# • STATE OF ANDHRA PRADESH AND ORS. ETC v. MC. DOWELL & CO. AND ORS. ETC

- **Citation:** [1996] 3 S.C.R. 721
- **Court:** Supreme Court of India
- **Decided:** 1996-03-21
- **Case number:** Civil Appeal Nos. 4712-17 of 1996
- **Bench:** Am. Ahmadi, B.P. Jeev An Reddy, Suhas C. Sen
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/state-of-andhra-pradesh-and-ors-etc-v-mc-dowell-co-and-ors-etc-14217
- **Pages:** 36

## Headnote

Andhra Pradesh Prohibition Act, 1995 (as amended by Andhra Pradesh
Prohibition (Amendment) Act, 1995).
A
B
Ss. 2(7)(a) and (b), 7, 7-A, 15(1)-/ntoxicating liquor~rohibition of C
manufacntre, production, sale, consumption and possession of-Held, constitutionally valid-Retrospective operatio11 to amending Act w.e.f date of
commencement of Pri11cipal Act is valid.
Constillttio11 ·of !11dia.
A1ticles 14, 19(1)(g), 19(6), 47, 24fr-7th Schedule (Entry 8 read with
Entry 6 and Entry 24 of List II and Enfly 52 of List !)--Intoxicating liquors--!'Janufacture, production, conszunption, sale and possession
of-Prohibition of by Andhra Pradesh Prohibitio11 Act, 1995-He/d intoxicatD
i11g liquors fall under Entry 8 of list II, and State Legislalltre is competent to E
enact law on the subject-Entry 52 of List I does not impinge upon Entry 8
of List II-A citizen has no right to trade in intoxicating liquors-Act is not
violative of Article 14-Grounds on which an enactment ca1i be st1uck
down-Explained .
Doct1ine of 'pith and substance'-Applicability of
F
Industries (Development and Regulation) Act, 1951 : Schedule 1, Item
26--Fennentation Industries-Prohibition of manufacture of intoxicating liquors by State Legislantre-Held, the item must be read subject to Entry 8
and EntJy 6 in List II of 7th Schedule to the Constitution-State Legislature G
has power to make law in order to prohibit manufacture, production consumption, sale and possession of intoxicating liquor.
The manufacturers of intoxicating liquors, whose licences the
Government of Andhra Pradesh refused to renew after the enforcement of
the Andhra Pradesh prohibition Act, 1995, filed writ petitions before the H
721
722
SUPREME COURT REPORTS
(1996] 3 S.C.R.
A High Court challenging the provisions of the Act and seeking a declaration
that the Act did not prohibit manufacture of intoxicating liquors though
it prohibited consumption, sale and possession thereof in the State. A Full
Bench of the High Court allowed the writ petition. Aggrieved, the State
Government filed the appeals.
B
c
D
Meanwhile the Andhra Pradesh Prohibition (Amendment) Act, 1995
was enacted prohibiting manufacture also of intoxicating liquors in the
State with effect from 16.1.1995, the date of commencement of the Principal
Act. The manufacturers tiled the present writ petitions challenging the
constitutional validity of the amending Act.
It was contended for the petitioner that by virtue of enactment of the
Industries (Development and Regulation) Act 1951, and inclusion of fermentation industries (alcohol being a product of fermentation industries)
in the Schedule to the Act, the State Legislature was denuded of its power
to licence and regulate the manufacture of liquor and, as such, prohibiting
the manufacture of liquor within the State was beyond the competence of
the State Legislature; and that the Act was violative of Article 19(1) (g) of
the Constitution as it infringed the right to trade in intoxicating liquors.
The Act was also challenged as violative of Article 14 since it exempted
certain categories of consumers of intoxicating liquors like foreigners,
E members of armed forces serving or retired etc.
Dismissing the writ petitions and disposing of the appeals, this
Court
'
I
HELD: 1. The prohibition of manufacture, production, consumption,
).
F
sale and possession of intoxicating liquors brought about by the Andhra
Pradesh Prohibition Act, 1995 (as amended by the Andhra Pradesh Act 35
of 1995) is perfectly valid and beyond challenge. The retrospective effect
given to the amending Act with effect from the date of commencement of the
principal Act is constitutionally valid. (751-E; 756-C]
G
2.1. The power to make a law with respect to manufacture and production of intoxicating liquors and its prohibition (among other matters mentioned In Entry 8 In List-II of 7th Schedule to the Constitution) belongs
exclusively to the State Legislatures. Item 26 in the First Schedule to the
Industries Development and Regulati

## Text

_Characters 0–39,970 of 88,449. This is a partial read: ask again with offset=39970 for what follows._

•
STATE OF ANDHRA PRADESH AND ORS. ETC.
v.
MC. DOWELL & CO. AND ORS. ETC.
MARCH 21, 1996
[AM. AHMADI, CJ, B.P. JEEV AN REDDY AND
SUHAS C. SEN, JJ.]
Andhra Pradesh Prohibition Act, 1995 (as amended by Andhra Pradesh
Prohibition (Amendment) Act, 1995).
A
B
Ss. 2(7)(a) and (b), 7, 7-A, 15(1)-/ntoxicating liquor~rohibition of C
manufacntre, production, sale, consumption and possession of-Held, constitutionally valid-Retrospective operatio11 to amending Act w.e.f date of
commencement of Pri11cipal Act is valid.
