A Division Bench, comprising justices K T Sankaran and Babu Mathew P Joseph, ratified the government's liquor policy framed last year and subsequent amendments granting licences to beer and wine parlours.
Delivering the judgement, the bench said there was nothing to offend fundamental rights or to term arbitrary or irrational about the liquor policy.
It set aside the ruling of the single judge permitting bars in four-star and heritage hotels. Equating four-star and five star hotels was illegal "as the yardsticks to their classification are different", it said.
The bench also relied on a scientific study by a one-man Commission on consumption of liquor in the state to uphold the policy. The bench, which dictated the judgement in an open court continuously from 10.30 am to 4.45 pm, rejected plea of bar owners that the closing down of bars will affect the economy of the state and its tourism prospects.
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Noting that rights of individuals are not affected by the policy, the court said it cannot dictate the government that the policy was bad. The state was trying to implement various policies year after year to achieve total prohibition stage by stage, it said.
"Now a comprehensive policy to attain the objective has been declared by the government. There is nothing offensive in the policy affecting fundamental rights," the court said.
Rejecting a batch of appeals filed by the bar owners, the bench said, public health is the primary duty of the state.
As per the policy only luxury hotels would be allowed to serve alcohol. Bar owners argued that the move was discriminatory and affected their business.