Karnataka HC upholds grant of licenses to MSIL for retail liquor outlets

The High Court of Karnataka in a recent order upheld the license granted to Mysore Sales International Limited (MSIL) for setting up of retail liquor outlets across the state.

Several private liquor retail outlet owners of north Karnataka had challenged the insertion of Rule 3 (11-C) of the Karnataka Excise Rules 1968, to accommodate such licenses to government-owned companies.

The petitions challenged the insertion of Rule 3 (11-C) contending that it excludes the applicability of Rule 12 (3), that provides for a maximum number of licences in an area/taluk on the basis of population. Rule 3 (11-C) specifies that a license in Form CL (11-C) shall be granted by the Deputy Commissioner only to such companies owned or controlled by the state government.

K N Phaneendra, senior counsel appearing for the MSIL, argued that the petitioners have no locus standi to challenge the validity of the Rule since the licences granted to them are not cancelled while granting licence in favour of MSIL.

Dismissing the batch of petitions, Justice Hemant Chandangoudar pointed out that the Rule cannot be said to be invalid or unconstitutional as it is being inserted as duly authorized under Section 71 of the Karnataka Excise Act.

The court said the exclusion of applicability of Rule 12 (3) cannot be said to be discriminatory since the right to carry on the business of sale of liquor is subject to limitations. The court also observed that the state government can create a monopoly either in itself or the agency created by it for sale of liquor.