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Kantilal and Co. Vs. State of Gujarat and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtGujarat High Court
Decided On
Judge
Reported in(1980)2GLR260
AppellantKantilal and Co.
RespondentState of Gujarat and anr.
Cases ReferredIn State v. Shehappa Dudhappa Tambade
Excerpt:
- - gur' shall be deemed to be unfit for human consumption or the consumption of it shall be deemed to be injurious to health if it is of dark-brown colour, with strong smell or if, on chemical analysis, it is found to contain more than 15 per cent of reducing sugars or less than 70 per cent of total sugars. nanavaty is not well-founded all that those two sections provide for is the regulation of possession, manufacture, use and consumption of rotten gur. there is no doubt or dispute about the fact that 'rotten gur' was diverted to the channels of illicit distillation of liquor which defeated the prohibition policy of the state. the quantity of juice which is extracted from cane depends upon the quality of cane, design features of the crusher and the feeding of cane into the crusher as.....s.h. sheth, j.1. the petitioners in all these cases are dealing in a kind of jaggery which is known as rotten gur. they challenge in all these petitions the vires of section 2(39a), section 64, section 64a and section 70a of the bombay prohibition act, 1949. the impugned sections were inserted by gujarat legislature by enacting bombay prohibition (gujarat amendment) act, 1978. the act was preceded by an ordinance. we may state that the ordinance was in the same terms as the amendment act is. the ordinance was promulgated in 1977.2. the contentious which have been raised on behalf of the petitioners are as follows:(1) the impugned provisions are in the nature of restrictions on freedom of trade commerce and intercourse guaranted by article 301 and are not saved by article 304.(2) the.....
Judgment:

S.H. Sheth, J.

1. The petitioners in all these cases are dealing in a kind of jaggery which is known as rotten gur. They challenge in all these petitions the vires of Section 2(39A), Section 64, Section 64A and Section 70A of the Bombay Prohibition Act, 1949. The impugned sections were inserted by Gujarat Legislature by enacting Bombay Prohibition (Gujarat Amendment) Act, 1978. The Act was preceded by an Ordinance. We may state that the Ordinance was in the same terms as the Amendment Act is. The Ordinance was promulgated in 1977.

2. The contentious which have been raised on behalf of the petitioners are as follows:

(1) The impugned provisions are in the nature of restrictions on freedom of trade commerce and intercourse guaranted by Article 301 and are not saved by Article 304.

(2) The impugned provisions impose an unreasonable restriction on the fundamental right guaranteed to the petitioners under Article 19 (1)(g) of the Constitution.

(3) The impugned provisions are ultra vires the legislative competence of the State Legislature under Entry 8 in the State List.

Before we examine the three contentions which have been raised on behalf of the petitioners, it is necessary to state that history of legislation in regard to rotten gur. On 3rd May 1950, after the Bombay Prohibition Act was enacted in 1949, the Government of Bombay issued an Order under Clause (b) of Section 139 of the Act. 'Rotten gur' was defined in that order in the following terms:

rotten gur' means gur containing less than 50 per cent sucrose and more than 20 per cent reducing sugars.

Paragraph 2 of that order prohibited the sale of rotten gur within the limits of the State of Bombay except under and in accordance with the conditions of a licence issued under that order. Paragraphs 3 and 4 laid down the procedure for making application for obtaining a licence to deal in 'rotten gur'. The form of licence and the conditions annexed thereto were also a part of that Order. We may state that that Order not only was applicable to 'rotten gur' but also to 'rotten dates'. We are not concerned in these cases with 'rotten dates'. Therefore, we are referring to that order only for the purpose of 'rotten gur'.

3. That order was replaced by another order which the Government of Bombay made on 6th November 1958 under Clause (b) of Section 139 of the Bombay Prohibition Act, 1949. It defined 'rotten gur' in the following terms:

gur which is unfit for human consumption or the consumption of which is injurious to health.

Explanation appended to that definition provided:

'Gur' shall be deemed to be unfit for human consumption or the consumption of it shall be deemed to be injurious to health if it is of dark-brown colour, with strong smell or if, on chemical analysis, it is found to contain more than 15 per cent of reducing sugars or less than 70 per cent of total sugars.

It prohibited possession and use of 'rotten gur' except under and in accordance with the conditions of a licence issued thereunder. It contained provisions which laid down the procedure for making an application for obtaining a licence for dealing in 'rotten gur'. The form of application was also appended to it. So also was appended to it the form of licence which could be issued under that order. That order was challenged in this Court in Special Civil Application No. 591 of 1962. During the course of hearing of that petition, the Government revoked that order on 4th May 1963. Therefore, that petition was not decided on merits and was dismissed as it had become infructuous.

4. On 30th June 1976, the Director of Health Services, Gujarat State, issued a circular to District Health Officers, Broach, Surat and Bulsar directing them to stop business in 'rotten gur.' That circular was challenged in this Court in Special Civil Applications No. 1124 of 1977 and 1150 of 1977. Those petitions were withdrawn because the petitioners wanted the validity of that contention to be tested in Criminal Case. No. 1364 of 1977 which was then pending before the learned Judicial Magistrate, First Class, Gandevi. It arose out of the breach of that circular. On 1st November 1977, the Government of Gujarat promulgated Bombay Prohibition (Gujarat Amendment) Ordinance, 1977. Thereafter, the present Act--Bombay Prohibition (Gujarat Amendment) Act, 1978, was enacted by Gujarat Legislature replacing the Ordinance issued in 1977.

5. We now turn to the contentions which have been raised on behalf of the petitioners. The first and the second contentions can be appropriately dealt with together. In order to appreciate these two contentions, it is necessary to reproduce the definition of 'rotten gur' given in Section 2(39A) of the Act. It reads as follows:

'rotten gur' means the article known as gur, gul, jaggery, palmyra jaggery or rab and other intermediary product prepared by boiling or processing juice pressed out of sugar cane or extracted from palmyra palm, date palm, sago palm, brab palm or coconut palm, with or without admixture of molasses, and which is in a liquid form or a semi-liquid or viscous form and which has a dark brown or a black colour or which, inspite of being in a solid, liquid, semi-liquid or viscous form, is unfit for human consumption owing to its becoming filthy, putrid, disgusting or decomposed.