Constillttio11 ·of !11dia.
A1ticles 14, 19(1)(g), 19(6), 47, 24fr-7th Schedule (Entry 8 read with
Entry 6 and Entry 24 of List II and Enfly 52 of List !)--Intoxicating liquors--!'Janufacture, production, conszunption, sale and possession
of-Prohibition of by Andhra Pradesh Prohibitio11 Act, 1995-He/d intoxicatD
i11g liquors fall under Entry 8 of list II, and State Legislalltre is competent to E
enact law on the subject-Entry 52 of List I does not impinge upon Entry 8
of List II-A citizen has no right to trade in intoxicating liquors-Act is not
violative of Article 14-Grounds on which an enactment ca1i be st1uck
down-Explained .
Doct1ine of 'pith and substance'-Applicability of
F
Industries (Development and Regulation) Act, 1951 : Schedule 1, Item
26--Fennentation Industries-Prohibition of manufacture of intoxicating liquors by State Legislantre-Held, the item must be read subject to Entry 8
and EntJy 6 in List II of 7th Schedule to the Constitution-State Legislature G
has power to make law in order to prohibit manufacture, production consumption, sale and possession of intoxicating liquor.
The manufacturers of intoxicating liquors, whose licences the
Government of Andhra Pradesh refused to renew after the enforcement of
the Andhra Pradesh prohibition Act, 1995, filed writ petitions before the H
721
722
SUPREME COURT REPORTS
(1996] 3 S.C.R.
A High Court challenging the provisions of the Act and seeking a declaration
that the Act did not prohibit manufacture of intoxicating liquors though
it prohibited consumption, sale and possession thereof in the State. A Full
Bench of the High Court allowed the writ petition. Aggrieved, the State
Government filed the appeals.
B
c
D
Meanwhile the Andhra Pradesh Prohibition (Amendment) Act, 1995
was enacted prohibiting manufacture also of intoxicating liquors in the
State with effect from 16.1.1995, the date of commencement of the Principal
Act. The manufacturers tiled the present writ petitions challenging the
constitutional validity of the amending Act.
It was contended for the petitioner that by virtue of enactment of the
Industries (Development and Regulation) Act 1951, and inclusion of fermentation industries (alcohol being a product of fermentation industries)
in the Schedule to the Act, the State Legislature was denuded of its power
to licence and regulate the manufacture of liquor and, as such, prohibiting
the manufacture of liquor within the State was beyond the competence of
the State Legislature; and that the Act was violative of Article 19(1) (g) of
the Constitution as it infringed the right to trade in intoxicating liquors.
The Act was also challenged as violative of Article 14 since it exempted
certain categories of consumers of intoxicating liquors like foreigners,
E members of armed forces serving or retired etc.
Dismissing the writ petitions and disposing of the appeals, this
Court
'
I
HELD: 1. The prohibition of manufacture, production, consumption,
).
F
sale and possession of intoxicating liquors brought about by the Andhra
Pradesh Prohibition Act, 1995 (as amended by the Andhra Pradesh Act 35
of 1995) is perfectly valid and beyond challenge. The retrospective effect
given to the amending Act with effect from the date of commencement of the
principal Act is constitutionally valid. (751-E; 756-C]
G
2.1. The power to make a law with respect to manufacture and production of intoxicating liquors and its prohibition (among other matters mentioned In Entry 8 In List-II of 7th Schedule to the Constitution) belongs
exclusively to the State Legislatures. Item 26 in the First Schedule to the
Industries Development and Regulation Act, 1951 must be read subject to
H Entry8 -and for that matter, Entry6 -in List-II. So read, the said item does
-
STATEv. MC. DOWELL
723
not and cannot deal with manufacture, production or with prohibition of A
manufacture and production of intoxicating liquors. The State Legislature
is, therefore, perfectly competent to make a law prohibiting their manufacture and production - in addition to their sale, consumption, possession
and transport - with reference to Entries 8 and 6 in List-II of the Seventh
Schedule to the Constitution read with Article 47 thereof.
[745-F-H]
Synthetics and Chemicals Limited v. State of Uttar Pradesh, [1990] 1
SCC 109; Khoday Distilleries v. State of Kamataka, [1995] 1 SCC 574;
Harshankar v. Deputy Excise and Taxation Commissioner, [1975] 3 SCR
B
254 and Cooverjee B. Bharucha v. Excise Commissioner and the Chief C
Commissioner, Ajmer, [1954] SCR 873, followed.
Bhola Prasad v. The King-Emporer, [1940] F.C.R. 17 and Miss Kishori
Shetty v. The King, [1949] F.C.R. 650, referred to.
2.2 Entry 24 of List II of 7th Schedule to the constitution is a general D
,
entry relating to industries whereas Entry 8 thereof is a specific and special
entry relating inter alia to industries engaged in production and manufact
ture of intoxicating liquors. Applying the well-known rule of interpretation
applicable to such a situation (special excludes the general), the industries
engaged in production and manufacture of intoxicating liquors do not fall
within Entry 24 but do fall within entry 8 of List II. Therefore, making of a E
declaration by the Parliament as contemplated by Entry 52 of List I does
not have the effect of transferring or transplanting, as it may be called, the
industries engaged in production and manufacture of intoxicating liquors
,
from the State List to Union List. As a matter of fact, the Parliament cannot
~
take over the control of industries engaged in the production and manufacF
ture of intoxicating liquors by making a declaration under Entry 52 of List
I, since the said entry governs only Entry 24 in List II but not entry 8.
