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SUPREME COURT OF INDIA
A.N. RAY, C.J.I., K.K. MATHEW AND N.L. UNTWALIA, JJ.
Nashirwar etc., Appellants
Versus
State of M.P. and others, Respondents.
Civil Appeals Nos. 1711-1721 and 1723, 1699, 1706 and 1744 of 1974, 1267 of 1970, Writ Petns. Nos. 436 of 1971, 133 and 26 of 1972,
D/- 27-11-1974.
Civil Appeal Nos. 1711- 1721 and 1723 of 1974 :
Civil Appeals Nos. 1699, 1706 and 1744 of 1974 :
Sethi Wine Stores, Appellant
Versus
State of M.P. and others, Respondents.
Civil Appeal No. 1267 of 1970 :
P. Ramachandra, Appellant
Versus
State of Kerala and others, Respondents.
Writ Petn. No. 436 of 1971 :
Joseph Michael and others, Petitioners
Versus
State of Kerala and others, Respondents.
Writ Petn. No. 133 of 1972 :
T. Govindan Kutty Menon, Petitioner
Versus
State of Kerala and others, Respondents.
Writ Petn. No. 26 of 1972 :
P. M. Choko and others, Petitioners
Versus
State of Kerala, Respondent,
(2) Excise Act, 1915 (MP) - S.I - power of the State Legislature to enact laws in respect of intoxicants.
The State Legislature is authorised to make a provision for public auction by reason of power contained in Entry 8 of List II of the Constitution. That Entry empowers the State Government to legislate with regard to intoxicating liquor, that is to say, production, manufacture, possession, transport, purchase and sale of intoxicating liquor. [Para 11
(3) Precedents-ruling by Constitution Bench of the Suprement Court cannot be over-ruled by ordinary Bench. [Para 17
(4) Constitution of India - Arts. 14, 19 & 47 - fundamental rights and business in intoxicants - power of the State to regulate manufacture or sale of intoxicants - Excise Act 1915 (MP) – Ss. 1, 17, & 18
(5) Excise Act, 1915 (MP) - Ss.1, 17 & 18 - Constitutionality of the Act - Constitution of India-Arts. 14, 19 & 47.
There are three principal reasons to hold that there is no fundamental right of citizens to carryon trade or to do business in liquor. 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. Article 47 states that the States shall endeavourt of bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health. Third, the history of excise law shows that the state has the exclusive right or privilege of manufacture or sale of liquor. [Para 23
Absolute prohibition of manufacture or sale of liquor is permissible and the only exception can be for medicinal preparations. The concept of inherent right of citizens to do business in liquor is antithetical to the power of the State to enforce prohibition laws in respect of liquor. 1951 SCR 682, 1954 SCR 873. 34 ELD 620, 1959 SCR 1295, 1957 SCR 874 & (1973) I SCR 533 relied on. (1967) 3 SCR 50 explained. [Para 24
Trade in liquor has historically stood on a different footing from other trades. Restrictions which are not permissible with other trades are lawful and reasonable so far as the trade in liquor is not only permissible but is also reasoilable. The reasons are public morality, public interest and harmful and dangerous character of the liquor. The State possesses the right of complete control over all aspects of intoxicants viz., manufacture, collection, sale and consumption. The State has exclusive right to manufacture and sell liquor and to sell the said right in order to raise revenue. [Para 34
The State has the exclusive right or privilege of manufacturing and felling liquor. The State grants such right or privilege in the shape of a licence or a lease. The State has the power to hold a public auction for grant of such right or privilege and accept payment of a sum in consideration of grant of lease. [Para 37
(6) Words and phrases-'monopoly'-what is-regulating trade in noxious or dangerous goods-is not creating monopoly.
There can be a monopoly only when a trade which could be carried on by all persons is entrusted to one or more persons to the exclusion of the general public. This is not the case with business in liquor. [Para 16
Prohibiting trade in noxious or dangerous goods cannot be held to be illegal as enacting a prohibition and not a mere regulation. 1954 SCR 873 relied on. [Para 13
(7) Excise Act, 1915 (MP) - Ss.17 & 18-nature of trade in liqour-rent -what is.
