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Gokulakrishnan, J.—Writ Petition Nos. 3955 and 3956 of 1978 and 3125 and 3167 of 1980: In the above Writ Petitions, each of the Writ Petitioner prays for the issue of a writ of declaration or any other appropriate writ, order or direction declaring that the Tamil Nadu Prohibition (Amendment) Act (XXXII of 1978) is void and unconstitutional in so far as it affects the Petitioner and for the issue of a consequential direction directing the Respondents to consider the application of the Petitioner for extension of his or her licence without recourse to the provisions of the Tamil Nadu Prohibition (Amendment) Act, (XXXII of 1978) hereinafter referred to as Act 32 of 1978.
Writ Petition No. 4247 of 1978 has been filed by the Secretary of the Tamil Nadu Spirit and French Polish Manufacturers, Dealers and Users Association, questioning the validity of Act XXXII of 1978.
The Petitioner in Writ Petition No. 3955 of 1978 is the holder of a DL-1 licence for wholesale vend of denatured spirit, She would want the second Respondent, the Collector of Madras, to consider her application for extension of the DL-1/78/79 licence without recourse to Act XXXII of 1978.
The Petitioner in Writ Petition No. 3956 of 1978 is the holder of DL-4, DL-5, and DL-8 licences and would want the Collector of Madras to consider her application for extension of those licences without recourse to Act XXXII of 1978.
The Petitioner in Writ Petition No. 3125 of 1980 is the holder of a DL-5 licence and wants extension of the same without recourse to Act XXXII of 1978.
The Petitioner in Writ Petition No. 3167 of 1980 is the holder of DL-1, DL-4, DL-5 and DL-8 licences and wants extension of those licences without recourse to Act XXXII of 1978.
Mr. G. Ramaswamy, learned Counsel, appears for the Petitioner in Writ Petition Nos. 3955 and 3956 of 1978. His arguments have been adopted by Mr. S. Ramalingam, learned Counsel appearing for the Petitioner in Writ Petition No. 4247 of 1978. Mr. P.R. Krishnan, learned Counsel, appears for the Petitioner in Writ Petition Nos. 3125 and 3167 of 1980 and he adopts the arguments of Mr. G. Ramaswamy besides submitting individual arguments.
The learned Advocate-General argued for the Respondents in these writ proceedings.
In view of Act XXXII of 1978, the Writ Petitioners would not be considered for the grant of DL-1, DL-4, DL-5 or DL-8 licence or extension thereof, since they do not come under the category envisaged under the Amended Act XXXII of 1978 for grant of the licence. Therefore, they are questioning the validity of Section 20C of the Tamil Nadu Prohibition Act as introduced by the Amendment Act XXXII of 1978. The main contentions raised by the respective Writ Petitioners are as follows:
Under Entry 52 of List I in the Seventh Schedule to the Constitution:
Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.
is a matter coming under the Union List. The Industries (Development and Regulations) Act, (LXV of 1951), which is a Central Act, declares under Entry 19 (5) Paints, Varnishes and Enamels and under Entry 26 (1) and (2) Alcohol and other products of Fermentation Industries as Industries coming under the said Act. Section 20C of the Tamil Nadu Prohibition Act, as introduced by Act XXXII of 1978, deals with licence for possession and use of denatured spirit in the manufacture of specified commodities etc. Since this subject is in relation to industries coming under the purview of the Industries (Development and Regulation) Act, 1951, according to the learned Counsel the State Legislature has no power to legislate such a provision and therefore the State Legislature has no legislative competence to enact Act XXXII of 1978.
The Second contention raised by the Petitioners in these Writ Petitions is that Section 20A of the Tamil Nadu Prohibition Act as introduced by Act XXXII of 1978 violates Article 19(1)(g) of the Constitution and therefore Act XXXII of 1978 has to be declared as a void one.
It was then contended that Act XXXII of 1978 violates Article 301 of the Constitution and is not saved by Article 304(b) of the Constitution.
Lastly it was contended that the Amendment Act XXXII of 1978 is discriminatory and is void for violation of Article 14 of the Constitution is so far as:
(a) Section 20C(i) discriminates between manufactures of spirit-based produced who are registered with the Director-General of Technical Development or the Director of Industries and Commerce and other manufacturers of varnish in the private sector;
(b) Section 20C (ii) discriminates between Co-operative Societies and other vendors of denatured spirit of varnish in the private sector.
On the above points, Mr. G. Ramaswamy and Mr. P.R. Krihsnan elaborated their arguments which we will be considering while discussing the main points in these cases.