[740-F-H; 741-A)
2.3 The industries engaged in the production and manufacture of
intoxicating liquors are outside the purview of Entry 24 of List II of the G
7th Schedule to the Constitution and fall squarely within Entry 8 in the
List-II; and Entry 52 in List-I does not over-ride or impinge upon Entry 8
In List-II. [749-B]
Calcutta Gas Company v. State of West Bengal, [1962) 3 Suppl. SCR
1, followed.
H
724.
SUPREME COURT REPORTS
[1996] 3 S.C.R.
A
2.4 No central law whether made with reference to an entry in List-I
or with reference to an entry in List-III can affect the validity of a State
enactment made in respect of an entry in list II. The concept of occupied
field has no relevance in such a context. If a particular matter is within
the exclusive competence of the State legislature, i.e. in List II that repreB sents the prohibited field for the Union, Article 246 (3) cannot be employed
to invalidate it on the ground of legislative incompetence of State Legislature. Similarly, if any matter is within the exclusive competence of the
Union, it becomes a prohibited field for the States. The concept of occupied
field is really relevant in the case of laws made with reference to entries in
List-III. [746-B-E]
c
A.S. Krishna & Ors. v. State of Madras, [1957] SCR 399; Subramanyan
Chettiar v. Muttudesmi Goundan, [1940] F.C.R. 188; Prafulla Kumar v. Bank
of Commerce Ltd., A.I.R. (1947] P.C. 60 and Ch. Tika Ramji & Ors., [1956]
SCR 393, followed.
D
2.5 The expression "industry" in both Entry 24 in List II and Entry
52 in List I must carry the same meaning, which means that if a particular
industry is not within the purview of Entry 24 in List-II, it wonld equally
not be within the purview of Entry 52 in List I. Article 246 cannot be
invoked to deprive the State legislatures of the powers inhering in them by
E virtue of entries in List-II. Once and enactment, in pith and and substance,
is relatable to Entry 8 in List-II or for that matter any other entry in
List-II, Article 246 cannot be brought into yet hold that State legislature
is not competent to enact that law. (749·8-C]
3. A citizen has no fundamental right to trade in intoxicating liquors.
j
t- •
•
F The trade and business in intoxicating liquors can be restricted, severely
)-
curtailed or even prohibited. The fact that Article 47 of the Constitution
expressly speaks of the obligation of the State to endeavour to bring about
prohibition of the consumption of intoxicating drinks is itself a clear and
definite pointer in this direction. Imposing prohibition is to achieve the
G directive principle adumbrated in Article 47. Such a course merits to be
treated as a reasonable restriction within the meaning of clause (6) of
>
Article 19. [750-C; 751-C·D]
~_,..
Khoday Distilleries v. State of Kamataka, [1995] 1 SCC 574; Harshankar v. Deputy Excise and Taxation Commissioner, [1975] 3 SCR 254;
H and Cooveljee B. Bharucha v. Excise Commissioner, Ajmer, [1954] SCR 873,
' 1
.f
•
STATEv. MC. DOWELL
725
followed.
A
Crowley v. Christensen, 34 L.Ed. 620 and Krishna Kumar Narula v.
State of Jammu & Kashmir, [1967] 3 SCR 50, referred to.
4.1 The Prohibition Act is not violative of Article 14 of the Constitulion. The exempted catq:ories put together constitute a fraction of the total B
consuming popnlation of Andhra Pradesh. If production and manufacture
of intoxicating liquors _is permitted in the name of meeting the needs of
this miniscule population, it would give rise to several other problems in
tnrn. In all the circumstances, the State .appears to have thought it
advisable to import the small quantities required rather than face a C
number of problems arising from restricted production, supervision and
enforcement. [754-G-H; 755-B]
State of Tamil Nadu & Ors. v. Ananthi Ammal & Ors., [1995] 1 SCC
519 and Mithu v. Union of India, [1983] 2 SCC 27, referred to.
4.2 Toddy is a class a part. It is drawn from tree. The Excise Act and
Rules make a clear distinction· between toddy on one hand and other
intoxicating liquors on the other, though it may be that toddy is also
included within the meaning of intoxicating liquors. In the circnmstances,
D
it cannot be said that it is not a case of reasonable classification having
regard to the object of legislation. Moreover, it is always open to the State E
to introduce prohibition In stages. It is not necessary that the prohibition
should be total and absolute whenever it is imposed. [755-D-E]
C.S. Rowji v. State of Andhra Pradesh, [1964] SCR 330, relied on .
5. A law made by the Parliament or the Legislature can be struck F
down by Courts on two gronnds and two grounds alone viz. (i) lack of
legislative incompetence and (2) violation of any of the fundamental rights
guaranteed in Part III of the Constitution or any other constitutional
provision. There is no third gronnd. No enactment can be struck down by
jnst saying that it is arbitrary or unreasonable. Some or other constitu- G
tional infirmity has to be found before invalidating an Act. [752-B-C; Fl
Atti/ Mac Tiller v. Atlantic Coast-line Ranbroad Company, 87 L.Ed.
