Holding

The Andhra Pradesh Prohibition (Amendment) Act, 1995, which prohibits the manufacture of intoxicating liquor, is constitutionally valid and within the exclusive legislative competence of the State Legislature.

Summary

The State of Andhra Pradesh enacted the Prohibition Act, 1995 and later amended it to prohibit the manufacture of intoxicating liquor. Several liquor manufacturers challenged the amendment, arguing that the State lacked competence under Entry 8 of List II because the Industries (Development and Regulation) Act, 1951 (Item 26) placed fermentation industries under Union control, and that the Act violated Articles 19(1)(g) and 14 of the Constitution. The Supreme Court applied the pith‑and‑substance test, held that Entry 8 specifically covers production and manufacture of intoxicating liquor and is not overridden by Entry 52 of List I or the IDR Act, and that the State may impose a total prohibition consistent with Article 47. It further ruled that the amendment’s retrospective operation is constitutionally valid and that the exemptions for certain categories do not constitute an unreasonable classification under Article 14. Consequently, the amendment and the prohibition of manufacture were upheld and the writ petitions dismissed.

Issues considered

The State Legislature's competence to prohibit manufacture of intoxicating liquor under Entry 8 of List II
Whether the Industries (Development and Regulation) Act, 1951 (Item 26) removes State power over fermentation industries
Validity of the amendment's retrospective effect
Whether the prohibition infringes Article 19(1)(g) right to trade in intoxicating liquor
Whether the Act violates Article 14 by exempting certain categories

Legislation cited

Andhra Pradesh Excise Act, 1968
Andhra Pradesh Prohibition Act, 1995s. 15(1), s. 2(7)(a), s. 2(7)(b), s. 7, s. 7-A
Andhra Pradesh Prohibition (Amendment) Act, 1995s. 2, s. 3, s. 5, s. 7-A
Industries (Development and Regulation) Act, 1951s. Item 26 (First Schedule)

Subjects

ProhibitionIntoxicating liquorLegislative competenceState ListUnion ListArticle 19Article 14Article 47Pith and substanceRetrospective legislationLicensing

Judgment

STATE OF ANDHRA PRADESH AND ORS. ETC. A
v.
MC. DOWELL & CO. AND ORS. ETC.

MARCH 21, 1996

[AM. AHMADI, CJ, B.P. JEEV AN REDDY AND B
SUHAS C. SEN, JJ.]

Andhra Pradesh Prohibition Act, 1995 (as amended by Andhra Pradesh
Prohibition (Amendment) Act, 1995).

Ss. 2(7)(a) and (b), 7, 7-A, 15(1)-/ntoxicating liquor~rohibition of C
manufacntre, production, sale, consumption and possession of-Held, con-
stitutionally valid-Retrospective operatio11 to amending Act w.e.f date of
commencement of Pri11cipal Act is valid.

Constillttio11 ·of !11dia. D
A1ticles 14, 19(1)(g), 19(6), 47, 24fr-7th Schedule (Entry 8 read with
Entry 6 and Entry 24 of List II and Enfly 52 of List !)--Intoxicating li-
quors--!'Janufacture, production, conszunption, sale and possession
of-Prohibition of by Andhra Pradesh Prohibitio11 Act, 1995-He/d intoxicat-
i11g liquors fall under Entry 8 of list II, and State Legislalltre is competent to E
enact law on the subject-Entry 52 of List I does not impinge upon Entry 8
of List II-A citizen has no right to trade in intoxicating liquors-Act is not
violative of Article 14-Grounds on which an enactment ca1i be st1uck
• down-Explained.

Doct1ine of 'pith and substance'-Applicability of F

Industries (Development and Regulation) Act, 1951 : Schedule 1, Item
26--Fennentation Industries-Prohibition of manufacture of intoxicating li-
quors by State Legislantre-Held, the item must be read subject to Entry 8
and EntJy 6 in List II of 7th Schedule to the Constitution-State Legislature G
has power to make law in order to prohibit manufacture, production con-
sumption, sale and possession of intoxicating liquor.

The manufacturers of intoxicating liquors, whose licences the
Government of Andhra Pradesh refused to renew after the enforcement of
the Andhra Pradesh prohibition Act, 1995, filed writ petitions before the H
721
I

'
722 SUPREME COURT REPORTS (1996] 3 S.C.R.