The learned Advocate-General, on the other hand, contended that the amendment Act XXXII of 1978 is within legislative competence of the State Legislature and it neither violates Article 19(1)(g) nor offends Article 301 or Article 14. According to the learned Advocate-General, there cannot be any fundamental right to deal with denatured spirit, varnish etc. since these commodities would come under the category of noxious commodities.
The basic contention of Mr. G. Ramaswamy is that, in pith and substance, the impugned legislation is in respect of sale of denatured spirit and manufacture of sale of varnish. Hence, according to the learned Counsel, the same would not fall under intoxicating liquors coming under Entry 8 of List II in the Seventh schedule.
Section 20C introduced by the impugned Act XXXII 1978, reads as follows:
20-C. Licence for possession and use of denatured spirit in the manufacture of specified commodities etc.- Notwithstanding anything contained in this Act, no licence under this Act shall be issued:
(i) for the possession and use of denatured spirit in the manufacture of Varnish (French Polish), picture Varnish, Insulating Varnish, Paint Remover, Gasket Shellac, Printing Ink or such other commodities as may be specified by the State Government from time to time except to the units of any department of the State Government or of any Government Company within the meaning of the Companies Act, 1956 (Central Act I of 1956) or any Corporation owned or controlled by the Central Government or the State Government and to manufacturers of spirit based products who are registered with the Director-General of Technical Development, Government of India or the Director of Industries and Commerce, Madras;
(ii) For the possession and sale, whether wholesale or retail of denatured spirit or of varnish (French Polish) except to the units of any department of the State Government or of any Government Company within the meaning, of the Companies Act, 1956 (Central Act I of 1956) or any Corporation owned or controlled by the Central Government or the State Government or a Co-operative Society registered or deemed to have been registered under any law in force for the time being.
Entry 8 of List II (State List) of the Seventh Schedules:
Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors.
According to the learned Advocate-General, the impugned legislation will squarely come under Entry 8 of List II. Learned Counsel for the Writ Petitioners on the other hand would refute this contention. In this connection, we may look into such of those Entries as are dealing with industries and products akin to intoxicating liquors. Entry 7 of List I is:
Industries declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war.
Entry 52 of List I is:
Industries the control of which by the union is declared by Parliament by law to be expedient in the public interest.
In List II, apart from Entry 8, Entry 24 is:
Industries subject to the provisions of Entries 7 and 52 of List I.
Entry 27 of List II is:
Production, supply and distribution of goods subject to the provisions of Entry 33 of List III.
Entry 33 of List III is:
Trade and Commerce, in and the production, supply and distribution of:
(a) the products of any industry where the control of such industry by the Union is declared by Parliament
(b) foodstuffs, including edible oilseeds and oils;
(c) cattle fooder, including oilcakes and other citric seed; and/
(e) raw jute.
In this connection, Mr. G. Ramaswami, learned Counsel, brings to our notice the decision reported in Ch. Tika Ramji and Others etc. Vs. The State of Uttar Pradesh and Others, . In order to elucidate the decision rendered in this Supreme Court judgment, learned Counsel would rely on the note given by H.M. Seervai in his commentary on the Constitutional Law of India (second edition) volume II, at pages 1315 and 1316 wherein it is stated as follows:
Industry in a wide sense comprises three different aspects
(i) raw materials which are an integral part of the industrial process,
(ii) the process of manufacture or production
(iii) the distribution of the products of industry.
Confining oneself to List II, raw materials would be goods with Entry 27, List II and so would the products of an industry. The process of manufacture or production would be comprised in entry 24. However, where the industry is a controlled industry, the process of manufacture or production would fall within entry 52, List I but the products of that industry would fall in entry 33, List III. Relying on this passage, the learned Counsel would state that since under Entry 19 of the First Schedule to the Industries (Development and Regulations) Act, varnish is stated to be a controlled Industry, production of varnish will come under Entry 52 of List I. It was further submitted that distribution or sale of varnish will come under Entry 33 of List III, of the Seventh Schedules to the Constitution. Similarly, it was argued that because under Entry 26 of the First Schedule to the Industries (Development and Regulation) Act, sale of denatured spirit will come under Entry 33 of List III to the Seventh Schedule to the Constitution If so, it was submitted that the impugned Act XXXII of 1978 beyond the legislature competence of the State Legislature.