610; Council of Civil Services Union v. Minister for the Civil Services, (1985)
A.C. 374 and R v. Secretary of State for the Home Department &-parte Brind
& Ors., (1991) A.C. 696, referred to.
H
726
SUPREME COURT REPORTS
[1996] 3 S.C.R.
A
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4712-17
of 1996 Etc.
From the Judgment and Order dated 28.4.95 of the Andhra Pradesh
High Court in W.P. Nos. 2506, 2574, 2950, 3248, 3932 and 667/95
B
S.J. Sorabjee, R.F. Nariman, A.H. Desai, AK Ganguli, G. Ramaswamy, K Ram Kumar, Gopal Jain, C. Balasubramaniam, Mukul Mudgal,
S. Sukumaran, Ms. Punita Singh, Sonu Bhatnagar, Ramesh Babu M.R.,
R.K.Kapoor, P. Varma, S.K. Srivastava, Anis Ahmed Khan, V.S. Yadav,
AM. Dittia, Ashok Mathur, Ms. Nisha Bonarji, J.K. Das and Navin
C Prakash for the Appearing parties.
The Judgment of the Court was delivered by
B.P. JEEVAN REDDY, J. Leave granted in Special Leave Petitions.
D
In response to wide-spread agitation by the women of Andlira
Pradesh, the Government prohibited the sale and consumption of intoxicatI
ing liquors by an Ordinance issued on December 27, 1994. In February,
1995, the Legislature of Andhra Pradesh enacted the Andhra Pradesh
-r
Prohibition Act, 1995 [hereinafter referred to as "the Act"] replacing the
Ordinance. It was reserved for and received the assent of the President of
E India. The long title and the preamble to the Act reads:
F
G
"An Act to introduce Prohibition of the sale and consumption of
intoxicating liquors in the State of Andhra Pradesh and for matters
connected therewith or incidental thereto.
WHEREAS Article 47 of the Constitution of India enjoins that
the State shall endeavour to bring about prohibition of the consumption, except for medicinal purposes, of intoxicating drinks
which are injurious to health;
AND WHEREAS there is urgent need in public interest to bring
about the prohibition of the sale and consumption of intoxicating
liquors, except for medicinal, scientific, industrial and such like
purposes, in the State of Andhra Pradesh.
BE it enacted by the Legislative Assembly of the State of Andhra
H
Pradesh in the Forty-sixth year of the Republic of India as follows:"
STATE v. MC. DOWELL [B.P. JEEV AN REDDY, J .]
727
Clause (7) of Section 2 defmes the expression "liquor" to include "(a) A
spirits of wine, denatured spirits, methylated spirits, rectified spirits, wine,
, ~
beer and every liquid consisting of or containing alcohol; and (b) any other
intoxicating substance which the Government may; by notification declare
•
to be liquor for the purposes of this Act, but does not include toddy".
Section 7 is the main provi.<ion prohibiting selling, buying and consumption B
of liquor. It reads:
"Prohibition of selling, buying and consumption of liquor.
7. The selling, buying, being in possession and consumption of
liquor, otherwise than in accordance with the provisions of this C
Act, or as the case may be, the Andhra Pradesh Excise Act, 1968,
is hereby prohibited."
Section 8 prescribes the punishment for contravention of the
provisions of section 7. Sections 9 and 10 provide for punishment of
persons found in state of intoxication and for abetting the escape of D
persons arrested. Section 11 makes any contravention of the provisions of
the Act or of any rule, notification or order made thereunder punishable.
Sections 12, 13 and 14 deal with seizure and confiscation. Chapter JV
containing Sections 15 and 16 provides for exemptions. Sub-section (1) of
Section 15 needs to be set out in view of the submissions made before us.
It reads:
"15. (1) Subject to such rules as may be made in this behalf, the
prescribed authority may issue,--
(i) permits to persons who are foreigners under the Foreigners
Act, 1939 and to persons who are non-resident Indians to consume
liquor;
E
F
(ii) licences to hotels and restaurants recognised as three star and
above in accordance with such rules as may be made and lo such
categories of institutions as may be specified by notification subject G
to such criteria as may be prescribed to sell foreign liquor or Indian
liquor to the holders of permits granted under this Act;
(iii) permits to those who are medically certified by any notified
medical authority as requiring to consume liquor on account of
any diagnosed health condition or problems, to consume liquor;
H
A
B
c
D
Tli3
SUPREME COURT REPORTS
[19%] 3 S.C.R.
(iv) permits to persons who are tourists from outside the State and
to persons who are not ordinarily residents of the State to consume
liquor;
(v) permits to members serving or retired belonging lo the armed
forces to consume liquor;
(vi) permits to companies, corporations, institutions, indcstrialists,
exporters, importers and similar such functionaries as may be
notified, who normally entertain foreigners, non-resident Indians
and guests coming from outside the State in pursuance of their
business activity or the activity connected with their institutions to
buy and serve liquors.
(vii) permits to consume liquor in cases of medical emergency; and
(viii) permits for sacramental wine used in masses conducted "in
Churches."
