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Karnataka to file review petition challenging SC highway liquor ban

LiveMint logoLiveMint 28-02-2017 Sharan Poovanna

Bengaluru: The Karnataka government has sent a review petition challenging the Supreme Court’s (SC) highway liquor ban order, said a senior government executive and a legal advisor to the state government.

On 15 December 2016, the SC order banned liquor outlets from operating within 500 metres of state and national highways in the country from 1 April.

The review petition brings some measure of hope to liquor manufacturers who cannot file a petition against the rule as it is a matter of governance and, thus, can only be contested by state governments.

Liquor generated revenues of Rs15,332.8 crore for Karnataka in 2015-16—up 11.10% from the preceding year and higher than the state’s target of Rs15,200 crore, according to state excise department data. But a drought in Karnatak has led to a dip in sales this year and revenue for 2016-17 is unlikely to meet the Rs16,510-crore target, since it stood at Rs14,608.27 crore as of 25 February.

The SC had heard the case over the alarming statistics on the occurrence of road accidents, which claim thousands of human lives every year.

“The law can only imperfectly alleviate the consequences of road accidents,” said the judgment.

“The first thing is that we are not heard in the matter. The order also upsets our arrangements that have been in place for over 20 years and the number (of accidents on highways) does not match the alarming figures seen in other places,” said one of the two people mentioned above, who are not authorized to the speak to the media.

Karnataka accounted for 9.4%, or 44,011 cases, of the total 4,64,674 road accident cases in 2015 that left 4,82,389 persons injured and 1,48,707 dead, according to a 2015 report by the National Crime Records Bureau.

A case-wise analysis of road accidents in 53 mega cities revealed that a majority of them were due to dangerous/over taking/careless driving. Driving under influence of drugs/alcohol caused 2% (348 out of 17,059 deaths) of fatalities in road accidents. Chennai accounted for 93 out of the 348 deaths in this category.

Tamil Nadu had, in April, 2016 filed a petition challenging the constitutional validity of a circular issued by the Central government on 22 April 2016 asking state governments to shut liquor shops along highways, Mint reported.

The Kerala government also filed an interlocutory petition seeking review of the SC order in February. But the petition turned controversial due to some of its claims, including one stating that beer, wine and toddy cannot be considered as alcoholic beverages, and was withdrawn within a day.

Karnataka has around 10,097 liquor outlets operating under various categories of licences, including retail stores, clubs and restaurants, of which nearly half are expected to be impacted due to the SC ban, according to a state excise department official who requested anonymity.

Existing state rules specify that liquor outlets have to be at a distance of 220 meters from highways. Some outlets are situated along highways despite coming under city limits, said the official cited above.

“Given that the SC ban on retail alcohol outlets along highways will be effective 1 April, we look forward to the state authorities playing an active role in mitigating the impact of the order on the livelihood of the lakhs of people dependent on the industry, for instance by relocating the outlets impacted by the SC order,” said Abanti Sankaranarayanan, chief strategy and corporate affairs officer at United Spirits Ltd (USL), which owns whisky brands like McDowell’s No 1 and Royal Challenge.

French distiller Pernod Ricard’s managing director for India, Guillaume Girard-Reydet, said the number of stores and on-trade outlets were already very low in most states and the recent SC decision would prove to be a real challenge on a short-term basis. Pernod sells Chivas Regal and Imperial Blue whiskies and Absolut vodka in India.

“This certainly can have significant impact on the volumes in the short term as the demarcation of highway is difficult, ex: Mumbai has a lot of stores on the Western Express highway. If the same is implemented the shops will be shifted outside the 500 meter range of the highways which will take some time and hence we expect that a quarter or two impact will certainly be there. In many cases in large cities, space availability will be an issue,” Abneesh Roy, senior vice president at Edelweiss Securities wrote in a February note.

USL, for instance, sells its brands in close to 60,000 outlets in India and the impact of the ban will be on 30% of its outlets, Roy added.

John Distilleries Pvt Ltd, maker of Paul John single-malt whiskies, said it was evaluating the impact on its sales and preparing for a contingency plan.

Prerna Kapoor from Delhi and Nidheesh MK from Bengaluru contributed to the story

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