(8) Words and phrases-rent-for licence to sell liquor-import of.
The nature of the trade is such that the State confers the right to vend liquor by farming out either in auction or on private treaty. Rental is the consideration for the privilege granted by the Government for manufacturing or vending liquor. Rental is neither a tax nor an excise duty. Rental is the consideration for the agreement for grant of privilege by the Government. [Para 34
Judgment
RAY, C. J.:- The principal question in these civil appeals and writ petitions is whether it is permissible for the State Government to auction licences for carrying on the business of selling foreign liquor which is neither manufactured nor imported by the State Government. Some of these appeals relate to State of Madhya Pradesh and others relate to State of Kerala.
2. The Madhya Pradesh appeals are governed by the Central Provinces and Berar Excise Act 1915 which became applicable to Madhya Pradesh as the Central Provinces Excise Act, 1915. This will be referred to as the Madhya Pradesh Act.
3. The Kerala Appeals are governed by the Abkari Act (Act No. 1 of 1077). This will be referred to as the Abkari Act.
4. Prior to 1 April, 1964 licences for sale of foreign liquor in Madhya Pradesh were granted by the excise authorities under the fee per bottle system. In l964-65 the State decided that licences for foreign liquor would be disposed of by public auction to the highest bidder. The appellants then challenged in the Madhya Pradesh High Court the authority of the State Government to hold public auction for grant of licences for foreign liquor. The appellants did not succeed because the Act was amended in 1964. The result of the amendment was, that whereas formerly the State Government could grant lease only in respect of country liquor, the Amending Act empowered the Government to grant lease in respect of any liquor which meant both foreign and country liquor. After the amendment, public auctions were held under Sec. 18 of the Madhya Pradesh Act in respect of foreign liquor as well. In 1965-66 public auctions were held in respect of foreign liquor. The leases were renewed up to 1969-70. In 1867-68 prohibition was withdrawn in certain areas of Madhya Pradesh and new foreign liquor vends were opened. These vends were disposed of by public auction. In 1968 the State Government by a notification dated 29 March, 1968 ordered that with effect from 1 April, 1968 foreign liquor licences shall be disposed of on payment of extra fee of Rs. l000 in addition to the payment of a fee per bottle at specified rates. The notification further directed that where new shops were required to be opened licences would be disposed of by public auction in addition to a fee per bottle. In 1970 there was a notification dated 14 August, 1970 where the State Government would dispose of foreign liquor licences by public auction.. This notification is the subject-matter of the Madhya Pradesh appeals.
5. The Madhya Pradesh Act by Sections 8 and 9 confers power on the State to prohibit import, export or transport of any intoxicant. "Intoxicant" under the Act means any liquor or intoxicating drug. The State Government has power to impose restrictions on import, export or transport of intoxicant in the shape of payment of duty and compliance with other conditions. Chapter IV of the Madhya Pradesh Act consisting of Sections 13 to 24 deals with manufacture, possession and sale of intoxicants. Section 13 requires licence for manufacture, collection, possession of intoxicants and materials for manufacturing intoxicants.
6. Sections 17 and 18 of the Madhya Pradesh Act are important for the purposes of these appeals. Section 17 deals with licences for sale of intoxicants. Section 18 states that the State Government may lease to any person on such conditions and for such period as it may think fit the right (a) of manufacturing or of supplying by wholesale, or of both, or (b) of selling by wholesale or by retail, or (c) of manufacturing or of supplying by wholesale. or of both, and selling by retail any liquor or intoxicating drug with in any specified area.
7. The Abkari Act which governs the Kerala Appeals in Sections 6 to 11 deal with import, export and transport of liquor or intoxicating drugs. Permission of the Government is required for import and export of liquor. Section 9 of the Abkari Act confers power on the Government to prohibit, transport of liquor fr
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