The other sub-sections of Section 15 contain provisions anciilary to
sub-section (1). Section 16 exempts the liquor in possession of bonafide
travellers for their own personal use while passing through any local area
E in which the Act is in force. It also saves lawful consignment of liquor
carried through or into any such local area from the operation of the Act.
The remaining provisions are in the nature of machinery provisions and
need not be noticed except Sections 32 and 33. Section 32 excepts certain
operations from the purview of the Act. it reads:
F
G
H
"32. Nothing in this Act shall be deemed to preclude,--
(a) the Andhra Pradesh Beverages Corporation Limited to
carry on trade in liquor in accordance with rules made in this
behalf;
{b) the buying and selling of liquor carried on by the military
canteens in the State under any licence granted in accordance
with the provisions of the Andhra Pradesh Excise Act, 1963
and the rules made thereunder; and
(c) the consumption of medicines containing alcohol."
t
STATEv. MC. DOWELL [B.P.JEEVAN REDDY,J.]
729
Section 33 confers the rule-making power upon the Government A
while Section 35 repeals the Ordinance issued in December, 1994.
There are a number of industries in the State of Andhra Pradesh
engaged in the manufacture of intoxicating liquors. They had taken out D-2
and B-2 licences prescribed by the rules made under the Andhra Pradesh B
Excise Act, 1968. The period of these licences, we are told, was one year,
i.e., financial year. The Government of Andhra Pradesh refused to renew
the said licences, when they came up for renewal, in the light of the
provisions of the Act. Several licensees approached the High Court of
Andhra Pradesh by way of writ petitions challenging the provisions of the
Act and seeking a declaration that the Act does not prohibit the manufacC
ture of liquor, though it may well prohibit the sale and consumption
thereof. The Full Bench, which heard the writ petitions, agreed with the
writ petitioners. They declared that Section 7 of the Act did not prolubit
the manufacture of liquor though it prohibited consumption, sale. and
possession thereof. They referred to the fact that several classes of persons D
within the State of Andhra Pradesh are exempted from the operation of
the Act whose requirements have to be met. The prohibition of possession
of liquor in Section 7, the Full Bench opined, was only for the purpose of
consumption, selling and buying within the State and does not affect the
manufacture. Accordingly, a direction was issued to the State of Andhra
Pradesh to consider the applications filed by the manufacturers for renewal E
of their licences without reference to the prohibition policy or to the
provisions of the Act. The orders rejecting applications for renewal were
quashed. The Full Bench thought it unnecessary to go into the question of
legislative competence of the Andhra Pradesh Legislature to make the said
Act in view of the interpretation placed by it on Section 7. The judgment F
was delivered on April 28·, 1995.
Against the judgment of the Full Bench of the Andhra Pradesh High
Court, the Sate of Andhra Pradesh preferred Special Leave Petitions (C)
Nos. 13936-13941 of 1995. They wete entertained by this Court and notice
issued to the respondents therein. It was directed that pending further G
orders status quo as on the date of the said order [July 21,1995] shall be
maintained. The writ petitioners-respondents were, however, permitted to
manufacture their products with the existing stocks of raw material upto
and inclusive of August 16, 1995. It was directed that they should not
continue their manufaduring operations beyond the said date irrespective H
730
SUPREME COURT REPORTS
[1996] 3 S.C.R.
A of the fact whether their stocks of raw materials were exhausted or not by
that date. It was further directed that the finished products manufactured
by them until the said date may be allowed to be cleared by the State in
accordance with law and subject to the conditions laid down in the letter
of the Commissioner of Prohibition and Excise No. 9736/95/Ex/J-5 dated
B May 24, 1995 referred to in the letter of the Commissioner dated June 16,
1995. It was also clarified that the said order shall not preclude the
Governor of Andhra Pradesh from issuing an ordinance seeking to amend
the Act, if he is so advised, with a view to remove the alleged defects
pointed out by the Full Bench.
C
On July 18, 1995, the Governor of Andhra Pradesh issued Ordinance
No.12 of 1995 amending certain provisions of the Act. Sections 2, 3 and 5
of the Ordinance were given effect from January 16, 1995 (the date of
commencement of the Act). Section 2 amended the long title of the Act
by including the expression "manufacture" within the ambit of the prohibition envisaged by it. By Section 3, the preamble to the Act was also
D
similarly amended. Section 4 amended the definition of "liquor" contained
in clause (7) of Section 2 of the Act. The amended definition reads as
follows:
E
F
"(7). 'Liquor' includes,--
(a) spirits of wine, wine beer and every liquid consisting of
or containing alcohol including Indian liquor and Foreign
liquor;
(b) any other intoxicating substance which the Government
may by notification, declare to be liquor for the purposes of
this Act,
but does not include toddy, denatured, spirits, methylated
spirits and rectified spirits;"
G This amendment was evidently effected in the light of the seven-Judge
Constitution Bench decision of this Court in Synthetics a11d Chemicals
Limited v. State of Uttar Pradesh, [1990] 1 S.C.C. 109.
Section 5 inserted Section 7-A after Section 7. Section 7-A is a short
one. It reads : "7 A. Manufacturing of liquor is hereby prohibited." Sections
H
6 to 9 of the Ordinance amended certain other provisions of the Act which
..
