highways. Harman Sidhu, the petitioner in the Supreme Court case, discovered that the 291 km National Highway 1 had a liquor shop every 1.5 km (see box: “This ruling will save lives...”). His petition formed the basis for the apex court’s judgment which ruled that “the availability of liquor along the highways is an opportunity to consume. Easy access to liquor shops allows the drivers to partake in alcohol in disregard to their safety and the safety of others…their existence provides a potent source for the easy availability of alcohol.”
In ruling that drunken driving was one of the significant causes of road accidents in India, the court stopped the grant of licences for the sale of liquor along national and state highways and over a distance of 500 metres from the outer edge of the highway or a service lane alongside. It fixed April 1, 2017, as the date for phasing out existing licences and directed all states and Union territories to halt issuing licences for the sale of liquor along national and state highways. Besides extending the prohibition to include highway stretches falling within municipal corporation, city, town or local authority limits, the verdict also banned all signages and advertisements of
the availability of liquor and directed their removal. No liquor shop could be visible from a national or state highway, directly accessible from a national or state highway, or situated within a distance of 500 metres of the outer edge of the national or state highway or of a service lane along the highway. The court gave the authorities one month to chalk out a plan for enforcement in consultation with the state revenue and home departments.
The big question is: does the verdict throw the baby out with the bathwater? The Indian hoteliers’ association consulted two legal luminaries after the December 2016 verdict who told them the court did not intend to target hotels, bars and restaurants holding valid liquor licences. The SC’s direction, they felt, “related to the situation of sale and not a situation of consumption near the highway”.
Yet, by including establishments like hotels and restaurants in its war against liquor vends, the judgment has hit the tourism and hospitality business. In less than a week, hotels have seen a host of cancellations for conferences. Arjun Sharma, chairman of the Select Group, says he expects a 50 per cent loss in business. “Some 75 per cent of my business is weddings and MICE (meetings, incentives, conferences and exhibitions) events,” he says.