The high court’s decision comes just days before the Kumar-led government, which is a coalition comprising his Janata Dal (United), Lalu Prasad’s Rashtriya Janata Dal and the Congress, was all set to notify the new and stricter prohibition law in the state.
In recent months, Kumar has implored the Uttar Pradesh government to impose prohibition in that state and asked Prime Minister Narendra Modi that he should encourage Bharatiya Janata Party (BJP)-ruled states to ban liquor, just as it is banned in the PM’s home state of Gujarat.
Kumar has maintained that crime rates have seen a sharp drop in Bihar after the liquor ban. His government, however, has also been criticised for the draconian imposition of the law and the recent hooch tragedy in Gopalpur in August in which at least a dozen people died. Shares of liquor companies rallied on Friday soon after the court's decision. United Spirits, Radico Khaitan, Tilaknagar Industries and United Breweries (Holdings) each gained around seven per cent. All liquor stocks saw a spurt in trading volumes. In comparison, the benchmark Sensex ended flat on Friday.
Abneesh Roy, senior vice-president, Edelweiss Securities, said the Patna HC’s revocation is a positive for liquor stocks and could trigger re-rating in the sector.
“Although Bihar accounts for a mere two-three per cent of sales, the move is a big sentimental positive. Investors were worried that more states would follow Bihar on the liquor ban. This coupled with Kerala’s decision to change the liquor policy will help ease concerns. Some benefits are also expected to be given to liquor in the Goods and Services Tax (GST) regime. This could lead to re-rating in these stocks,” he said.
Giving its verdict on a writ challenging the liquor ban filed by the Confederation of Indian Alcoholic Beverage Companies and Spirits and Wines Association of India, the court said: “The underlying idea of the New Excise Policy was that total prohibition would be brought about gradually and in a phased manner. This policy, nowhere, contemplates immediate and complete prohibition on consumption of alcohol.”
"Everyone, including the state government, proceeded with the assurance that the sale of Indian Manufactured Foreign Liquor (IMFL) would continue in urban areas. Then the state government did a U-turn through a notification, which can't be sustained," said the court.
Last year, the state government had announced it intended to bring prohibition in a phased manner. In the first phase, which was implemented from April 1, the state government imposed a complete ban on composite and country liquor, while IMFL was to be sold through government-owned shops and only in urban areas. However, seeing an enthusiastic support for complete prohibition, the CM declared Bihar a dry state on April 5.
The order comes as the state government was preparing to unveil the Bihar Prohibition and Excise Bill -2016. This was expected to have stricter provisions, such as possible arrest of all members of a family if a liquor bottle is found in a house. Under this law, all sections are non-bailable where only courts can grant bail. If the Bill were to come into effect, only special courts would have the authority to try cases related to violation of the Bihar Prohibition Law.
Asked about the impact of the HC's decision, the state government said it was waiting for a copy of the court's order. “I can't say anything about the matter right now as we are yet to receive the verdict's copy. We will study it and then decide the future course of action," Excise Commissioner A K Das told Business Standard.
Earlier in the month, the CM had claimed that the liquor ban had earned positive changes for the people and helped the administration in controlling heinous crimes such as murder and rape.
“In the current year, we have witnessed sharp reduction in crime figures due to the prohibition. Cases related to murder have seen a decrease of 31.7 per cent during April-July 2016, when compared to the figures of the same period last year. There has been a sharp dip in other crimes also – 20 per cent in rape, 27 per cent in road robbery, 73 per cent in dacoity, 18.4 per cent in rioting and 61 per cent in kidnapping for ransom. There has been a whopping 26.15 per cent drop in deaths in road accidents in the state due to prohibition,” Additional Director General of Police Sunil Kumar told Business Standard a few days ago.
Between April 1 and September 20, more than 16,000 people were arrested by the excise and police officials for breaking prohibition. More than 100,000 litres of alcohol has been seized so far in the state. However, since the exit of KK Pathak, the controversial boss of the Excise Department who authored the new excise policy, the state's drive to control sale of alcohol has lost traction.
The prohibition is creating some problems which the state government didn’t foresee – the jails are getting overcrowded. “As things stands today, the day is not far when our jails will face the problem of overcrowding. We have a capacity of 37,000 prisoners and almost 29,000 criminals are already lodged in our jails. We have to construct new jails to meet the demand as the number of undertrials is rising,” said a senior official of the jail department.