STATEv. MC. DOWELL[B.P.JEEVAN REDDY,J.]
731
need not be noticed for the purpose of theses appeals.
On October 12, 1995, the Legislature of Andhra Pradesh enacted the
Andhra Pradesh Prohibition (Amendment) Act, 1995 in terms of Or·
dinance No.12 of 1995 with certain minor changes which are not relevant
A
for our purpose. The manufacturers of intoxicating liquors in Andhra B
Pradesh have now come forward with these writ petitions under Article 32
of the Constitution of India challenging the constitutional validity of Act
35 of 1995 [hereinafter referred to as the "amending Act"].
Sri Ashok Desa~ learned counsel for the petitioner in Writ Petition
(C) No. 569 of 1995 submitted that the amending Act insofar as it prohibits C
the manufacture of liquor within the State of Andhra Pradesh is beyond
the legislative competence of the Andhra Pradesh Legislature. Learned
Counsel submitted that by virtue of the enactment of the Industries
(Development and Regulation) Act, 1951 [!.D.R. Act] and the inclusion of
fermentation industries (manufacturing alcohol and other products of fer· D
mentation industries) in the Schedule to the Act, the State Legislature is
denuded of its power to licence and regulate the manufacture of liquor.
Learned counsel placed strong reliance upon the holding in Synthetics and
Chemicals Limited that after the 1956 Amendment to !.D.R. Act including
alcohol industries as Item 26 in the First Schedule to that Act, the control
of the alcohol industries is vested exclusively in the Union and that thereE
after, licences to manufacture both potable and non-potable is vested in
the Central government [Para 85 of the judgment]. The next submission of
Sri Desai was that the Act is violative of Article 14 insofar as it prohibited
the manufacture of liquor by the units in Andhra Pradesh even for limited
local consumption. Even after the amending Act, learned counsel submitted, several classes of persons are exempted from the operation of the
Act and their requirements have to be met. Closing down the industries
manufacturing liquor in Andhra Pradesh and importing the requirements
of the consuming classes (exempted categories). from outside the State is
discriminatory and violative of Article 14, he submitted.
F
G
Sri Ganguly, learned counsel appearing for the petitioner in writ
Petition (C) No. 602 of 1995, submitted that the later decision of the
Constitution Bench of this Court in Khoday Distilleries v. State of Karnataka, [1995] 1 S.C.C. 574 does not altogether rule out the argument that
right to trade in intoxicating liquors is within the ambit of Article 19(l)(g). H
732
SUPREME COURT REPORTS
[1996]3 S.C.R.
A The learned counsel reiterated ·the submissions of Sri Desai in other
respects.
B
Sri Rohinton F. Nariman, learned· counsel appearing for the
petitioner in writ Petition (C) No. 593 of 1995, laid stress upon the
provisions contained in clauses (1), (2) and (3) of Article 246 of the
Constitution and submitted that the power of the State Legislature to make
a law with reference to matters enumerated in List-II in the Seventh
Schedule to the Constitution (provided by clause (3) of Article 246) is
subject to the Parliament's power specified in clauses (1) and (2) of the
said Article. Relying upon certain decisions of this Court, learned counsel
C contended that once the Parliament has enacted the I.D.R. Act and
included the fermentation industries within the purview of that Act by 1956
Amendment, the Parliament must be deemed to have expressed its clear
intention to occupy the entire field of fermentation industries including
alcohol industries. If so, the State Legislatures have no power to make any
D law with respect to the said industries. The control over the said industries
is exclusively that of the Union. Learned counsel reiterated the submission
of Sri Desai based upon Article 14.
Sri G. Ramaswamy, learned counsel appearing in Writ Petition (C)
No.680 of 1995, referred to the Constituent Assembly Debates with respect
E to Entry 52 in List-I of Seventh Schedule to the Constitution as well as to
certain decisions of this Court which, according to the learned counsel,
help in understanding the principles .enunciated in Synthetics and Chemicals Limited. Learned counsel submitted that by not prohibiting toddy
which contains more alcohol than beer and some other wines, the Act has
F brought about an invidious distinction which is a negation of the equality
clause contained in Article 14.
Sri Soli J. Sorabjee, learned counsel appearing for the State of
Andhra Pradesh, on the other hand, submitted that the State has the
exclusive power to make a law with respect to Entry 8, which entry is in
G no manner impinged upon by Entry 52 in List-I or by the !.D.R. Act made
in pursuance thereof. Learned counsel submitted that whenever the' question of legislative competence is raised, the matter has to be examined
applying the doctrine of pith and substance, as has been repeatedly affirmed by the Federal Court as well as this Court in a number of decisions.
H
Learned counsel submitted that any incidental trenching upon the field
)
STATEv. MC. DOWELL [B.P. JEEVAN REDDY, J.]
