Mumbai Police had issued the directive imposing the deadline citing security concerns, including terror attacks, and safety of women during the revelry.
"Threat perception to the city will be there all the time. Not just on December 31," Justice Gautam Patel observed while hearing a petition of Indian Hotels and Restaurant Association (AHAR) challenging the city police's fiat that overruled a Home Department relaxation of the deadline till 5 AM.
The court also dismissed concerns about women's safety, saying "The Shakti Mills gangrape incident did not happen on December 31. It happened on a normal day. If proper precautions are taken, such incidents would not occur."
A 22-year-old woman photojournalist interning with a magazine was gangraped at the abandoned Shakti Mills compound in the city in August when she was out on assignment.
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"If the Home department under which the police comes has no problem with the celebrations going on till 5 AM then why is the police setting the deadline of 1.30 AM. This is without logic," Justice Patel said.
The court, however, said hospitality establishments will have to give an undertaking that security inside the premises would be their responsibility. It also allowed them to play indoor music till 5 AM.
AHAR, in its petition, had also contested the police order on the ground that was not applicable to five star hotels and upscale pubs.
Mumbai Police Commissioner Satyapal Singh had yesterday said there would be strict enforcement of the 1.30 AM deadline for closure of eateries and restaurants.
"My views are very clear in the matter. For women's safety and to prevent drunken driving among others, I took this decision," he had told reporters.
In case of violation of the order, the offenders were liable to be fined and their licences impounded.