A High Court challenging the provisions of the Act and seeking a declaration
that the Act did not prohibit manufacture of intoxicating liquors though
it prohibited consumption, sale and possession thereof in the State. A Full
Bench of the High Court allowed the writ petition. Aggrieved, the State
Government filed the appeals. -
B Meanwhile the Andhra Pradesh Prohibition (Amendment) Act, 1995
was enacted prohibiting manufacture also of intoxicating liquors in the
State with effect from 16.1.1995, the date of commencement of the Principal
Act. The manufacturers tiled the present writ petitions challenging the
constitutional validity of the amending Act.
c It was contended for the petitioner that by virtue of enactment of the
Industries (Development and Regulation) Act 1951, and inclusion of fer-
mentation industries (alcohol being a product of fermentation industries)
in the Schedule to the Act, the State Legislature was denuded of its power
to licence and regulate the manufacture of liquor and, as such, prohibiting
D the manufacture of liquor within the State was beyond the competence of
the State Legislature; and that the Act was violative of Article 19(1) (g) of
the Constitution as it infringed the right to trade in intoxicating liquors.
The Act was also challenged as violative of Article 14 since it exempted
certain categories of consumers of intoxicating liquors like foreigners,
E members of armed forces serving or retired etc.

Dismissing the writ petitions and disposing of the appeals, this
Court

HELD: 1. The prohibition of manufacture, production, consumption, ).
F sale and possession of intoxicating liquors brought about by the Andhra
Pradesh Prohibition Act, 1995 (as amended by the Andhra Pradesh Act 35
of 1995) is perfectly valid and beyond challenge. The retrospective effect
given to the amending Act with effect from the date of commencement of the
principal Act is constitutionally valid. (751-E; 756-C]

G 2.1. The power to make a law with respect to manufacture and produc-
tion of intoxicating liquors and its prohibition (among other matters men-
tioned In Entry 8 In List-II of 7th Schedule to the Constitution) belongs
exclusively to the State Legislatures. Item 26 in the First Schedule to the
Industries Development and Regulation Act, 1951 must be read subject to
H Entry8 - and for that matter, Entry6 - in List-II. So read, the said item does
STATEv. MC. DOWELL 723

not and cannot deal with manufacture, production or with prohibition of A
manufacture and production of intoxicating liquors. The State Legislature
is, therefore, perfectly competent to make a law prohibiting their manufac-
ture and production - in addition to their sale, consumption, possession
and transport - with reference to Entries 8 and 6 in List-II of the Seventh
Schedule to the Constitution read with Article 47 thereof.
[745-F-H]
B
Synthetics and Chemicals Limited v. State of Uttar Pradesh, [1990] 1
SCC 109; Khoday Distilleries v. State of Kamataka, [1995] 1 SCC 574;
Harshankar v. Deputy Excise and Taxation Commissioner, [1975] 3 SCR
254 and Cooverjee B. Bharucha v. Excise Commissioner and the Chief C
Commissioner, Ajmer, [1954] SCR 873, followed.

Bhola Prasad v. The King-Emporer, [1940] F.C.R. 17 and Miss Kishori
Shetty v. The King, [1949] F.C.R. 650, referred to.

2.2 Entry 24 of List II of 7th Schedule to the constitution is a general D
, entry relating to industries whereas Entry 8 thereof is a specific and special
entry relating inter alia to industries engaged in production and manufac-
t ture of intoxicating liquors. Applying the well-known rule of interpretation
applicable to such a situation (special excludes the general), the industries
engaged in production and manufacture of intoxicating liquors do not fall
within Entry 24 but do fall within entry 8 of List II. Therefore, making of a E
declaration by the Parliament as contemplated by Entry 52 of List I does
not have the effect of transferring or transplanting, as it may be called, the
industries engaged in production and manufacture of intoxicating liquors
, from the State List to Union List. As a matter of fact, the Parliament cannot
~ take over the control of industries engaged in the production and manufac- F
ture of intoxicating liquors by making a declaration under Entry 52 of List
I, since the said entry governs only Entry 24 in List II but not entry 8.
[740-F-H; 741-A)
2.3 The industries engaged in the production and manufacture of
intoxicating liquors are outside the purview of Entry 24 of List II of the G
7th Schedule to the Constitution and fall squarely within Entry 8 in the
List-II; and Entry 52 in List-I does not over-ride or impinge upon Entry 8
In List-II. [749-B]

Calcutta Gas Company v. State of West Bengal, [1962) 3 Suppl. SCR
1, followed. H
j
724. SUPREME COURT REPORTS [1996] 3 S.C.R.