733
reserved for the union cannot be characterised as travelling beyond the A
assigned field. He submitted that the decision in Sy11thetics a11d Chemicals
·~
Limited should be read in the light of the question raised therein and
should not be read as a statute. The observations relied upon by the
learned counsel for the writ petitioners, he submitted, cannot be charac..
terised as constituting the ratio of the said decision. They cannot be B
understood as decisions on those issues since those issues were not in
controversy before the Court nor were the parties at issue thereon. He
referred to certain later decisions of this Court to indicate how they have
understood the decision in Synthetics a11d Chemicals Limited. Learnec'
counsel submitted that the decisions of this Court in Harsha11kar v. Deputy
I·
Excise a11d Taxatio11 Commissioner, [1975] (3) S.C.R. 254 and Khoday C
Distilleries conclusively lay down that no citizen of this country has a
fundamental right to trade in liquor. Once they have no such right, the
learned counsel submitted, writ petition under Article 32 of the Constitution, which lies only to enforce a fundamental right, is misconceived.
Learned counsel also disputed the correctness of the petitioners submis- D
sions based upon Article 14.
PART-II
Part XI of the Constitution deals with relations between the Union
and the States. Chapter-I in this Part bears the heading "Legislative RelaE
lions: Distribution of Legislative Powers". Clause (1) of Article 245
declares that "subject to the provisions of this Constitution, Parliament may
make laws for the whole or any part of the territory of India, and the
Legislature of a State may make laws for the whole or any part of the State."
Clause (1) of Article 246 declares that "notwithstanding anything contained F
in clauses (2) and (3), Parliament has exclusive power to make laws with
respect to any of the matters enumerated in List I in the Seventh Schedule
(in this Constitution referred to as the 'Union List')". Clause (2) of Article
246 declares that "notwithstanding anything in clause (3), Parliament and,
subject to clause (1), the Legislature of any State. also have power to make
laws with respect to any of the m'l!ters enumerated in List III in the G
Seventh Schedule (in this Constitution referred to as the Concurrent List)".
"' ,;
Clause (3) of Article 246 then declares that "subject to clauses (1) and (2),
the Legislature of any State has exclusive power to make laws for such State
or any part thereof with respect to any of the matters enumerated in List
II in the Seventh Schedule (in this Constitution referred to as the 'State H
734
SUPREME COURT REPORTS
[1996] 3 S.C.R.
A List')." Clause (4) says that "Parliament has power to make laws with
respect to any matter for any part of the territory of India not included in
a State, notwithstanding that such matter is a matter enumerated in the
State List". Article 248 vests the residuary legislative power in the Union.
Article 249 empowers the Parliament to legislate with respect to a matter
B in the State List in national interest while Article 250 empowers the
Parliament to legislate with respect to any matter in the State List if a
proclamation of emergency is in operation. Article 251 says that the
provisions of Articles 249 and 250 do not restrict the power of the Legislature to make any law which it is competent to make but if such law is
repugnant to any of the provisions of the law made by the. Parliament under
C the said Articles, the law made by Parliament shall prevail so long only as
the law made by the Parliament continues to have effect. Article 252
empowers the Parliament to legislate for two or more States by their
consent. It also provides for adoption of such legislation by other States.
Article 254 declares that if any provision of law made by the Legislature
D of a State with respect to matters enumerated in the Concurrent List is
inconsistent with the provisions of any law made by the Parliament, between the Union and the States. Chapter-I in this Part bears the heading
"Legislative Relations: Distribution of Legislative Powers". Clause (1) of
Article 245 declares that " subject to the provisions of this Constitution,
E Parliament may make laws for the whole or any part of the territory of
India, and the Legislature of a State may make laws for the whole or any
part of the State." Clause (1) of Article 246 declares that "notwithstanding
anything contained in clauses (2) and (3), Parliament has exclusive power
to make laws with respect to any of the matters enumerated in List I in the
F Seventh Schedule (in this Constitution referred to as the 'Union List')".
Clause (2) of Article 246 declares that "notwithstanding anything in clause
(3), Parliament and, subject to clause (1), the Legislature of any State also
have power to make laws with respect to any of the matters enumerated in
List III in the Seventh Schedule (in this Constitution referred to as the
Concurrent List')". Clause (3) of Article 246 then declares that "subject to
G
clauses (1) and (2), the Legislature of any State has exclusive power to
make laws for such State or any part thereof with respect to any of the
matters enumerated in List II in the Seventh Schedule (in this Constitution
referred to as the 'State List')." Clause ( 4) says that "Parliament has power
to make laws with respect to any matter for any part of the territory of
H
India not included in a State, notwithstanding that such matter is a matter
STATE v. MC. DOWELL [B.P. JEEV AN REDDY, J.]
735
enumerated in the State List". Article 248 vests the residuary legislative A
;
power in the Union. Article 249 empowers the Parliament to legislate with
respect to a matter in the State List in national interest while Article 250
empowers the Parliament to legislate with respect to any matter in the State
List if a proclamation of emergency is in operation. Article 251 says that
the provisions of Articles 249 and 250 do not restrict the power of the B
Legislature to make any law which it is competent to make but if such law
is repugnant to any of the provisions of the law made by the Parliament
under the said Articles, the law made by Parliament shall prevail so long
only .as the law made by the Parliament continues to have effect. Article
+
252 empowers the Parliament to legislate for two or more States by their
consent. It also provides for adoption of such legislation by other States. c
Article 254 declares that if any provision of law made by the Legislature
of a State with respect to matters enumerated in the Concurrent List is
inconsistent with the provisions of any law made by the Parliament, whether
made earlier to the State enactment or later, the State enactment shall to
the extent of repugnancy be void. If, however, the State enactment is D
reserved for and receives the assent of the President, such law will prevail
"
in that State notwithstanding its repugnancy with a Parliamentary enactment.