The Tamil Nadu Denatured Spirit Methyl Alcohal and Varnish (French polish) Rules, 1959, defines denatured spirit Under Rule 2(c) as:
Denatured Spirit'' means spirit subjected to any one of the following procedure for the purpose of redering it unfit for human consumption, namely:....
Rule 2(h) defines Mythlthlated spirit as meaning:
denatured spirit rendered effectually unfit for human consumption by the admixture of crude woodnaptha otherwise than in a highly purified condition, in the proportion of one part of crude woodnaptha to nine parts of spirit (or in any other proportion that may specially be prescribed by the Government).
Rule 2(m) defines Varnish as meaning:
Spirit Varnish, commonly known as French polish, containing shella, Cresir a both dissolved in denatured spirit that is, spirit denatured by the addition of half a litre of light coutchouncince and half a litre of pyridine to ninety nine litres of spirit at a minimum strength of 50 degree over proof or denatured under the process sanctioned under-Sub-rule (2).
Under Section 3(9) of the Tamil Nadu Prohibition Act IX of 1937.
Liquor includes toddy, arrack, spirits of wine, denatured spirits, wine-beer and all liquid consisting of or containing alcohol;
Explanation; Denatured means subject to a process prescribed by the State Government by notification for the purpose of rendering unfit for human consumption.
In the Encyclopedia Britannica, volume XXII at page 899 Varnish is stated to include, among other things Spirit Varnishes which are solutions of resins in Volatile solvents,
From the above said definitions, Mr. G. Ramaswami contended that Varnish is not alcohol and therefore the law made is not law in respect of intoxicating liquors. The learned Counsel further contended that in pith and substance the impugned legislation is not in respect of intoxicating liquor and therefore will not come under Entry 8 of List II of the Seventh Schedule.
In the Statement of Objects and Reasons for the introduction of the impugned legislation (Act XXXII of 1978), it is stated that the legislation is intended to check the misuse of the quotas of denatured spirit granted to the licensees under the Tamil Nadu Denatured Spirit Methyl Alcohol and Varnish (French Polish), Rules 1959. On this basis it is contended that it can not be construed that the impugned legislation is in respect of intoxicating liquors.
In this connection, we can usefully refer to the decision reported in State of Bombay v. F.N. Balsara AIR 1951 S.C. 318. In this, decision the Supreme Court had occasion to consider the definition of liquor and has observed;
The definition of liquor in the Madras Abkari Act, 1886 is the same as in the Bombay Act of 1878. Even if we exclude the American and English Acts from our consideration, we find that all the Providial Acts of this Country have a consistently included liquids containing alcohol in the definition of liquor and intoxicating liquor, The farmers of the Government of India Act, 1935, could not have been entirely ignorant of the accepted sense in which the word ''liquor'' has been used in the various excise Act of this country, and, accordingly I consider the appropriate conclusion to be that the word ''liquor'' covers not only those alcoholic liquids which are generally used for beverage purposes and produce intoxication, but also all liquids containing alcohol. It may be that the latter meaning is not the meaning which is attributed to the word ''liquor'' in common parlance especially when that word is prefixed by the qualifying word intoxicating, but in my opinion having regard to the numerous statutory definitions of that word, such a meaning could not have been intended to be excluded from the scope of the term "intoxicating liquor'' as used in entry 31 of List II.
Entry 31 of List II in the Seventh Schedule of the Government of India Act, 1935, deals with intoxicating liquor.
The above said decision of the Supreme Court and the various provisions which we have noticed, would make it clear that liquids containing alcohol will come under the category of intoxicating liquors.
In as much as denatured spirit which is used for manufacture of Varnish (French Polish),- etc., contains alcohol, it will come under the category of intoxicating liquor, the possession of it will squarely bring it under Entry 8 of List II in the Seventh Schedule of the Constitution of India.
In Writ Petition No. 594 of 1976, dated 17th September, 1981 (Messrs Southern Synthetics Ltd. Madras-14 v. State of Tamil Nadu) a Full Bench of this Court has held that whatever be the nature of the liquor, that is, whether it is potable or not, the State Government will be well within its power to legislate under List II, Entry 8, relating to intoxicating liquor. The learned Advocate-General strongly relied upon this decision and submitted that the impugned legislation in this case would come only under Entry 8 of List II of the Seventh Schedule to the Constitution. The learned Advocate-General further submitted that only items coming under Entry 24 of List II of the Seventh Schedule can be transferred to Entry 52 of List I, and in the case on Hand, the impugned Legislation relating, as it does to Entry 8 of List II, the subject cannot be transferred to Entry 52 of'' List I. in this connection, the learned Advocate General cited the decisions reported in Southern Pharmaceuticals and Chemicals, Trichur and Others Vs. State of Kerala and Others, . In that case, the Kerala Abkari (Amendment) Act, 1967 was questioned as wanting in legislative competency. There were also other grounds raised in those writ proceedings. Before the Supreme Court, the constitutional validity of the impugned provisions was mainly challenged on these grounds namely:
(1) The State Legislature had no legislative competence to enact the impugned provisions because the field was occupied by the provisions of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (the Central Act) and the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 (The Central Rules), and alternatively, the impugned provisions are violative of the Fundamental right guaranteed in Article 19(1)(g) of the Constitution.