This definition is in two parts. Firstly, 'rotten gur' is gul or gur which, inter alia, answers the description of being in a liquid, semi-liquid or viscous form and which has a dark brown or a black colour. This part of the definition does not state that it must be unfit for human consumption. The second part of the definition, inter alia, provides that 'rotten gur' is gur which, inter alia, answers the description of being in a solid, liquid, semi-liquid or viscous form and is unfit for human consumption owing to its becoming, putrid, disgusting or decomposed. 'Unfit for human consumption' is one of the tests laid down in the second part of the definition of 'rotten gur' given in Section 2(39A). It cannot be gainsaid that what is filthy, putrid, disgusting or decomposed is unfit for human consumption.

6. We now turn to Section 64 of the Act. It reads as follows:

No person shall have in his possession, except under a permit granted by an officer empowered by the State Government in that behalf, any quantity of rotten gur in excess of such quantity as the State Government may, by notification in the Official Gazette, specify.

Mr. Nanavaty has shown us the notification which specifies 2. 5 kg. of rotten gur which can be possessed by a person without obtaining a permit in that behalf. A close look at the section makes it abundantly clear that what the State Legislature has done is not to prohibit possession altogether but to regulate it. A person can have lawfully in his possession any quantity of rotten gur if he holds permit granted to him by an officer empowered by State Government in that behalf. Section 64 reads thus:

No person shall manufacture, use or consume rotten gur except under the authority, and in accordance with the terms and conditions of, a licence, permit, pass or authorisation granted for the purpose by an officer empowered in that behalf by the State Government.

The scheme of Section 64A is also very clear It regulates the manufacture, use and consumption of rotten gur. The regulation has been introduced in the form of a licence, permit, pass or authorization which is necessary to be taken out by a manufacturer or a consumer from an officer empowered in that behalf by the State Government. Section 70A reads thus:

Whoever in contravention of the provisions of this Act, or any rule, regulation or order made or of any licence, permit, pass or authorisation granted thereunder possesses, manufactures, uses or consumes rotten gur or ammonium chloride shall, on conviction, be punished with imprisonment for a term which may extend to six months and with fine which may extend to one thousand rupees

Section 70A is a penal section. It provides for the consequences of violation, inter alia, of Section 64 and Section 64A. and the rules, regulations or orders issued thereunder. Mr. Nanavaty has argued that Section 64 and Section 64A prohibit the possession, manufacture, use and consumption of rotten gur. The argument advanced by Mr. Nanavaty is not well-founded All that those two sections provide for is the regulation of possession, manufacture, use and consumption of rotten gur. There is no doubt or dispute about the fact that 'rotten gur' was diverted to the channels of illicit distillation of liquor which defeated the prohibition policy of the State. The prohibition policy as enacted in the Bombay Prohibition Act, 1949, was held by the Supreme Court lawful and valid as early as in 1951. Article 47 in Part IV of the Constitution enjoins upon the State the duty to pay regard to the 'raising of the level of nutrition and the standard of living of its people and the improvement of public health' and further enjoins upon the state to 'endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health'. Ex facie, if the State Legislature in order to plug loopholes which were found in the working of prohibition policy in the State and with the object of enforcing its prohibition policy with greater efficiency enacted Sections 64 and 64A by which possession, manufacture, use and consumption, of 'rotten gur' has been regulated, it cannot be said that it did something which it otherwise could not have done.

7. Mr. Nanavaty has invited our attention to 'Monograph on the Gur Industry of India' by S.C. Roy published in 1951. Certain paragraphs in that book throw light on the nature and character of gur. We make a brief reference to the relevant aspects of gur as discussed in that book.

8. Gur is produced in three different forms, viz, lump, powder and semi-liquid form. In 1951, 15. 42 per cent of the total production of gur was in semi-liquid form. Gur in lump form, which is consumed by human beings, was produced to the extent of 80. 75 per cent of the total production. AH the gur which is consumed is produced within the country. Exports thereof are negligible. Gur is used for different purposes, such as direct consumption by human beings, stock feeding, for refining, in milk, tea or coffee, for preparing sweetmeats. It is used in general for sweetening purposes. It is manufactured from sugarcane juice and sweet juices of palmyra and date-palm trees. The major proportion of gur produced is from sugarcane juice. In the manufacture of gur, three main operations are involved: (i) extraction of juice from sugarcane, (ii) purification of juice and (iii) concentration of juice into gur. The quantity of juice which is extracted from cane depends upon the quality of cane, design features of the crusher and the feeding of cane into the crusher as well as upon the pull applied by the bullocks. Cane juice is an opaque liquid. It varies in colour from grey to dark green according to the colour of cane from which it is extracted. The turbid viscous juice from the mills is not fit to be worked up into an edible material without clarification. It is very necessary to boil the juice immediately after it is extracted from cane because the sucrose which it contains is very liable to inversion and fermentation. This process takes place on account of the action of micro-organisms. The clarificants which are used for the clarification of cane juice consist of two types: (i) vegetable clarificants and (ii) chemical clarificants. Some of the chemicals such as sodium carbonate, sodium bicarbonate, Sajji and lime water if used in the manufacture of gur from inferior canes, help in the solidification of gur but import dark colour to the finished product. Secondly, if the juice is limed in neutrality or thereabout, the dark gur is produced. Addition of sodium bicarbonate improves the colour of gur but its effect is temporary. Such a gur acquires its real colour after some days. After clarification, the juice is boiled vigorouly to evaporate water and to concentrate it into a thick, almost semi-solid, mass which on cooling solidifies into gur. The moulded blocks are allowed to cool down and hardened overnight when they may be packed or stored as such.

