Shares soar as Bihar alcohol ban ruled ‘illegal’

A court ruling declaring the prohibition act in India’s third most populous state “unconstitutional” has given a significant boost to the country’s liquor producers’ shares.

a High Court in Bihar has ruled the state’s alcohol ban is illegal

The Patna High Court this morning (30 September) quashed the Bihar Prohibition of Liquor Act. The legislation, introduced by the region’s Grand Secular Alliance government on 1 April 2016, puts a complete ban on the sale, manufacture and consumption of alcohol in Bihar.

Following the introduction of the Act, the state – home to around 100 million people – was declared ‘dry’ from 5 April 2016.

The court ruled that the legislation, which is in breach of two articles of the Constitution, including Article 14, which provides “equality before the law”.

Under the Bihar Prohibition of Liquor Act, family members of anyone in possession of or consuming alcohol could be held responsible for that person’s actions. For example, if a teenage boy consumes alcohol in his parents’ home, the father would face 10 years in prison, reports The Financial Express.

The legal challenge resulting in the High Court ruling was brought by India’s Restaurant & Bar Association against the state government.

Indian spirits producers saw their share prices soar on the news. McDowell’s Indian whisky maker United Spirits was trading up by around 7%, while Globus Spirits, which makes Country Club, saw its share price climb by as much as 12%.

However, it remains unclear whether the High Court ruling will reverse Bihar’s ‘dry state’ status. A revised Bihar Excise and Prohibition Act 2016 is still set to come into force from October 2, with the ruling understood to only apply to the 5 April notification.

“I can only say that government is committed to enforce total prohibition,” a government spokesperson told the Economic Times.

In August 2014, officials proposed to ban the sale and consumption of alcohol in Kerala – the largest liquor-consuming state in India.

Prohibition already exists in the Indian states of Gujarat, Mizoram, and Nagaland, parts of Manipur, and the Union Territory of Lakshadweep.