(2) The Parliament having made a declaration in Section 2 of the Industries (Development and Regulation) Act, 1051, declaring Drugs and Pharmaceuticals to be a scheduled industry, being item 22 of the of the First Schedule thereof, the power of the State Legislature to make a law in respect of medicinal and toiler preparations containing alcohol is taken away,
(3) The provisions made in Section 14(e) of the Act for the collection of supervisory charges was clearly invalid inasmuch as (a) they are in conflict with Rule 45 of the Central Rules and they could not be sustained as a fee as there was no Quid -pro -quo.
(4) Rules 13 of the Kerala Rectified Sprit Rules, 1972, providing for the levy of excise duty as excess was rage of alcohol in the manufacture of medical and toilet preparations can-not be supported in terms of the charging provisions contained in Section 17 of the Act. The Supreme Court has not accepted all these contentions, In dealing with these questions, the Supreme Court has observed (at page 871):
There can be no doubt that the impugned Act is referable to Entry 8, List II of the Seventh Schedule. In Balsara''s case AIR 1951 S.C. 318. 325 the Court held that expression liquor in Entry 31, List II of the Seventh Schedule to the Government of India Act, 1935, took within its sweep all liquids containing alcohol. In dealing with the question, Fazal Ali, J. observed (at page 325):
The farmers of the Government of India Act, 1935, could not have been entirely ignorant of the accepted sense in which the word ''liquor, has been used in the various Excise Acts of this country and, accordingly I consider the appropriate conclusion to be that the word ''liquor, covers not only those alcoholic liquids which are generally use for coverage purposes and produce intoxicating, but also all liquids containing alcohol. It may be that the later meaning is not the meaning which is attributed to the word ''liquor, in common parlance especially when that word is prefixed by the qualifying word intoxicating but in my opinion having regard to the numerous statutory definitions of that word such a meaning could not have been intended to be excluded from the scope of the term intoxicating liquor as used in Entry 31 of List II.
It is not disputed by the Appellants that the impugned Act does not levy a duty of excise on medicinal and toilet preparations containing alcohol but they contend that whatever be the intention, the State legislature had, in-fact, encroached upon an occupied field. The contention is, in our opinion wholly misconceived. The main purpose of the impugned Act is to consolidate the law relating to manufacture sale and possession of intoxicating liquor and intoxicating drugs which squarely falls under Entry 8, List II of the Seventh Schedule, while the main object of the Central Act is to provide for the levy and collection of duties of excise on medicinal and toilet preparations containing alcohol falling under Entry 84. List I of the seventh schedule. When the frame-work of the two enactments is examined, it would be apparent that the Central and the State Legislation operate in two different and distinct fields. In the matter of making rules or detailed provisions to achieve the object and purpose of a legislation, there may be some provisions seemingly overlapping or encroaching upon the forbidden field, but that does not warrent the striking down the impugned Act as ultra vires the State Legislature.
The alternative contention that the impugned provisions are violative of Article 19(1)(g) of the Constitution, is wholly devoid of any merit. No citizen has any fundamental right guaranteed under Article 19(1)(g) of the Constitution to carry on trade in any noxious and dangerous goods like intoxicating drugs or intoxicating liquors. The power to legislate with regard to intoxicating liquor carries with it the power to regulate the manufacture, sale and possession of medicinal and toilet preparations containing alcohol, not for the purpose of interfering with the right of citizens in the matter of consumption or use for bonafide medicinal and toilet preparations, but for preventing intoxicating liquors from being passed on under the guise of medicinal and toilet preparations. It was within the competence of the Legislature to prevent the noxious use of such preparations i.e., their use as a substitute for alcoholic beverages.