9. Neutral gur is prepared for refining purposes. It cannot be consumed directly on account of its unpleasant taste. However, it contains higher percentage of sugar in it and would fetch better price than ordinary gur in the refineries.

10. Gur is like a preserved fruit. In fact, it is preserved cane juice. It is necessary to preserve it in the form in which it appears because cane juice out of which it is manufactured cannot be retained for a longer time as it would ferment and get converted into alcohol and other products by the action of micro-crganisms. Similarly, storing of a liquid material will present a serious problem The quality of gur produced all over the country differs from tract to tract and even in the same tract from sample to sample. The quality of gur depends upon the conditions of storage. Inadequate and faulty storage condition lead to deterioration of quality of gur and an appreciable quality is lost. Broadly speaking, the deterioration of gur in storage depends upon three factors: (i) composition of the product (ii) atmospheric condition of the place of storage and (iii) form and shape of the product. The main constituents which bring about deterioration are 'invert sugar' and 'mineral salts' which are hygroscopic. The initial moisture content is also one of the factors coming into play. Deterioration of qur starts at the outside layers. The shapes which expose large surfaces are liable to deteriorate earlier than those which present less exposed surfaces. The higher the invert sugar, the greater is the deterioration. Even best quality gur develops fungi and deteriorates rapidly. The form in which it deteriorates is generally one of syrupy liquids. Partial neutralisation of juice with lime and soda improves the keeping quality but the colour increases and the taste is spoiled. There is no just, uniform or scientific method of grading the gur. It is not possible to grade and compare the produce of one place with that of another. On account of the wide variation in its quality, it is difficult to grade gur. Its complex chemical composition and the marked deterioration which it undergoes during storage have added to the difficulties. The presence of a large amount of moisture impairs the keeping quality of gur. Old jaggery and palm gur have the reputation of being medical sugars and are prescribed for use in the indigenous system of medicine. The lump gur is prepared to a greater or less extent in different districts. The practice of making liquid gur is also prevalent in some parts. The practice of clarifying the juice during the boiling process is not common and the gur of Bengal is generally of a dark brown colour. Semi-liquid gur is prepared in almost all the districts of the province. Gur which is produced in Bihar, Nizamabad and Osmanabad (now in the State of Andhra Pradesh) is generally dark brown.

11. Mr. Nanavaty has invited our attention to these aspects of gur with the object of showing that semi-liquid gur with a dark brown or black colour is prepared or manufactured. There is no doubt about that fact. That is what exactly the definition of 'rotten gur' given in Section 2(39A) read with Section 64A contemplates. There is no averment in any of the petitions showing that semi-liquid gur in dark brown or black colour is in ordinary course consumed by human beings. However, even if we assume that it is ordinarily consumed by human beings, it does not make any difference because what the State Legislature has tried to do is to so regulate possession, manufacture, use and consumption of rotten gur as to prevent it from being channelized into illicit distillation of liquor. The Legislature, therefore, by enacting Section 64 and Section 64A has designedly and deliberately regulated possession, manufacture, use and consumption of gur and not prohibited it.

12. Bearing these aspects in mind, we now turn to the first and the second contentions raised on behalf of the petitioners. According to Mr. Nanavaty, Sections 64 and 64A are in the nature of restrictions on freedom of trade and intercourse guaranteed by Article 301. Article 301 reads as follows:

Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.

He has argued that control on possession, manufacture, use and consumption of gur places a restriction upon the freedom of trade, commerce and intercourse in that commodity. Secondly, he has argued that Clause (b) of Article 304 does not protect Sections 64 and 64A of the Bombay Prohibition Act, 1949. Clause (b) of Article 304 provides as under:

Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law:

(a)....

(b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest.

The conjoint reading of Article 301 and Clause (b) of Article 304 leave no doubt in our minds that reasonable restrictions in the public interest can be placed by a State Legislature upon the freedom of trade, commerce and intercourse guaranteed by Article 301.

13. Now, Article 301 as correctly submitted by Mr. Nanavaty comprises within its sweep both the inter-State trade and the intra-State trade. The first aspect which Mr. Nanavaty has raised before us is whether the regulation of possession, manufacture, use and consumption of rotten gur envisaged by Section 64 and Section 64A is a reasonable restriction in the public interest. We are proceeding to examine the arguments raised by Mr. Nanavaty on the assumption that Article 301 is otherwise attracted to the impugned sections. We shall later show that it has no application to them. Enactment of Sections 64 and 64A are a reasonable restriction upon the freedom of trade guaranteed by Article 301 and it is also in public interest because they have been enacted with the object of effectively enforcing the prohibition policy of the State which otherwise is a constitutional policy. The steps which a State Legislature takes in order to enforce a constitutional policy must under all circumstances be held to be a reasonable restriction and a restriction in the public interest. Mr. Nanavaty has, however, taken a step further and argued that the terms of Clause (b) of Article 304 are not satisfied because the proviso to it has net been complied with. Proviso to Article 304 reads as follows:

Provided that no Bill or amendment for the purposes of Clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.

It is an admitted fact that the President has neither granted a previous sanction or a subsequent sanction to Section 64 and Section 64A Mr. Nanavaty has, therefore, argued that what the State Legislature did by enacting Section 64 and Section 64A could not have been validly done unless the President had accorded his sanction to the impugned legislation.

14. On behalf of the State, Mr. J.U. Mehta has argued that the impugned legislation does not attract the provisions of Article 301 and that, therefore, the question whether the relevant provisions of Article 304 were complied with or does not arise.

15. Before we examine in details the submission made by Mr. Mehta, it is necessary to remember that prima facie provisions of Article 301 would be attracted to the impugned legislation because possession, manufacture, use and consumption of rotten gur necessarily imply business, trade and commerce in it. It is idle to think that a person may possess rotten gur in any quantity he likes unless he has the intention to carry on trade commerce therein. Similarly, a manufacturer who manufactures rotten gur does so for the purpose of carrying on business therein. Similarly, rotten gur can be used for business purpose. Therefore, regulation of possession, manufacture, use or consumption or rotten gur necessarily implies regulation of trade and commerce therein irrespective of whether it is intra-State trade and commerce or inter-State trade and commerce. li is in this light that prima-facie the provisions of Article 301 are attracted to the impugned legislation.