After considering the aforesaid provisions and the scheme of the
Constitution, a nine,Judge Bench of this Court in S.R. Bommai & Ors. v. E
Union of India, (1994] 3 S.C.C. 1 has opined that within the sphere allotted
to States, they are supreme.
It has been repeatedly pointed out by this Court and the Federal
Court (dealing with similar distribution of legislative powers among the F
Centre and the Provinces under the Government of India Act, 1935) that
the several entries in th~ three Lists in the Seventh Schedule are mere
legislative heads and that it is quite likely that very often they overlap.
Wherever such a situation arises, it is held, the issue must be solved by
applying the rule of pith and substance. As explained by T.L Venkatarama
..
Iyer, J. in A.S. Krishna & Ors. v. State of Madras, (1957] S.C.R.399:
G
•-f
"It must be remembered that we are construing a federal Constitution. It is of the. essence of such a Constitution that there should
be a distribution of the legislative powers of the Federation between the Centre and the Provinces. The scheme of distribution H
A
B
c
D
E
F
G
736
SUPREME COURT REPORTS
[1996] 3 S.C.R.
has varied with different Constitutions, but even when the Constitution enumerates elaborately the topics on which the Centre
and the States could legislate, some overlapping of the fields of
legislation is inevitable. The British North America Act, 1867,
which established a federal Constitution for Canada, enumerated
in ss.91 and 92 the topics on which the Dominion and the Provinces
could respectively legislate. Notwithstanding that the lists were
framed so as to be fairly full and comprehensive, it was not long
before it was found that the topics enumerated in the two sections
overlapped, and the Privy Council had time and again to pass on
the constitutionality of laws made by the Dominion and Provincial
legislatures. It was in this situation that the Privy Council evolved
the doctrine, that for deciding whether an impugned legislation
was intra vires, regard must be had to its pith and substance. That
is to say, if a statute is found in substance to relate to a topic within
the competence of the legislature, it should be held to be intra
vires, even though it might incidentally trench on topics not within
its legislative competence. The extent of the encroachment on
matters beyond its competence may be an element in determining
whether the legislation is colourable, that is, whether in the guise
of making a law on a matter within its competence, the legislature
is, in truth, making a law on a subject beyond its competence. But
where that is not the position, then the fact of encroachment does
not affect the vires of the law even as regards the area of encroachment. Vuie Citizens Insurance Company of Canada v. William
Parsons, (1881) 7 AC 96; The Attorney-General for Ontariao v.
Attorney-General for the Dominion of Canada, 1894 A.C. 189; The
Attorney General of Ontaria v. Attorney-General for the Dominion,
(1896) AC 348; Union Colliery Company of British Columbia v.
Bryden, (1899) AC 580; Attorney-General for Canada v. AttomeyGeneral for Ontaria, (1937) AC 355; Attorney-General for Alberta
v. Attorney-General for Canada, (1939) AC 117 and Board of
Trnstees of Letherbridge Northern Inigation District v. Independent
Order of Foresters, (1940) AC 513."
The learned Judge pointed out that this very principle was enunciated by the Federal Court in Subramanyan Chettiar v. Muttudesmi Goundan, (1940) F.C.R. 188 and by the Privy Council in Praful/a Kumar v. Bank
H of Commerce Ltd., A.l.R.(1947) P.C.60 wherein the statement of law in
' "
STATE v. MC. DOWELL [B.P. JEEV AN REDDY, J.]
737
Subramanyan Chettiar was endorsed in full.
A
Sri Sorabjee invited our attention to the decision of the Federal
Court in Bhola Prasad v. 171e King-Emporer (1940) F.C.R.17 where it was
held that the power to legislate "with respect to intoxicating liquors conferred upon the Provincial Legislature by Entry 31 in the Provincial Legislative List includes a power to prohibit intoxicating liquors throughout the B
province or any specified part of province unless the meaning of the words
used is restricted or controlled by the context or by other provisions in the
Act.
11
Learned counsel also invited our attention to another decision of the C
Federal Court in Miss Kishori Shetty v. The King (1949) F.C.R.650. The
appellant was charged for being in possession of a certain quantity of
foreign liquor/whisky in excess of the limit provided under the notification
issued under Section 14B of the Bombay Abkari Act. The appellant
contended that Section 14B insofar as it prohibited possession of foreign D
whisky was beyond the legisl.ative competence of the Provincial Legislature
inasmuch as it amounts in effect to prohibiting the import of such goods
into the country which can be done only by the Central Legislature. It was
submitted that under Item 19 in List-I of the Seventh Schedule to the 1935
Act; the Centre had the exclusive power to make a law with respect
0to
"import and export across customs frontier. as defined by the dominion E
frontiers" whereas States' power to make a law with respect to intoxicating
liquors wa:s limited to Item 31 in List-II (which read "intoxicating liquors
and narcotic drugs, that is to say, the production, manufacture, possession,
transport, purchase and sale of intoxicating liquors, opium and other
narcotic drugs") She, therefore, contended that Section 14B is void to the F
extent it prohibited the possession of imported whisky/liquor.