Holding

The Tamil Nadu Spirituous Preparations (Control) Rules, 1984 are valid as they are within the legislative competence conferred by Section 54(2)(m) of the Tamil Nadu Prohibition Act, 1937, and the licence requirement does not constitute an unreasonable restriction.

Summary

The appellants, manufacturers and dealers of Ayurvedic and Unani medicines, challenged the validity of the Tamil Nadu Spirituous Preparations (Control) Rules, 1984, which require licences for the sale of any medicinal preparation containing alcohol or intoxicating drugs. They argued that the rules imposed unreasonable restrictions on wholesale and retail dealers. The High Court upheld the rules, and the appellants appealed to the Supreme Court. The Court examined the statutory power under Section 54(2)(m) of the Tamil Nadu Prohibition Act, 1937, which authorises the State to make rules for regulating liquor used for medicinal or toilet purposes. It held that the Rules, which define spirituous and restricted preparations and mandate licences under Rule 11, are consistent with the Act’s scheme of prohibiting intoxicating liquors and drugs. The fact that many of the appellants' products do not contain alcohol was deemed irrelevant; any sale of a restricted or spirituous preparation requires a licence. Consequently, the appeal was dismissed and the High Court’s order affirmed.

Issues considered

Whether the Tamil Nadu Spirituous Preparations (Control) Rules, 1984 are validly framed under Section 54(2)(m) of the Tamil Nadu Prohibition Act, 1937.
Whether the requirement of licences for the sale of indigenous system medicinal preparations containing alcohol or intoxicating drugs amounts to an unreasonable restriction on dealers.

Legislation cited

Drugs and Cosmetics Act, 1940

Subjects

licensingindigenous medicinesAyurvedicUnanispirituous preparationsprohibition actregulatory lawTamil Nadualcoholintoxicating drugs

Judgment

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KANYA KUMAR! DISTRICT SIDHA AND A YURVEDA A
VAIDYAR SANGAM AND ANR.
v.
THE GOVERNMENT OF TAMIL NADU AND ORS.

MARCH 13, 1996
B
[J.S. VERMA, N.P. SINGH AND B.N. KIRPAL, JJ.]

Tamil Nadu Prohibition Act, 1937: Sections 3(9), 16, 54(2) (m).
>- -~'
Tamil Nadu Spi1ituous preparations (Control) Rules, 1984: Rules C
3(b )(j)(k) lll!d II.

Indigenous system of Medicines-Medicinal Preparation containing al-
cohol whether self generated or otherwise or any intoxicating drng-Sale
of-'Spirituous preparations' and 'Restricted preparations'-Sale of-Require-
ment of licence fol'-Held valid-Object of the mies explained. D

The appellants manufacture and deal in ayurvedic and unani
medicines. They questioned the validity of the Tamil Nadu Spirituous
Preparations (Control) Rules, 1984 contending that the provisions reqnir-
ing licences for sale of indigenous system of medicines by medical prac- E
titioner or by those holding licence under the Medicinal and Toilet
Preparations (Excise Duties) Rnles, 1956 or holders of licences under
Drugs and. Cosmetics Act, 1940 amoµnts to unreasonable restrictions on
the right of wholesale and retail dealers to deal in indigenous system of
medicines. The High Court upheld the validity of the Rules. Against the
decision of the High Court an appeal was preferred before this Court. F
Dismissing the appeal, this Court

HELD : 1. The impugned order of the High Court requires no
interference. In view of the provisions contained in section 3(9) and
54(2)(m) of the Tamil Nadn Prohibition Act, 1937 read with Rnles G
3(b)(j)(k) and 11 of the Tamil Nadu Spirituons Preparations (Control)
Rules, 1984, if any wholesale or retail dealer is to sell any preparation
which contains alcohol whether self-generated or otherwise or any in·
toxicating drug, then be bas to obtain licence as required by Rule 11 of the
Rules. The Rules purport to regulate the sale of spirituous preparations H
317
{
318 SUPREME COURT REPORTS [1996] 3 S.C.R.

A and restricted preparations through homoepathic or indigenous system of
medicines. The restrictions imposed by the Rules are consistent with the
provisions of the Act and the State Government had authority to frame
such Rules. The primary object is to regulate the sale of medicinal or toilet
preparations containing alcohol and/or intoxicating drugs, which is con·
sistent with the scheme and provisions of the Act i.e. prohibition of the
B manufacture, sale and consumption of intoxicating liquors and drugs in
the State of Tamil Nadu. (321-D, 320-E-H; 321-C]

2. The fact that the appellants are dealing in many products of
indigenous system of medicines and all of them do not contain alcohol is .,._ •
C of no significance or consequence. Once it is found that they have been
dealing and selling any medicinal preparation through indigenous system
of medicines which can be held to be restricted preparation or spirituous
preparation then the provisions of the Rules shall be attracted and the
appellant can deal only on basis of licences being granted for the same.
(321-A-B]
D
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 30-31 of
1993. ...

From the Judgment and Order dated 17.4.89 of the Madras High
Court in W.A. No. 1508 and W.P. No. 1445 of 1988.
E
M. Kalyana Sundaram and S.R. Selia for the Appellants.

A.S. Nambiar, Ms. A. Subhashini for Arputham, Arona & Co. for
· the Respondents.