16. The circumstances under which the provisions of Article 301 are attracted have been the subject-matter of a few decisions.

17. In Chandulal Jethalal Jayaswal v. State of Gujarat and Anr. 0065/1964 : AIR1964Guj59 , IV G.L.R. 1031 such a contention, raised under Article 301, examined by this Court. In order to find out whether legislation is in violation of Article 301, the first test which this Court has laid down is as follows: What exactly is the direct result of the legislation in question? Does it hamper the freedom of trade, commerce or intercourse or is it merely regulatory? This Court has observed, '... restrictions, freedom from which is guaranteed by Article 301, should be such restrictions as directly and immediately restrict or impede the free flow or movement of trade. 'If a legislation operates directly against the freedom of trade, commerce and intercourse, then it is not violative of Article 301. If it operates incidentally in the same area, it is not violative of Article 301. In other words, Article 301 is not attracted to such a legislation. What was done in that case was to regulate trade in French Polish which was diverted to the channels illicit distillation of liquor. This Court has further observed: 'Abuse or misuse of denatured spirituous preparations, such as French Polish and Varnish, is neither trade nor commerce and a measure seeking to put down such abuse or misuse cannot be regarded as an impediment in the way of trade or commerce.' The principle laid down by this Court in that decision applies four-square to the facts of the instant case. Sections 64 and 64A seek to prevent the abuse or misuse of rotten gur. Abuse or misuse of rotten gur and its unlawful diversion to the channels of illicit distillation of liquor cannot be said to be trade or commerce within the meaning of Article 301.

18. In Automobile Transport Ltd v. State of Rajasthan 1962 S.C. 1406, the Supreme Court has amplified the connotation of Article 301 and Article 304(b). It was done in the context of Rajasthan Motor Vehicles Taxation Act, 1951, the constitutional validity of which was challenged under Article 301. The principle which has been laid down by the Supreme Court is that it is the reality or the substance of the matter which has to be determined. In the opinion of the Supreme Court, as long as a tax remained compensatory or regulatory, it did not operate as a hindrance to trade and commerce.

19. A similar question arose in Atiabari Tea Co. Ltd. v. The State of Assam and Ors. : [1961]1SCR809 . Assam Taxation (on Goods Carried by Roads or Inland Waterways) Act, 1954, was challenged, inter as violative of Article 301. The principle which has been laid down in that decision is that restrictions which are contemplated by Article 301 are such as directly__and immediately restrict or impede the free flow or movement of trade. A rational and workable test which should be applied to determine the limit of the width and amplitude of the freedom guaranteed by Article 301 has been stated in the following terms: Does the impugned restriction operate directly or immediately restrict or impede the free flow or movement of trade? If it does not, provisions of Article 301 are not attracted to such a restriction.

20. The next decision is in The State of Madras v. N.K. Nataraja Mudaliar AIR 1969 S.C. 147. In that case, certain provisions of Central Sales Tax Act, 1956. were challenged on the ground that they were ultra vires Articles 301, 302 and 303 (1). In that context, the Supreme Court examined the scope and ambit of Article 301. The principle which the Supreme Court has laid down in that decision is that the tax levied under the Central Sales-tax Act, 1956, did not operate directly or immediately on the free flow of trade or the free movement of the transfer of the goods from one part of the country to another. The Principle which the Supreme Court has laid down is whether it operates directly or immediately on the free flow of trade and free movement of transfer of goods. It is clear, therefore, that the provisions of Article 301 are attracted to that legislation which produces direct or immediate impact upon the free flow of trade or free movement or transfer of goods.

21. The next decision to which our attention has been invited is in T.G. Venkataraman v. State of Madras : (1967)IILLJ246SC . In that case, certain provisions of Madras General Sales Tax Act, 1959, were challenged on the ground that they were enacted in colourable exercise of power, In that context, the Supreme Court examined the impact of Articles 14, 301 and 246. Adverting to Article 301, the Supreme Court has laid down that a tax imposed on the transaction of sale does not affect the freedom of trade within the meaning of Article 301. However, in that decision, reference has been made to the earlier decision of the Supreme Court in The State of Madras v. N.K. Nataraja Mudaliar AIR 1969 S.C. 147, to which we have already referred and in which it has been laid down that 'a tax may in certain cases directly and immediately restrict or hamper the flow of trade, but every imposition of tax does not do so. '

22. The next decision to which our attention has been invited is in The District Collector, Hyderabad and Others v. M/s. Ibrahim and Co. etc. AIR 1270 S.C. 1975. In that case, an executive order issued by the' Government of Andhra Pradesh was challenged on the ground that it violated Article 301. All that has been laid down in that decision in that context is that no restriction upon freedom of trade, commerce and intercourse can be placed by an executive order. It can be done only by a legislation. This decision strictly has no application to the facts of the present case.

23. In The State of Kerala v. A.B. Adbul Kadir and Ors. : [1970]1SCR700 , certain provision of Kerala Luxury Tax on Tobacco (Validation) Act, 1964, were challenged on the ground that they violated Article 301 and were not saved by Article 304. The principle which has been laid down by the Supreme Court in that decision is that only such restrictions or impediments which directly or immediately impede the free flow of trade, commerce and intercourse fall within the prohibition imposed by Article 301. It has also been observed that unless the Court first decides whether the impugned legislation falls within the ambit of Article 301, the further question whether it is saved by Article 304 (b) does not arise.

