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1965 Supreme(SC) 237
SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO, M. HIDAYATULLAH, J.C. SHAH AND S.M. SIKRI, JJ.
The Indian Chemical and Pharmaceutical Works, Hyderabad, Appellant
Versus
The State of A.P. and others, Respondents.
Civil Appeal No. 649 of 1964.
Advocates appeared
M/s. Arun B. Saharya and Sardar Bahadur, Advocates, for Appellant; M/s. P. Rama Reddy and T. V. R. Tatachari, Advocates, for Respondent No. 1.
Arun B.Saharaya, P.RAM REDDY, SARDAR BAHADUR SAHARYA, T.V.R.TATACHARI
A substance can be subject to both central regulation for quality/prohibition and state excise duties. Central laws governing drug control do not repeal state laws concerning excise duties on narcotics, provided the substance meets the definition of a narcotic.
Headnote:(A) Constitution of India - Seventh Schedule - List I, Item 59; List II, Item 8 and Item 51; List III, Item 19 - Dangerous Drugs Act, 1930 - Drugs Act, 1940 - Medicinal and Toilet Preparations (Excise Duties) Act, 1955 - Validity of excise rules for chloral hydrate - A substance may fall under multiple legislative entries; for instance, a drug may be subject to both central control for quality or prohibition and state excise duties - The introduction of central acts dealing with prohibition and quality of drugs does not automatically repeal state laws concerning the imposition and collection of excise duties on narcotics (Paras 5, 6, 9, 10).
(B) Narcotic - Definition - A substance that relieves pain, produces sleep, and in large doses brings on stupor, coma, or death - A hypnotic and sedative substance falls within the definition of a narcotic for the purpose of imposing excise duties under Entry 51 of List II of the Seventh Schedule (Para 12).
(C) Appellate Jurisdiction - New grounds - A party cannot raise a point for the first time before the appellate court if it was not raised in the court below or clearly averred in the original petition (Para 13).
Facts of the case:
A manufacturer of chloral hydrate challenged the validity of state rules requiring a license and payment of excise duty for its manufacture. The manufacturer contended that the parent state act had been repealed by central legislation, specifically the Dangerous Drugs Act, 1930 and the Drugs Act, 1940, and further argued that chloral hydrate is not a narcotic drug, thus exempting it from state excise duties under the Constitution.
Findings of Court:
The court found that the central acts focused on prohibition, control, and quality standards, whereas the state act focused on excise duties. Therefore, the central acts did not repeal the state's power to levy excise duties. Furthermore, since chloral hydrate acts as a hypnotic and sedative, it qualifies as a narcotic.
Issues: Whether the state act was repealed by the Dangerous Drugs Act, 1930 and the Drugs Act, 1940; and whether chloral hydrate is a narcotic drug subject to state excise duties under Entry 51 of List II of the Seventh Schedule.
Ratio Decidendi: The court held that a substance can simultaneously be governed by central laws for control and quality and by state laws for excise duties. The repeal of provisions related to manufacture or prohibition does not entail the repeal of provisions related to the collection of excise duties. Additionally, the dictionary meaning of "narcotic" encompasses substances that induce sleep or stupor, making chloral hydrate a narcotic.
Result: Appeal dismissed.
WANCHOO, J. : This is an appeal by special leave against the judgment of the Andhra Pradesh High Court. The appellant manufactures drugs in Hyderabad and among the drugs manufactured by it is chloral hydrate. In September 1962, the State of Andhra Pradesh issued rules called the Andhra Pradesh (Telengana Area) Chloral Hydrate (Chloral) Rules, 1962 with respect to manufacture, possession, sale, import, export and transport of chloral hydrate (hereinafter referred to as the Rules). We shall refer to the Rules in detail later, but in brief they provide that the manufacture of chloral hydrate shall take place only in accordance with the conditions of a licence granted by the Excise Commissioner and only on payment of excise duty of Rs. 500 per annum. The Rules also provide for possession, import, export, sale and transport of chloral hydrate. In consequence of the issue of the Rules, the appellant was called upon to take out a licence and pay the necessary excise duty. The appellant refused to do so and in November 1962 filed a writ petition in the High Court challenging inter alia the validity of the Rules. It may be mentioned that the Rules were issued under the Andhra Pradesh (Telengana Area) Intoxicating Drugs Act, No. IV of 1333 Fasli (hereinafter referred to as the 1333-F Act) as amended by the Hyderabad Opium and Intoxicating Drugs (Amendment) Act, No. XXII of 1953.
2. The main contention of the appellant in the High Court was that the 1333-F Act had been repealed in toto on the introduction of the Dangerous Drugs Act, No. 2 of 1930 by the Opium and Revenue Laws (Extension of Application) Act, No. 33 of 1950, and the Drugs Act, No. 23 of 1940 by the Part B States (Laws) Act, No. III of 1951, and therefore, there was no power in the Hyderabad Legislature to amend it by Act 22 of 1953. In consequence there was no law in force on the basis of which the Rules could be promulgated in 1962. Secondly, it was contended that even if the 1333-F Act, did not stand repealed as above, the Rules framed by the State of Andhra Pradesh in 1962 with respect to chloral hydrate were not within the powers conferred by the 1333-F Act as amended in 1953, as chloral hydrate was not a narcotic or narcotic drug and was not covered by item 51 of List II of the Seventh Schedule to the Constitution.
3. The petition was opposed on behalf of the State, and it contended that there was no repeal of the 1333-F Act by the introduction of the Dangerous Drugs Act 1930 and the Drugs Act, 1940 and consequently the amendment of the 1333-F Act by the Hyderabad Act No. 22 of 1953 was good, and the 1333-F Act as amended was in force in 1962 when the Rules were framed. It was further contended that the Rules were intra vires the 1333-F Act as amended in 1953 as chloral hydrate was a narcotic and an intoxicating drug.
4. The High Court repelled the contentions raised on behalf of the appellant and dismissed the writ petition. The appellant then applied for a certificate for leave to appeal to this Court, which was refused. It then obtained special leave from this Court; and that is how the matter has come before us.
5. Before we consider the points raised in the High Court which have also been raised before us, we should like to refer to certain provisions in the three legislative Lists in the Seventh Schedule to the Constitution dealing with various aspects that arise in this case. The first of these provisions is item 59, List I, which deals with "cultivation, manufacture, and sale for export, of opium". Then there are two items in List II, item 8 which deals with "intoxicating liquors, that is to say, the production, manufacture, possession, transport and sale of intoxicating liquors" and item 51 which deals with "duties of excise on the following goods manufactured or produced in the State ........ :- (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics; but including medicinal and toilet preparations conta
