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2017 Supreme(Pat) 675

IN THE HIGH COURT OF PATNA
RAJENDRA MENON, AJAY KUMAR TRIPATHI, SUDHIR SINGH, JJ.
Bihar Distillers & Bottlers Pvt. Ltd. and Ors. - Appellant
Versus
The State of Bihar and Ors. – Respondent
Civil Writ Jurisdiction Case Nos. 1713, 1623, 1629 and 1737 of 2017
Decided On : 03-05-2017

Advocates Appeared:
For the Appellant :Y.V. Giri, P.K. Shahi, Senior Advocates, Satyabir Bharti and Alok Chandra, Advocates
For the Respondents:Rajiv Dhavan, Dinesh Dwivedi, Senior Advocates, Lalit Kishore, PAAG-I, Keshav Mohan, Manish Kumar, Piyush Choudhary and Kabir Ghose, Advocates

Headnote:

) Bihar Prohibition and Excise Act, 2016 – Sections 2(40) (ii), 13, 23 and 24(1) – Industries (Development and Regulation) Act, 1951 – Section 2 – Constitution of India – Article 300-A – Constitutional validity so far as they prohibit manufacture and prevent renewal of license pertaining to industrial alcohol vis-a-vis spirit including silent spirit or ENA – State Government cannot claim to have power to legislate on industrial alcohol, a product of Scheduled industries under IDR Act by virtue of Entry 8 of List II or Entry 33 of List III of Constitution – This power is exclusively with Union of India – State can only lay down regulations to ensure that non-potable alcohol is not diverted and misused as its substitute for potable liquor – State Government may bring about regulations or measures to ensure that non-potable alcohol like ENA is not diverted or misused or converted or used as substitute for potable alcohol but in garb of power of regulation made in this regard, they cannot impose total prohibition in manufacture of industrial alcohol like ENA – In fact, what has been done by State Government in present case is by extending definition of intoxicant State Government has legislated and encroached into field reserved for Central Government – Inclusion of ENA within definition of Section 2(40) (ii) is nothing but an indirect method of prohibiting manufactur of industrial alcohol like ENA which is not fit for human consumption – By artificially extending definition of intoxicant State has done something which is not permissible or contrary to constitutional mandate – This is not a case where there is a mere overlap of power exercised or a case where words used in entries should be so construed that all ancillary or subsidiary matters may fairly and reasonably be comprehended in it – This is a case where contrary to mandate of Constitution and in absence of legislative competence being available, something has been done by State Government which is impermissible under Constitution – Act of State of Bihar in extending or including within definition of intoxicant in Section 2(40) (ii), ENA or industrial alcohol is an act which is beyond legislative competence of State Government and to that extent, declaration and mandamus, as prayed for by petitioners, will have to be granted – However, merely because Government is refusing to renew license to carry on manufacturing process, it cannot be said that it violates mandate of Article 300A of Constitution – At best, it is a case of pecuniary loss due to loss of profit or investment of petitioners. (Paras 47, 62, 63, 64, 67 and 82)

(B) Bihar Prohibition and Excise Act, 2016 – Sections 2(40) (ii), 13, 23 and 24(1) – Industries (Development and Regulation) Act, 1951 – Section 2 – Constitutional validity so far as they prohibit manufacture and prevent renewal of license pertaining to industrial alcohol vis-a-vis spirit including silent spirit or ENA – Definition of intoxicant as contained in Section 2(40) (ii) of Bihar Prohibition and Excise Act, 2016 so far as it includes ENA within ambit of word, 'intoxicant' is ultra vires to Constitution and IDR Act and to that extent definition is struck down and in view of this, provisions of Sections 13, 23 and 24 will not have any application and meaning of word 'intoxicant' appearing in Section 13 has to be read accordingly – Notification dated 24th January, 2017 issued by State Government so far as it prevents or denies right of renewal of an existing license for production of ENA from grain based distilleries, struck down and set aside and petitioners' case for renewal of license directed to be considered by State Government in accordance with requirement of law. (Para 86)

JUDGMENT :

RAJENDRA MENON, J.

1. Challenging the constitutional validity of certain provisions under the Bihar Prohibition and Excise Act, 2016 (hereinafter referred to as 'the Prohibition Act'), these writ petitions have been filed and the reliefs claimed are to declare Section 2(40)(ii), Section 13, Section 23 and Section 24(1) of the Prohibition Act as ultra vires to the Constitution and in excess to the legislative power of the State, so far as they prohibit manufacture and prevent renewal of license pertaining to industrial alcohol vis-à-vis spirit including silent spirit or ENA. It is said that by including spirit or ENA within the definition of 'intoxicant' as provided under Section 2(40)(ii), the State Legislature has acted in excess of the jurisdiction vested in it. Further prayer is to declare Sections 23 and 24(2) as ultra vires being in conflict to Article 300A of the Constitution inasmuch as it mandates that no compensation in consequence to withdrawal or non-renewal of distillery license shall be paid to the distillers so also on account of the fact that it confers unguided and uncontrolled power on the executive authority. Further prayer is to declare as null and void and to issue a writ in the nature of certiorari for quashing the Notification dated 24th January, 2017 issued by the State in exercise of the powers conferred upon it under Section 24(1) of the Prohibition Act whereby it prohibits renewal of license in Form 28A issued to the petitioners-distilleries with regard to manufacture of ENA after 1st of April, 2017.

2. The petitioners are engaged in the business of manufacture of Extra Neutral Alcohol (ENA), which is unfit for human consumption, and according to the petitioners, as the entire power to legislate with regard to ENA and other industrial alcohol or alcohol unfit for human consumption is exclusively with the Union, the power exercised by the State is ultra vires.

3. It is said that the State Government floated its Industrial Incentive Policy in the year 2011 for promoting industrial growth in the State of Bihar and in furtherance thereto, various incentives were offered to companies, firms and individuals intending to set up industries within the State. The incentives offered were in the form of reimbursement of VAT, capital subsidy, subsidy for capital power generation and Distillery was an industry which was brought within the ambit of the aforesaid Industrial Policy. The Industrial Policy has been brought on record as Annexure-1 in CWJC No. 1713 of 2017 and suffices it to say that it provided various incentives.

4. It is the case of the petitioners that being encouraged and influenced by the incentive so offered, they set up their establishment, namely, a distillery plant of various capacities after investing huge amount ranging from Rs. 150 to 200 Crores for the production of Extra Neutral Alcohol (ENA), rectified spirit and impure alcohol and the units were grain based. For the purpose of establishment of the industry, captive (generation) power plant were also set up, various documents and materials have been adduced in detail in the writ petitions to show that in pursuance to the policy, applications and offers were submitted. They were discussed and thereafter the State Cabinet approved the same. The State Investment Promotion Board issued certain clarifications, the Registration, Excise and Prohibition Department in the Government of Bihar, granted permission and the industries in question have been set up by all the petitioners after investing huge amount and obtaining loans and capital from various Banks. Documents evidencing these facts have been brought on record and there being no dispute with regard to these factual aspects of the matter, it is not necessary to go into various details thereto as canvassed in the writ petitions.

5. However, it may be relevant to take note of the fact that all the petitioners are manufacturing Extra Neutral Alcohol (ENA), its, a grain based industry and

































































































































































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