24. In G.K. Krishnan etc. v. state of Tamil Nadu and Another etc. : [1975]2SCR715 , certain provisions of Madras Motor Vehicles Taxation Act, 1931, were challenged, inter alia, on the ground that they violated the provisions of Article 301. The principle which the Supreme Court has laid down in that context is that for a tax to become a prohibited tax, it has to be a direct tax, the effect of which is to hinder the movement part of the trade If the tax is compensatory or regulatory, it cannot operate as a restriction on the freedom of trade or commerce.

25. In Fatehchand Himmatlal and Others etc. v. State of Maharashtra : [1977]2SCR828 , certain provisions of the Maharashtra Debt Relief Act were challenged, inter alia, on the ground that they violated the provisions of Article 301 of the Constitution. In that context, this is what the Supreme Court has observed in paragraph 22 of the report:

We have no hesitation, in our hearts and our heads, to hold that every systematic, profit-oriented activity, however sinister, suppressive or socially diabolic, cannot ipso facto, exalt itself into a trade, Incorporation of Directive Principles of State Policy casting the high duty upon the State to strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice social, economic, and political shall inform all the institutions of the national life, is not idle print but command to action. We can never forget, except at our peril, that the Constitution obligates the State to ensure an adequate means of livelihood to its citizens and to see that the health and strength of workers, men and women are not abused, that exploitation, moral and material, shall be extradited. In short, State action defending the weaker sections from social injustice and all forms of exploitation and raising the standard of living of the people, necessarily imply that economic activities, attired as trade or business or commerce, can be de-recognised as trade or business. At this point, the legal culture and the public morals of a nation may merge, economic justice and taboo of traumatic trade may meet and jurisprudence may frown upon dark and deadly dealings. The constitutional refusal to consecrate exploitation as 'trade' in a Socialist Republic like ours argues itself.

The Supreme Court in that case has held that the deleterious pattern of money-lending cannot be classed as 'trade' within the meaning of that expression used in Article 301.

26. There are certain other decisions to which our attention has been invited. In our opinion, they are not very apposite. However, we make a brief reference to them.

27. In Cooverjee B. Bharucha v. Excise Commissioner and the Chief Commissioner, Ajmer and Ors. : [1954]1SCR873 , a similar question arose under the Ajmer Excise Regulation, 1915. Some of the provisions of the regulation were challenged, inter alia under Article 19(1)(g). In that context, the Supreme Court has observed that a business attended with danger to the community may be entirely prohibited or may be permitted under such conditions as will limit to the utmost its evils. The manner and extent of regulation rest in the direction of the governing authority.

28. In State of Bombay v. R.M.D. Chamarbaugwala and Anr. : [1957]1SCR874 , certain provisions of the Bombay Lotteries and Prize Com petitions Control and Tax Act, 1948, were challenged as unconstitutional, inter alia, on the ground that they violated the provisions of Article 301. In that context, the Supreme Court has observed that gambling activities from their very nature and in essence are extra-commercium although the external forms, formalities and instruments of trade may be employed and they are not protected either by Article 19(1)(g) or Article 301 of the Constitution. They cannot be elevated to the status of trade, commerce and intercourse within the meaning of Article 301 because they encourage a spirit of rekless propensity for making easy gain by lot or chance, which lead to the loss of the hard earned money of the undiscerning and improvident common man and thereby lower his standard of living and drive him into a chronic state of indebtedness and eventually disrupt the peace and happiness of his humble home.

29. In Kochan Velavudhan v. State of Kerala 1961 Cri. L.J. 70, a question arose whether Travancore Cochin Prohibition Act, 1950, fell within the scope of Article 301 and whether it was unconstitutional. The Kerala High Court in that decision has observed that the legislation impugned therein in pith and substance prohibited the use and consumption of intoxicating liquor as the latter are deleterious to the health of the people and undermine public morals. It concerns itself only with the enforcement of prohibition and this subject is within the competence of the State Legislature (vide Entry 8 in List IF, Schedule VII). That legislation was not meant to affect directly the free flow of men or goods from one part of India to another or to put barriers in the way of free trade in India, so as to hit directly the freedom of trade enshrined in Article 301. The protection which Article 301 affords is confined to such activity as has been regarded as lawful trading activity. It does not extend to an activity which is extra commericium. The expression 'trade, commerce and inter course' does not embrace activities which are inherently pernicious, viz., trafficking in women, hiring of goondas to commit crimes, gambling etc. It was further held: 'Liquor is not a legitimate article of trade and freedom of trade in liquor is not protected by Article 301. 'Therefore, in its opinion, a legislation which restricts or even prohibits trade in liquor need not satisfy the procedural requirements of Article 304 for its validity.

30. In Yogesh Trading Co., Kotachery v. The Intelligence Officer of Sales Tax, Cannanore and Anr. : AIR1970Ker218 , the provisions of Articles 301 and 304 were invoked to challenge to the validity of Kerala General Sales-tax Act, 1963, on the ground that they impeded the freedom of trade, commerce and intercourse. In that context, the Kerala High Court has observed that even though the provisions of Article 301 are unqualified in nature, they are not offended by a legislation which regulates and does not restrict the free flow of trade. Only those provisions which directly and immediately affect the free flow of trade or movement part of the trade would come into clash with it.

31. The principle which has been well settled in several decisions to which we have referred is that a legislation which directly or immediately restricts the freedom of trade, commerce and intercourse attracts the pro visions of Article 301 and that the legislation which incidentally regulates trade, commerce or intercourse does not attract the provisions of Article 301.

32. So far as the impugned legislation is concerned, it does not directly or immediately restrict the free flow of trade, commerce and inter course. The primary object of the impugned legislation is to prevent rotten gur from being diverted to the channels of illicit distillation of liquor. It has been enacted with the object of tightening the prohibition policy in the State and enforcing it rigorously and effectively. It is a policy envisaged by Article 47 of the Constitution and the impugned legislation was held as in 1951, lawful and valid. In order to achieve this principal object of plugging the loopholes in the prohibition policy of the State that the impugned legislation has been enacted. Incidentally_ it regulates freedom of trade, commerce and intercourse in rotten gur. We will not go to the extent of saying that the rotten gur is extra commericium, trade, commerce and intercourse can be regulated incidentally by a legislation which has been enacted for serving a greater and higher object of enforcing the prohibition policy in the State. Therefore, in our opinion, the impugned legislation does not attract Article 301. Therefore, the question whether it is protected by Article 304 (b) does not arise. In that view of the matter, it was not necessary for the State Government to obtain the President's sanction as contemplated by proviso to Clause (b) of Article 304.

