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1996(4) Supreme 604
SUPREME COURT OF INDIA
A.M. Ahmadi, C.J.I., B.P. Jeevan Reddy and Suhas C. Sen, JJ.
State of Andhra Pradesh and Ors. etc. -Appellants
versus
McDowell & Co. and Ors. etc. -Respondents
Civil Appeal Nos. 4712-17 of 1996
(Arising out of SLP (C) Nos. 13936-13941 of 1995)
with
Civil Appeal No. 4718 of 1996
(Arising out of SLP (C) No. 21889 of 1995)
and
Writ Petition (C) No. 470 of 1995
with
W.P. (C) Nos. 569/95, 593/95, 602/95 & 680-81/95
All Decided on 21-3-1996
Held : That the power to make a law with respect to manufacture and production and its prohibition (among other matters mentioned in Entry 8 in List-II) belongs exclusively to the State Legislatures. Item 26 in the First Schedule to the I.D.R. Act must be read subject to Entry 8 - and for that matter, Entry 6 - in List -II. So read, the said item does not and cannot deal with manufacture, production or with prohibition of manufacture and production of intoxicating liquors. All the petitioners before us are engaged in the manufacture 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. (Para 20)
Further held : In view of our finding that the impugned enactment is perfectly within the legislative competence of the State Legislature and is fully covered by Entry 8 read with Entry 6 of List-II, it is not necessary for us to deal with the arguments based upon clause (3) of Article 246 of the Constitution except to say the following: once the impugned enactment is within the four corners of Entry 8 read with Entry 6, 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 such State enactment. The argument of occupied field is totally out of place in such a context. If a particular matter is within the exclusive competence of the State Legislature, i.e., in List -II that represents the prohibited field for the Union. 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. In other words, whenever a piece of legislation is said to be beyond the legislative competence of a State Legislature, what one must do is to find out, by applying the rule of pith and substance, whether that legislation falls within any of the entries in List II. If it does, no further question arises; the attack upon the ground of legislative competence shall fail. It cannot be that even in such a case, Article 246(3) can be employed to invalidate the legislation on the ground of legislative incompetence of State Legislature. If, on the other hand, the State Legislation in question is relatable to an entry in List-III applying the rule of pith and substance, then also the legislation would be valid, subject to a Parliamentary enactment inconsistent with it, a situation dealt with by Article 254. Any incidental trenching, as already pointed out, does not amount to encroaching upon the field reserved for the Parliament. (Para 21)
(ii) Constitution of India-Article 246-Article 246 cannot be invoked to deprive State Legislatures of powers inhering in them by virtue of entries in List-II-Once an enactment, in pith and substance, is relatable to any entry in List-II, Article 246 cannot be brought in to yet hold that State Legislature is not competent to enact that law. (Para 23)
(iii) Constitution of India-Article 19(1)(g)-Andhra Pradesh Prohibition (Amendment) Act, 1995-Constitutional validity-Challenged on ground of violation of fundamental right to trade in intoxicating liquors-Not maintainable. (Para 25)
(iv) Constitution of India-Article 14-Andhra Pradesh Prohibition (Amendment) Act, 1995-Constitutional validity-Challenge based on Article 14-Importing requirements of State to meet need of exempted categories from outside State-Total prohibition of manufacture and production of liquors-Whether arbitrary ?-(No).
Held : Learned counsel for the petitioners then sought to demonstrate the discriminatory aspect of the impugned amending Act in prohibiting the production and manufacture of intoxicating liquors in Andhra Pradesh and importing the requirements of State (to meet the need of exempted categories) from outside the State. We are unable to see any unreasonableness in it much less any discrimination. This ground is really one of unreasonableness rather than discrimination. The Andhra Pradesh Legislature can make a law limited to the territory of that State but not beyond. The exempted categories put together constitute a fraction of the total consuming population 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 turn. The present capacity of the industries in Andhra Pradesh engaged in manufacture and production of intoxicating liquors is many many times over and above the requirements of the exempted categories. If the production is to be scaled down correspondingly for each of the factories, they would become uneconomic and not viable. Choosing one or two of them would be beset with legal and practical difficulties. In all the circumstances, the State appears to have thought it advisable to import the small quantities required rather than face a number of problems arising from restricted production, supervision and enforcement. (Para 28)
Further held : Counsel for the petitioners complained of discrimination in the matter of providing exemptions. It is complained that there is no justification in providing for grant of permits to "companies, corporations, institutions, industrialists, exporters, importers and similar such functionaries as may be notified" for entertaining not only foreigners and N.R.Is. but also persons from outside the State of Andhra Pradesh in connection with their business. Similar criticism is levelled against certain other clauses in Section 15 as well. We are of the opinion that this argument is not open to manufacturers of intoxicating liquors like the petitioners. It would be a different matter if any person affected by such discriminatory treatment complains of the same. The petitioners at any rate cannot be heard to complain of the same. (Para 30)
Certainly. Here are the key points derived from the legal document:
The legislation in question, specifically the Andhra Pradesh Prohibition (Amendment) Act, 1995, and its subsequent amendments, are within the constitutional powers of the State Legislature, particularly under the entries related to the production, manufacture, possession, transport, sale, and consumption of intoxicating liquors (!) (!) (!) .