The Judgment of the Court was delivered by
F
N.P. SINGH, J. The appellants who manufacture and deal in ayur-
vedic and unani medicines questioned the validity of the Tamil Nadu
Spirituous Preparations (Control) Rules, 1984 (hereinafter referred to as
the 'Rules) framed under the exercise of the power conferred by Section
G 54 of the Tamil Nadu Prohibition Act, 1937 (hereinafter referred to as the
'Act') before the High Court which has upheld the validity of the said rules.
The order by which the aforesaid Rules were notified gives the object of
the framing of the Rules, saying that by G.O. Ms. No. 3031, Home, dated
1.11.1958, the Government in exercise of the powers conferred by Section
16 of the aforesaid Act had exempted the medicinal and toilet preparations
H containing alcohol and/or intoxicating drugs from all provisions of the said
KANYA KU MARI DI SIT. SIOHA AND AYURVEDA VAIDYAR SANG AM v. GOVI'. OF T.N. 319

Act, subject to certain conditions. But the conditions were found to be A
inadequate to check effectively the manufacture and sale of medicines
containing alcohol and because of that a decision had been taken to frame
a separate set of rules. Rule 3(b) defines alcohol to mean ethyl alcohol of
any strength and purity having the chemical composition of C2 H5 OH.
Rule 30) defines "restricted preparations":
B
"spirituous preparations that are intended for internal con-
sumption and containing more than 18% v/v of alcohol and
medicinal preparations containing intoxicating drugs.

Provided that all ayurvedic preparations containing self-
generated alcohol and classified as "restricted preparations" under C
the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956
shall be treated as restricted preparations for the purpose of these
1
rules.'

Similarly Rule 3(k) defines "spirituous preparations" : D
"Spirituous preparations 11 means -

(i) any medical or toilet preparation containing alcohol,
whether self-generated or otherwise, or any intoxicating drug; or
E
(ii) any other substance containing alcohol or intoxicating drug,
whether self-generated or otherwise, notified under rule 5 to be a
spirituous preparation;

F
Rule 11 provides for grant of wholesale and retail sale licences in different
forms prescribed therein for sale of any homoeopathic medicinal prepara-
tion or "any preparation corning under the indigenous system of medicine
to a registered medical practitioner or to those holding licence in Forms
L1 and L2 under the Medicinal and Toilet preparations (Excise Duties) G
Rules, 1956 or a licence under the Drugs and Cosmetics Act, 1940 (Central
~ Act XXIII of 1940)''.

According to the appellants, the provisions aforesaid requiring licen-
ces for sale of indigenous system of medicines by medical practitioner or
by those holding licence under the Medicinal and Toilet Preparations H
320 SUPREME COURT REPORTS [1996] 3 S.C.R.

A (Excise Duties) Rules, 1956 or holders of licences under Drugs and Cos-
metics Act, 1940 amounts to unreasonable restrictions on the right of
wholesale and retail dealers to deal in such indigenous system of medicines.

It cannot be disputed that power to frame such Rules, requiring the
wholesale dealers and retail dealers to get licences before dealing in
B indigenous system of medicines must flow from the provisions of the Act
under which such Rules have been framed. Section 3(9) of the Act defines
nliquor 11 :

"liquor" includes toddy,/country Liquor, spirits or wine, (dena-
c tured spirits), spirits, wine, beer, and all liquid consisting of or
containing alcohori

Section 54 vests power in the State Government to make rules for the
purpose of carrying into effect the provisions of the said Act. Clause (m)
of sub-section (2) of Section 54 says :
D
"Clause (m) - for the prevention of the use of medicinal or toilet
purposes and for the regulation of the use of any liquor or drug
exempted from all or any of the use provisions of this Act."

On a plain reading Section 54(2)(m) enables the State Government to
E make rules for regulating the use of any liquor for medicinal or toilet
purposes. We are not able to appreciate as to how in face of Section
54(2)(m) it can be held that the State Government could not have regulated
the use of liquor which shall include alcohol in view of definition of liquor
under Section 3(9) aforesaid. As already pointed out above, Rule 3(k)
F defines 'spirituous preparations' to mean any medicinal or toilet prepara-
tions containing alcohol whether self-generated or otherwise or any in-
toxicating drug. The expression alcohol has already been defined in rule
3(b). In this background, if any wholesale or retail dealer is to sell any
preparation which contains alcohol whether self-generated or otherwise or
G any intoxicating drug, then he has to obtain licence as required by Rule 11
of the Rules. From reading the Rules, it is apparent and obvious that they
purport to regulate the sale of spirituous preparations and restricted
preparations through homoeopathic or indigenous system of medicines.
The restrictions imposed by the Rules are consistent with the provisions of
the Act and the State Government had authority to frame such Rules under
H Section 54(2)(m).
KANYA KUMARI DISIT. SIDHAAND A YURVEDA VAIDYARSANGAM~. GOVT. OFT.N. 321

On behalf of the appellant, it was pointed out that they are dealing A
in many products of indigenous system of medicines and all of them do not
contain alcohol. In other words, majority of the medicinal preparations are
neither spirituous preparations nor restricted preparations containing any
alcohol. This according to us, is of no significance or consequence. Once
it is found that the appellants have been dealing and selling any medicinal B
preparation through indigenous system of .medicines which can be held to
be restricted preparation or spirituous preparation then the provisions of
the Rules shall be attracted and the appellant can deal only on basis of
licences being granted for the same. The notification through which the
rules were notified as already mentioned above clearly indicate the object
and the reason for framing such rules. The primary object is to regulate C
the sale of medicinal or toilet preparations containing alcohol and/or
intoxicating drugs, which is consistent with the scheme and provisions of
the Act i.e. prohibition of the manufacture, sale and consumption of
intoxicating liquors and drugs in the State of Tamil Nadu. The impugned
order of the High Court requires no interference. The appeal is accordingly D
dismissed. In the fact and circumstances of the case, there shall be no
orders as to cost.
..J
• T.N.A. Appeal dismissed.