33. In this context, Mr. Nanavaty has argued that the definition of 'rotten gur' given in Section 2(39A) is vague and indefinite and, therefore, it exposes dealers in rotten gur to undue penal action. According to him, therefore, provisions of Article 21 are violated inasmuch as, on the strength of such a vague and indefinite definition, dealers or traders may be deprived of their personal liberty. This challenge has also been raised by Mr. Nanavaty under Article 19(1)(g) of the Constitution. According to him, such a vague and indefinite definition of rotten gur does not place a reasonable restriction upon the petitioners' fundamental right to carry on business. It is guaranteed to them by Article 19(1)(g). In order to examine this challenge, it is necessary to turn once again to two parts of the definition of 'rotten gur'. The first part is in the following terms:

'rotten gur' means the article known as gur. gul, jaggery, palmyra jaggery or rab and other intermediary product prepared by boiling or processing juice pressed out of sugar cane or extracted from palmyra palm, date palm, sago palm brab palm or conconut palm, with or without admixture of molasses, and which is in a liquid form or a semi-liquid or viscous form and which has a dark brown or a black colour.

The earlier part of the expression refers to several sources of rotten gur to which we need not advert. The subsequent part of this definition provides that it must be in a liquid form or a semi-liquid or viscous form and it must have a dark brown or a black colour. It is necessary to note that gur in solid or Jump form is not covered by this definition. The 'Monograph on the Gur Industry of India' to which we have referred in the earlier part of this judgment does not deal with liquid form of gur nor does it deal with viscous form of gur. 'Viscous' has been defined in Oxford Dictionary as having a glutinous or gluey character. This part of the definition, in our opinion, cannot be challenged on the ground that it is vague and indefinite because it prescribes the form and the colour of gur which can be termed as a rotten gur. So far as the form is concerned, it may be in a liquid from or in a viscous form. It may as well be in a semi-liquid form to which the reference has been made in the 'Monograph on the Gur Industry of India' to which we have referred. Our attention has not been invited to anything which shows that the gur in semi-liquid form having a dark brown or black colour is edible or can be consumed by human beings. Gur in liquid form and viscous form appears to us to be unfit for human consumption. It cannot be so in case of gur in semi-liquid form. However, irrespective of whether such a gur can be consumed by human beings or not, what the State Government has done is to regulate trade and business in gur which can be identified definitely with reference to the first part of the definition. Therefore, what has been regulated by the State Legislature is gur in liquid form or semi-liquid form or viscous form having a dark brown or black colour. These are objective tests. Whether prosecution launched in respect of rotten gur under the provisions of the Bombay Prohibition Act, 1949, will succeed or fail will depend upon the report of a Chemical Analyser or a Public Analyst showing whether a particular gur or sample in which an accused has been dealing answers the description given in the first part. It is difficult to say that the first part of the definition of 'rotten gur' requires the subjective satisfaction of the police or the State Government. We do not think we can take such a view. Mr. Mehta who appears on behalf of the State of Gujarat has also not canvassed such a view before us. To take any such view is to leave the bread and the liberty of the citizens to the whim and caprice of the State Government. In our opinion, however, that is not the effect which the first part of the definition of rotten gur produces when the first part Jays down the objective test with reference to which whether a particular gur is rotten gur or not can be determined. The first part, therefore, is incapable of being exposed to the charge of vagueness or indefiniteness.

34. We now turn to the second part of the definition which is in the following terms:

'rotten gur' means, the article known as gur, gul, jaggery, palmyra jaggery or rab and other intermediary product prepared by boiling or processing juice pressed out of sugar cane or extracted from palmyra palm, date palm, sago palm, brab palm or coconut palm, with or without admixture of molassess... inspite

of being in a solid, liquid, semi-liquid or viscous form, is unfit for human consumption owing to its becoming filthy, putrid, disgusting or decomposed. 'This part of the definition also lays down objective tests. The first objective test is that it must be unfit for human consumption on account of its being filthy, putrid, disgusting or decomposed. An ordinary or a common man does not eat something which is filthy, putrid, disgusting or decomposed and what is unfit for human consumption can always be determined by the Chemical Analyser or the Public Analyst. It, therefore, lays down objective standards for determining what a particular commodity is. So also, the form in which gur has been described also provides objective tests. It may be in a solid form, liquid form, semi-liquid form or viscous form. It is noteworthy that whereas the first part of the definition does not refer to solid gur, the second part refers to it. The Legislature his taken precise and meticulous care in defining the depression 'rotten gur' by laying down objective criteria for determining the character of a particular kind of 'gur'. Both the parts of the definition, therefore, lay down identifiable standards and are not open to the charge of vagueness or indefiniteness.

35. It has next been argued in this context by Mr. Nanavaty that the Act does not provide any machinery for effectuating the policy of the Legislature as laid down in Sections 64 and 64A. The State Legislature has made Gujarat Rotten Gur and Ammonium Chloride (Manufacture and Possession) Rules, 1977, in exercise of the power conferred upon them by secs 64, 64 A, 64B and Clause (bb) of Sub-section (2) of Section 143 of the Bombay Prohibition Act, 1949. They provide adequate machinery for the issuance of a licence, permit, pass or authorization in respect of rotten gur. It is, therefore, not correct to say that no machinery has been provided in order to effectuate the policy laid down by Sections 64 and 64A by the impugned legislation. In our opinion, in the context of the prohibition policy enforced in this State, the regulation placed by the Legislature by enacting Sections 64 and 64A constitutes reasonable restriction on the petitioners' fundamental right to carry on business guaranteed to them under Article 19(1)(g) the Constitution and does not violate Article 21. The first and the second contentions which Mr. Nanavaty his raised before us, therefore, fail and are rejected.