The Supreme Court further held that the impugned, provisions have been enacted to ensure that rectified spirit is not misused under the pretext of being used for medicinal and toilet preparations containing alcohol. Such regulation is a necessary concomitant of the police power of the State to regulate such trade or business which is inherently dangerous to public health.
Applying the above said principles to the facts of the present case it is clear that the legislation now in question, in pith and substance, is one under Entry 8 of List II of the Seventh Schedule. This is clear from the statement of objects and reasons wherein it is stated that such a legislation was brought since the quotas of denatured spirit granted to the parties concerned were misused. It has also been stated in the statement of objects and Reasons that such a legislation has been brought about to enforce prohibition more vigorously and also prevent the misuse of the denatured spirit by such licensees. Even apart from the Statement of Objects and Reasons, Section 20C of the Act, which is being questioned in these writ proceedings, clearly spells out the control the State Government wants to have in granting licence for possession and use of denatured spirit in the manufacture of specified commodities etc. It is also clear that the legislation is hot under Entry 24 of List II so as to attract Entry 52 of List I of the Seventh Schedule. Further, under the Industries (Development and Regulation) Act, 1951, Entry 19 of the First Schedule, catalogues, among other commodities, varnishes and Entry 26 catalogues alcohol and other products of fermentation industries. This act deals with Industry as such, and hence varnish industry and alcohol and other products of frementioned industry, as such will be controlled by this Act. The introduction of Section 20C, in with and substance, comes under Entry 8 of List II, inasmuch it deals with possession and use of denatured spirit in the manufacture of specified commodities etc. The impugned provisions has been enacted to ensure that rectified spirit is not misused under the pretext of being used in the preparation of varnish etc. containing alcohol. Such regulation is a necessary concomitant of the police power of the State to regulate such trade or business which is inherently dangerous to public health. Further, the present enactment, which will squarely come under Entry 8 of List II of the Seventh Schedule of the Constitution, in pith and substance, is not a legislation under Entry 24 of List II and therefore Entry 52 of List I is not attracted.
In this connection, we can also usefully quote the decision reported in The Calcutta Gas Company (Proprietary) Ltd. Vs. The State of West Bengal and Others, . In this case, the West Bengal Oriental Gas Company Act, 1950 was questioned as being beyond the legislative competence of the State Legislature. In regard to that Act, the Supreme Court interpolated Entries 24 and 25 of List II and Entry 52 of List I of the Seventh Schedule to the Constitution. According to the definition of industry which the Supreme Court held must be the same both in respect of Entry 24 of List II and Entry 52 of List, I, the Supreme Court concluded that the same would take in Gas and Gas works mentioned in Entry 25 of List II. The Supreme Court, stating as to how these conflicts have to be harmoniously looked into in order to give meaning for both these En tries, held:
On this interpretation, the argument...that under Article 246 of the Constitution, the legislative power of State is subject to that of Parliament ceases to have any force, for the gas industry is outside the legislative field of Parliament and is within the exclusive field of the Legislative of the State.
The Supreme Court, therefore, held that the West Bengal Oriental Gas Company Act, 1950, was within the legislative competence of the West Bengal State Legislature and was validity made. Applying this principle, it is clear that the legislation which is now impugned before us, will clearly come within the purview of Entry 8 of List II. Hence the production, manufacture, possession, transport, purchase and sale of intoxicating liquor comes within the legislative competence of the State Legislature.
Mr. G. Ramaswami, learned Counsel appearing for some of the Writ Petitioners, citing Ch. Tika Ramji and Others etc. Vs. The State of Uttar Pradesh and Others, submitted that the industry in question is a controller industry and the process of manufacture or production would fall within Entry 52 of List I, but the products of that industry would fall within entry 33 of List III. We have, in the paragraphs supra, discussed and decided that, in pith and substance, the impugned legislation would fall only under Entry 8 of List II.