The law's retrospective effect from the date of the principal Act's commencement is deemed constitutionally valid, and its enactment does not violate the principles of legislative competence or fundamental rights (!) (!) .
The State has exclusive authority over the regulation and prohibition of intoxicating liquors, and this authority is supported by the constitutional entries that specify the State's power in this domain (!) (!) .
The control of industries related to intoxicating liquors, including manufacturing and production, remains within the State's domain and is not overridden by central legislation or the provisions of the Industries (Development and Regulation) Act, 1951, especially considering the doctrine of pith and substance (!) (!) .
The classification and distinctions made between different types of liquors, such as toddy versus other intoxicants, are based on reasonable classifications aligned with legislative objects and are not arbitrary or discriminatory (!) (!) .
The legislation does not infringe upon the fundamental right to trade under Article 19(1)(g), as the right is subject to reasonable restrictions in the interest of public health and morality, and the law's restrictions are within constitutional bounds (!) (!) .
The law's provisions, including exemptions and permits for certain categories (e.g., foreigners, medical needs, tourists, armed forces), are reasonable and serve legislative objectives without violating constitutional principles of equality or non-discrimination (!) (!) .
The concept of legislative field occupation, particularly whether the central or state legislation prevails, is determined by the doctrine of pith and substance, and the legislation's scope is confined to its constitutional entries (!) (!) .
The legislation's restrictions are consistent with directive principles aimed at promoting public health and morality, and the State's power to prohibit or regulate trade in intoxicants is well-established and within constitutional limits (!) (!) .
The challenge based on Article 14, alleging arbitrariness or discrimination, is unfounded because the classifications and restrictions are reasonable and based on legislative policy considerations, especially regarding public health and social order (!) .
The law does not violate the principles of federalism or the distribution of legislative powers, as the legislative entries and the doctrine of pith and substance support the State's authority to enact prohibition laws (!) .
Overall, the legislation is constitutionally valid, and the arguments challenging its validity on legislative competence, fundamental rights, or equality grounds are not sustainable under constitutional principles (!) .
Please let me know if you need a more detailed analysis or specific legal interpretations.
JUDGMENT
B.P. Jeevan Reddy, J.-Leave granted in Special Leave Petitions.
2. In response to wide-spread agitation by the women of Andhra Pradesh, the Government prohibited the sale and consumption of intoxicating liquors by an Ordinance issued on December 27, 1994. In February, 1995, the Legislature of Andhra Pradesh enacted the Andhra Pradesh Prohibition Act, 1995 (hereinafter referred to as "the Act") replacing the Ordinance. It was reserved for and received the assent of the President of India. The long title and the preamble to the Act reads :
"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 Pradesh in the Forty-sixth Year of the Republic of India as follows :-"
Clause (7) of Section 2 defines the expression "liquor" to include "(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 provision prohibiting selling, buying and consumption 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 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 Section7. Sections 9 and 10 provide for punishment of persons found in state of intoxication and for abetting the escape of persons arrested. Section 11 makes any contravention of the provisions of the Act or of any rule, noti-fication or order made thereunder punishable. Sections 12, 13 and 14 deal with seizure and confiscation. Chapter IV 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;
(ii) licences to hotels and restaurants recognised as three star and above in accordance with such rules as may be made and to such categories of institutions as may be specified by notification subject 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;
(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 to the armed forces to consume liquor;
(vi) permits to companies, corporations, institutions, industrialists, 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
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