36. The last contention which Mr. Nanavaty has raised, relates to the legislative competence of the State Legislature.lt has been argued by Mr. Nanavaty that the impugned legislation does not fall under Entry 8 in List II in the Seventh Schedule to the Constitution, Entry 8 provides as follows:

Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors'

It is significant to note that the Entry does not use only the expression 'intoxicating liquors'. The Entry amplifies the expression 'intoxicating liquors' and specifies several aspects of 'intoxicating liquors', such as production, manufacture, possession, transport, purchase and sale. Reference to the production of intoxicating liquors in Entry 8 in List II must, in our opinion, covers the raw materials out of which intoxicating liquors are produced.

37. In the State of Bombay and Another v. R.N. Balsara AIR 1951 S.C. 318, the amplitude of Entry 8 in List II was examined by the Supreme Court. It was a case in which the provisions of the Bombay Prohibition Act, 1949, were challenged. However, since the Bombay Prohibition Act, 1949, was enacted before the Constitution came into force, the challenge to the legislative competence was examined under the relevant entry in the Government of India Act, 1935. Entry 31 in Schedule VII, List II to the Government of India Act, 1935, read as follows:

31. Intoxicating liquors and narcotic drugs, that is to say, the production, manufacture possession, transport, purchase and sale of intoxicating liquors, opium and other narcotic drugs, but subject, as respects opium, to the provisions of List I and, as respects poison and dangerous drugs, to the provisions of List III.

It was held by the Supreme Court in that case that under Entry 31 in List II in the Government of India Act, 1935, the Provincial Legislature had the power to prohibit possession, use and sale of intoxicating liquor absolutely. The question, however, has been answered directly by the Supreme Court in Ch. Tika Ramji v. State of V.P. : [1956]1SCR393 . It was a case in which the provisions of U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953, were challenged as ultra vires the legislative Competence of the U.P. State Legislature. The facts of the case were as follows: Sugar industry was declared by Central Act, 65 of 1951 to be an industry, the control of which by the Union of India was expedient in the public interest. The history of legislation on the sugar industry which has been traced in that decision shows that since 1932 the sugar industry was declared to be an industry, the control of which by the Central Government was expedient in the public interest. Entry 52 in List I in the Seventh Schedule to the Constitution provides as follows:

Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.

By virtue of Entry 52 in List I, the Parliament has the exclusive jurisdiction in regard to sugar industry because Central Act 65 of 1951 has declared it to be an industry, the control of which by the Union of India is expedient in the public interest. The question which, therefore, arose in the context of U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953, was as follows: Could the UP. Legislature enact that Act when under Entry 52 in the Union List the Parliament had the exclusive jurisdiction to legislate upon the sugar industry, ID that context, the Supreme Court has laid down the principle for construing Legislative entains in the Constitution and observed as follows:

Each entry in the Lists which is a category or head of the subject-matter of legislation must be construed not in a narrow or restricted sense but as widely as possible so as to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it.

This was the principle which the Supreme Court laid down in the matter of construing entries specified in the Seventh Schedule to the Consitution. Referring to the expression 'industry' used in the Seventh Schedule, this is what the Supreme Court has stated:

Industry in the wide sense of the term would be capable of comprising three different aspects: (1) raw materials which are an integral part of the Industrial process (2) the process of manufacture or production and (3) the distribution of the products of the industry. The raw materials would be goods which would be comprised in Entry 27 of List 2. The process of manufacture or production would be comprised in Entry 24 of List 2 except where the industry was a controlled industry when it would fall within Entry 52 of List 1 and the products of the industry would also be comprised in Entry 27 of List 2 except where they were the products of the controlled industries when they would fall within Entry 33 of List 3.

This decision is an authority for two propositions. Firstly, a legislative entry in the Seventh Schedule to the Constitution must be construed in its widest amplitude so as to cover all ancillary and incidental matters which can be fairly said to be comprehended in it. Secondly, in case of an industry, the expression' 'industry' covers raw materials, the process of manufacture or production and the distribution of the product of industry. Pausing here for a moment and applying the principle laid down by the Supreme Court to the facts of the instant case, there is no reason why we should place a narrow construction upon the expression 'intoxicating liquors' so as to exclude from its connotation and amplitude raw materials out of which intoxicating liquors can be manufactured or produced. Rotten gur is one of the raw materials. However, in Tika Ramji 's case (supra), the question which was raised for the decision of the Supreme Court related to resolution of conflict between Entry 52 in List I and Entry 27 in List II. Entry 27 in List II reads as follows:

Production, supply and distribution of goods subject to the provisions of Entry 33 of List III.

To reconcile these two entries and in order to avoid conflict of jurisdiction, the Supreme Court held that raw materials in case of a controlled industry fell under Entry 27 in List II and, therefore, the legislation in respect of them was within the exclusive jurisdiction of the State Legislature. Therefore, U.P. Sugarcane (Regulation of Supply and Purchase) Act, 1953, was held intra vires the legislative competence of the U.P. State Legislature. However, the Supreme Court held that the process of manufacture in case of a controlled industry fell within the ambit of Entry 52 in List I and that the products of such an industry fell within the ambit of Entry 33 in List III. The Supreme Court split up three aspects of the industry in order to remove conflicting jurisdictions of Parliament and State Legislature and to harmonise them. Therefore, where there is no such conflict of jurisdictions and in this case there is none a legislative head must be construed to embrace within its sweep all that is a part of it, connected with it or incidental to it. In our opinion, therefore, the expression 'intoxicating liquors' used in Entry 8 in List II embraces within it sweep legislation on raw materials out of which intoxicating liquors may be produced or manufactured. In the instant case, the problem is simpler than it otherwise would be because the entry does not refer only to intoxicating liquors but amplifies that expression and refers, amongst others, to production of intoxicating liquors.