Mr. G. Ramaswami, citing the decision in The Hingir-rampur Coal Co. Ltd. and Others Vs. The State of Orissa and Others, submitted that the State Legislature has no competence to legislate Section 20C of the Tamil Nadu Prohibition Act. The said decision relates to a case where the Supreme Court considered Entry 25 of List II and Entry 54 of List I, with reference to the Orissa Mining Areas Development Fund Act, 1952. In that context, the Supreme Court held that the jurisdiction of the State Legislature under List III Entry 23 is subject to the limitation imposed by the latter part of that Entry. If Parliament by its law has declared that regulations and development of mines should in pubic interest be under the control of the Union, to the extent of such declarations the jurisdiction of the State Legislature is excluded. In other words, if a Central Act has been passed which contains a declaration by Parliament as required by Entry 54, and if the said declaration covers the field occupier by the impugned Act the impugned Act would be ultra vires, not because of any repugnance between the two statutes but because the State Legislature had no jurisdiction to pass the law. The limitation imposed by the latter part of Entry 25 is a limitation on the legislature competence of the State Legislature itself. Of course, there cannot be any dispute for the proposition laid down by the Supreme Court. Nevertheless, in the present case, even though the Industries (Development and Regulation) Act, 1951, in its First Schedule, would take in its fold among others Indusities pertaining to Paints, Vanishes and Enamells and also Alcohol and other products of fermentation in industries we have already discussed on this aspect of the case and came to the conclusion that the same will not in any way preclude the present impugned legislation inasmuch as it would, in pith and substance, fall under Entry 8 of List II of the Seventh Schedule. Since we have held that in pith and substance the impugned legislation comes under Entry 8 of List II, there is no question of obtaining the President''s assent in this case, nor would the legislation come under Entry 33 of List III. Further, the non-obstinate Pause in the impugned sention will not in any way affect, or come in conflict with, the Central Legislation, since the impugned section and the Act itself within the purview of Entry 8 of List II.
In Wirt Appeal No. 317 of 1961 S.M. Krishnan (etc.) v. State of Tamil Nadu (etc.) and Writ Petition Nos. 5475, 5669 and 5827 of 1981, by judgment, dated 23rd December, 1981, a Fuller Bench consisting of five Judges of our High Court, dealing with the validity of the constitution of a Commission of Enquiry headed by a retired Judge of our High Court in respect of the sale of spirit, had occasion to deal with the legislative competence of the State Legislature for appointing such Commission of Enquiry regarding the sale of spirit. It was held therein that the State Legislature has power under Entry 8 of List II to legislate with reference to intoxicating liquor since it is a special and separate category not falling in the general category of industries coming within Entry 24 of List II. This ruling will squarely apply to this case on hand and it will strengthen our couclusion that the impugned legislation would come only under Entry 8 of List II.
In State of Uttar Pradesh and Others Vs. Synthetics and Chemicals Ltd. and Others, , the Supreme Court has held that the word ''liquor, with not only cover alcohol liquor which is generally used for beverage purposes and produce intoxication, but will also include liquids containing alcohol, Definitely, denatured spirit contains alcohol. If this observation of the Supreme Court Is taken into consideration, the legislation now, in question would clearly come under Entry 8 of List II. This view is strengthened in view of the decision in Balalsara''s case AIR 1961 S.C. 318 which we have referred to earlier,
It is clear from the decision reported in Ishwari Khetan Sugar Mills (P) Ltd. and Others Vs. State of Uttar Pradesh and Others, that:
before the State Legislature is denuded of power to legislate under Entry 24, List II in respect of a declared industry, the scope of declaration and consequent control assumed by the Union must be demarcated with precision and then to ascertain whether the impugned State legislation trenches upon the excepted field.
In the light of this principals laid down by the Supreme Court, we do not think that the industries declared by the Industries (Development and Regulation) Act, 1951, such as paints, varnishes and enamel and alcohol and other products of fermentation industries, come into conflict with the State''s power to license for possession and use of denatured spirit in the manufacture of specified commodities etc in order to prevent the misuse of denatured spirit by such licensees and also to enforce prohibition more vigorously.
From the foregoing discussion, We are of the view that it was within the legislative competence of the State legislature to enact Section 20C of the Tamil Nadu Prohibition Act.
We shall now Consider the arguments advancedon Articles 19, 14, 301 and 304 of the Constitution of India. According to Mr. G. Ramaswami and the other learned Counsels appearing for the Petitioners'' the impugned legislation is one on varnish that it will not come under the category of liquor, and that the Petitioners have fundamental right to trade in varnish and denatured spirit. It was further submitted that the reasonableness of the impugned legislation has to be established by the State Number of decisions were cited on both sides on this aspect, We will be referring to the relevant latest position on this subject in the succeeding paragraphs.
Section 20C of the Prohibition Act (the impugned section) deals with licence for possesion and use of denatured spirit in the manufacture of specified commodities. In this case, we are concerned with DL-1, DL-4, DL-5 and DL-8 forms of licensees. DL-1 form of licence is for the wholesale vend of denatured spirit/methylated spirit/methyl/alcohol. D-L-4 form of license is for the retail sale of denatured spirit. DL-5 form of licence is for possession and use of denatured spirit in the manufacture of varnish and use or sale of varnish. DL-8 form of licence is for the sale of varnish. By the impugned Section 20C, the ''possession and use of denatured spirit in the manufacture of varnish and possession and sale of denatured spirit or of varnish are sought to be controlled. It is clear from Section 20C that varnish, is made from the base raw-material called denatured spirit.
As per Section 3(17) of the Prohibition Act, ''spirits means any alcohol and includes any liquor containing alcohol and obtained by distillation whether such liquor is denatured or not. Section 3(9) states:
Liquor'' includes toddy, arrack, spirits of wine, denatured spirits, spirits, wine bear and all liquid consisting of or containing alcohol.
In. the Explanation to Section 3(9), it is stated Denatured means subject to a process prescribed by the State Government by notification for the purposes of rendering unfit for human consumption. In State of Uttar Pradesh and Others Vs. Synthetics and Chemicals Ltd. and Others, we have noticed in the above paragraphs, the Supreme''Court has held that the word liquor will not only cover alcohol liquor which is generally used for beverages purposes and produce intoxication, but will also include liquor containing alcohol. The Supreme Court decision further states that definitely denatured spirit confairs alcohol. Thus, from the foregoing definitions and the Supreme Court decision, it is clear that denatured spirit and varnish contemplated u/s 20C will squarely come under the category of liquor and spirits and if that be so, these goods would definitely come under the category of intoxicating Liquors.
In Nashirwar and Others Vs. State of Madhya Pradesh and Others, three-Judges Bench of the Supreme Court has categorically held that there is no fundamental right of citizens to cany on trade or to do business in liquor. Three principal reasons have been given therefor, viz (at page 365):
First, there is the police power of the State to enforce public morality to prohibit trades in noxious or dangerous goods, Second, there is power of the State to enforce an absolute prohibition of manufacture or sale of intoxicating-Liquor.... Third, the history of excise law shows that the State has the exclusive right or privilege of manufacture of sale of liquor.
Such a view of this Bench of the Supreme Court found favour in various subsequent decision and in Har Shankar and Others Vs. The Dy. Excise and Taxation Commr. and Others, a Bench of Five Judges of the Supreme Court decided. the question as to whether there is any fundamental right in a citizen to. trade in liquor. After referring to various decided cases starting from Balsam. Case AIR 1951 S.C. 318 the Five Judges Bench, has held that there is no fundamental right in a citizen to do business in intoxicants. The said Bench observed as follows (paragraphs 53 and 55):
There is no fundamental right to do trade or business in intoxicants. The State, under its regularity powers, has the right to prohibit, absolutely every form of activity in relation to intoxicatings-its manufactures, storage, export, import, sale and possession. In all their manifestations, these rights are vested in the State and indeed without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants. In American Jurisprudence". Volume 30, it is stated that while engaging in liquor traffic is not inherently unlawful, nevertheless it is a privilege and not a right, subject to governmental control (page 538). This power of control is an incident of the society''s right to self-protection and it rests upon the right of the State to care for the Health, morals and welfare of the people.... Liquor traffic is a source of pauperism and crime (pages 539, 540, 541.)
"Since rights in regard to intoxicants belong to the State, it is open to the Government to part with those rights for a consideration. By Article 298 of the Constitution, the executive power of the State extends to the carrying on of any trade or business and to the making of contracts for any purpose. As observed in Harinarayanan Jaiswal''s case, "if the Government is the exclusive owner of these privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government, nor can there be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights....
In Sat Pal and Co. and Others Vs. Lt. Governor of Delhi and Others, the Supreme Court has categorically held that there is no fundamental right to, carry on trade or business in noxious drinks which include liquor. If there is no fundamental right to carry on trade or business in liquor, there is no question of its abridgement by any restriction which can be styled as unreasonable. The State under its regulatory power has a right to control or even to prohibit absolutely every form of activity in relation to intoxicants apart from anything else, its import too. Continuing, the Supreme Court has held (at page 1557):
This power of control is question of society''s right to self-protection and it rests upon the right of the State to act for the health, moral and welfare of the people. Liquor traffic is a source of pauperism and crime. In this background it is now too late in the day to entertain an argument that imposition of fax on the import of liquor which serves the double purpose of restraining its use by making it costly and prohibiting its use oft the ground that it trenches upon manufacturers slowly and gradually to restrict its manufacture directly impinging upon its unrestrited consumption such as impost, therefore, can be said to be one in the public interest for preserving public health, and public morals and cannot be said to be one as infringing the inter State freedom of trade and commerce.