38. The principle laid down in Tika Ramji's case (supra) has been referred with approval in the latest decision in Ganga Sugar Corporation Ltd. v. The State of Uttar Pradesh and Ors. : [1980]1SCR769 . Referring to the decision in Tika Ramji's case (supra), it has been observed by the Supreme Court as follows:

Enlightened litigative policy in the country must accept as final the pronouncements of the Supreme Court by a Constitution Bench unless the subject be of such fundamental importance to national life or the reasoning is so plainly erroneous in the light of later thought that it is wiser to be ultimately right rather than to be consistently wrong. Stare decisis is not a ritual of convenience but a rule with limited exceptions. Pronouncements by Constitution Benches should not be treated so cavalierly as to be revised frequently.

39. Reference has been also made to the decision of the Supreme Court in The State of U.P. and Others v. Synthetics and Chemical Ltd. and Ors. : [1980]2SCR531 . Paragraph 10 of the report refers to Entry 8 in List II. Reference to it in that decision is not relevant for the purpose of the present case.

40. The last decision is the decision of this Court in the case of Chandulal Jethalal Jayaswal (supra). In paragraphs 6 and 8 of the report, it has been observed that Entry 8 in List II does not expressly mention import but that it is well-settled that entries in such lists are enumerative and not exhaustive, and, therefore, legislation with regard to import of intoxicating liquor would be included within the purview of that entry. It has also been observed that 'entries in the lists in the Seventh Schedule to the Constitution are not to be regarded as exhaustive but only enumerative 'and that such entries should be liberally construed so as to include in them all subsidiary and incidental purposes. '

41. Reference has also been made to Entry 27 in the State List. It provides as follows: 'Production, supply and distribution of goods subject to the provisions of Entry 33 of List III?' It is not necessary to examine the argument raised in the context of this entry because we are of the opinion that the impugned legislation falls within the scope and ambit of Entry 8 in List II. It is also not necessary to refer to Entry 33 in List III which specifies trade and commerce in, and the production, supply and distribution, inter alia, of a foodstuffs, including edible oilseeds and oils. It is difficult to imagine that the 'rotten gur' is a gur and, there fore, falls within Entry 33. It, in our opinion falls four square within the ambit of Entry 8 in the State List.

42. Reference has also been made to Entry 33 in List III by Mr. Nanavaty in order to show that if rotten gur is a foodstuff, provisions of Essential Commodities Act, 1955, enacted by Parliament would be in conflict with the impugned legislation. Rotten gur as defined in Section 2(39A) of the Bombay Prohibition Act, 1949, cannot, in our opinion, be termed as 'foodstuff. Therefore, Entry 33 in List III is not attracted to the impugned legislation. We have already observed that there is nothing to show that rotten gur is consumed by human beings nor is there anything to that effect in the texts to which we have already referred.

43. Reference has also been made to the unreported decision of this Court in Special Civil Application No. 1323 of 1966 decided by Mr. Justice J.B. Mehta and Mr. Justice A.D. Desai on April 24. 1970. In that case, provisions of Section 59AA and Section 24A were challenged as ultra vires the legislative competence of the State Legislature. In that decision the principle laid down by this Court in Chandulal' s case (supra) has been followed.

44. In State v. Shehappa Dudhappa Tambade AIR 1964 Bombay 253, it has been held by the High Court at Bombay that Section 129A which provides that if a Police Officer has reasonable ground for believing that a person has consumed an intoxicant and that for the purpose of establishing that he has consumed an intoxicant or for procuring evidence thereof, it is necessary that his body be medically examined or that his blood be collected for being tested for determining the percentage of alcohol therein, such Prohibition Officer or Police Officer may produce such person before a registered medical practitioner (authorised by general or special order by the State Government in that behalf) for the purpose of such medical examination or collection of blood and request such registered medical practitioner to furnish a certificate of his finding showing whether such person has consumed any intoxicant and to forward the blood collected by him for test to the Chemical Examiner or Assistant Chemical Examiner to the Government, or to such other officer as the State Government may appoint in that behalf, was within the scope and ambit of Entry 8 in List II of the Seventh Schedule to the Constitution. Acceding to the High Court at Bombay, it is ancillary to the exercise of legislative power under that entry. In order to give effect to the policy of the legislation in question, the ancillary provisions cannot be considered separately from the enactment and they do not fall under another head of legislation.

45. We, are therefore, of the opinion that Sections 64, 64A read with Section 2(39A) and Section 70A are intra vires the legislative competence of the State Legislature under Entry 8 in the Seventh Schedule in the State List to the Constitution.

46. Before we part the case, we may observe that whereas in respect of intoxicating liquor the Bombay Prohibition Act prohibits possession, manufacture, export, import, transport etc., in case of rotten gur, it merely prohibits possession, manufacture, use and consumption. This makes it clear that it is purely regulatory in character.

47. The three contentions which Mr. Nanavaty has raised before us, therefore, fail and are rejected.

48. In the result, all the petitions fail and are dismissed. Rule in each of them is discharged with no order as to costs in the circumstances of the case.

Mr. K.S. Nanavaty on behalf of the petitioners request this Court to direct the licensing authority to dispose of applications for licence, permit, pass or authorization, if made by the petitioners or any of them within a reasonable time so that the petitioners know what they should do to the stocks which they are holding. If the petitioners or any of them apply to the licensing authority on or before 30th September 1980 for issuance of licence, permit, pass or authorization, the licensing authority shall dispose of his or their applications within four weeks thereafter. If such applications are made by the petitioners, then such applicants shall not be prosecuted in respect of any offence which they might purport to have committed during the pendency these petitions and till the disposal of their applications. We may, however, add that this order shall not enable the petitioners to dispose of their stocks of rotten gur except in accordance with the provisions of law.


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