Further, as have already noticed in Har Shankar and Others Vs. The Dy. Excise and Taxation Commr. and Others, the Supreme Court has held that the reasons mentioned by Das, C.J., for holding that there can be no fundamental right to do trade or business in an activity like gambling apply with equal force to the alleged right to trade in liquor and those reasons may not be brushed aside by restricting them to gambling operations.
As regards Article 14 of the Constitution, Mr. G. Ramaswami argued that in the impugned provision there is no reasonable classification for grant of licence for possession and use of denatured spirit in the manufacture of specific commodities The main object for the impugned enactment is to stop misuse of quotas of denatured spirits granted to parties and also to end force prohibition more vigorously. According to Mr. G. Ramaswami, granting licence to these who have registered with the Director-General of Technical Development, Government of India, or the Director of Industries and Commerce, Madras, and also to Co-operative Societies registered or deemed to have been registered under the law in force for the time being, cannot, achieve the object sought to be achieved by the impugned legislation. In effect, there is no nexus between the impugned legislation and the object sought to be achieved. Mr. G. Ramaswami vehemently contended that the grant of such licences to Co-operative Societies could lead to much more misuse of denatured spirits and would not achieve the object sought to be achieved by the impugned legislation. In this connection, we can usefully refer to the decision reported in Sarkari Sasta Anaj Vikreta Sangh Tahsil Bemetra and Others Vs. State of Madhya Pradesh and Others, wherein the Supreme Court had occassion to deal with grant of licences for Fair Price Shops to Co-operative Societies. The Supreme Court, after observing that no monopoly could be granted in favour of Cooperative Societies, held that preference shown to Co-operative Societies would not create monopoly in their favour and such preference granted cannot be considered as being discriminatory.
In M.P. Ration Vikretta Sangh Society v. State of M.P AIR 198. S.C. 2001 the Supreme Court has held:
The wider concept of equality before the law and the equal protection of laws is that there shall be equality among equals. Even among equals there can be unequalatreatmet based on an intelligible different having a rational relation to the objects ought to be achieved. Consumer''s Co-operative Societies form a distinct class by themselves. Benefits and concessions granted to them ultimately benefit persons of small means and promote social justice in accordance with the directive principles. There is an intelligible different is in between the retail dealers who are nothing but traders and consumers'' co-operative societies. The position would have been different if there was a monopoly created in favour of the latter. The scheme only envisages a rule of preference. The formulation of the scheme does not exclude the retail traders from making an application for appointment as agents. We have no reason to think that the State Government was not actuated with the best of intentions in bringing about a change in the system of distribution of foodstuffs through fair price shops.
From the above said decisions of the Supreme Court it is clear that preference shown to Co-operative Societies is well within the constitutional limit and does not offend Article 14 or Article. 19 of the Constitution. In the catend of decisions which we have seen above, it is clear that there cannot be any fundamental right to deal in liquor. If that be so, the State which has the prerogative right to trade in liquor has the right to grant licences in order to regulate the possession and use of denatured spirits so as to prevent misuse and also to enforce prohibition moire vigorously. Therefore, the selection of co-operative sociality or those who are registered with the Director-General of Technical Development, Government of India, or the Director of Industries and Commerce, Madras, in preference to individuals, would not in any way offend Article 14 or Article 19 of the Constitution.
Mr. G. Ramaswami, stressing his argument that the impugned Section 20(c) violates the fundamental rights guaranteed under Articles 19 and 14 of the Constitution, wanted to make a difference between potable and non potable liquor and submitted that the catena of decisions referred to by the Advocate-General would refer to potable liquor and therefore would not have any application to non-potable liquor. Considering the wide definition of liquor u/s 3(9) and of spirits u/s 3(17) of the Tamil Nadu Prohibition Act X of 1937, and also in the light of the various decisions noticed by us in the preceding paragraphs showing that the definition of liquor and of spirits would take in its fold non-potable liquor such as varnishes and devalued spirits also, we do not think there is any substance in differentiating between potable and non-potable liquor, on the facts and circumstances of the case on hand.
In these circumstances, we uphold the legislative competence of the State Legislature in exacting Section 20C of the Tamil Nadu Prohibition Act by the Amendment Act XXXII of 1978 and find that the impugned provisions does not offend either Article 14, Article 19, Article 301 or Article 304 of the Constitution of India. On these findings, all these writ petitions are dismissed.