A 2.4 No central law whether made with reference to an entry in List-I
or with reference to an entry in List-III can affect the validity of a State t- •
enactment made in respect of an entry in list II. The concept of occupied
field has no relevance in such a context. If a particular matter is within
the exclusive competence of the State legislature, i.e. in List II that repre-
B sents the prohibited field for the Union, Article 246 (3) cannot be employed
to invalidate it on the ground of legislative incompetence of State Legisla-
ture. Similarly, if any matter is within the exclusive competence of the
Union, it becomes a prohibited field for the States. The concept of occupied
field is really relevant in the case of laws made with reference to entries in
List-III. [746-B-E]
c •
A.S. Krishna & Ors. v. State of Madras, [1957] SCR 399; Subramanyan
Chettiar v. Muttudesmi Goundan, [1940] F.C.R. 188; Prafulla Kumar v. Bank
of Commerce Ltd., A.I.R. (1947] P.C. 60 and Ch. Tika Ramji & Ors., [1956]
SCR 393, followed.

D 2.5 The expression "industry" in both Entry 24 in List II and Entry
>
52 in List I must carry the same meaning, which means that if a particular
industry is not within the purview of Entry 24 in List-II, it wonld equally
not be within the purview of Entry 52 in List I. Article 246 cannot be
invoked to deprive the State legislatures of the powers inhering in them by
E virtue of entries in List-II. Once and enactment, in pith and and substance,
is relatable to Entry 8 in List-II or for that matter any other entry in
List-II, Article 246 cannot be brought into yet hold that State legislature
is not competent to enact that law. (749·8-C]

3. A citizen has no fundamental right to trade in intoxicating liquors.
F The trade and business in intoxicating liquors can be restricted, severely )-
curtailed or even prohibited. The fact that Article 47 of the Constitution
expressly speaks of the obligation of the State to endeavour to bring about
prohibition of the consumption of intoxicating drinks is itself a clear and
definite pointer in this direction. Imposing prohibition is to achieve the
G directive principle adumbrated in Article 47. Such a course merits to be
treated as a reasonable restriction within the meaning of clause (6) of
Article 19. [750-C; 751-C·D] ~_,..

Khoday Distilleries v. State of Kamataka, [1995] 1 SCC 574; Har-
shankar v. Deputy Excise and Taxation Commissioner, [1975] 3 SCR 254;
H and Cooveljee B. Bharucha v. Excise Commissioner, Ajmer, [1954] SCR 873,
STATEv. MC. DOWELL 725

followed. A
' 1
Crowley v. Christensen, 34 L.Ed. 620 and Krishna Kumar Narula v.
State of Jammu & Kashmir, [1967] 3 SCR 50, referred to.

4.1 The Prohibition Act is not violative of Article 14 of the Constitu-
lion. The exempted catq:ories put together constitute a fraction of the total B
consuming popnlation of Andhra Pradesh. If production and manufacture
of intoxicating liquors _is permitted in the name of meeting the needs of
this miniscule population, it would give rise to several other problems in
tnrn. In all the circumstances, the State .appears to have thought it
advisable to import the small quantities required rather than face a C
number of problems arising from restricted production, supervision and
enforcement. [754-G-H; 755-B]

State of Tamil Nadu & Ors. v. Ananthi Ammal & Ors., [1995] 1 SCC
519 and Mithu v. Union of India, [1983] 2 SCC 27, referred to.

4.2 Toddy is a class a part. It is drawn from tree. The Excise Act and
D
.f
Rules make a clear distinction· between toddy on one hand and other
intoxicating liquors on the other, though it may be that toddy is also
included within the meaning of intoxicating liquors. In the circnmstances,
it cannot be said that it is not a case of reasonable classification having
regard to the object of legislation. Moreover, it is always open to the State E
to introduce prohibition In stages. It is not necessary that the prohibition
should be total and absolute whenever it is imposed. [755-D-E]

C.S. Rowji v. State of Andhra Pradesh, [1964] SCR 330, relied on .
•
5. A law made by the Parliament or the Legislature can be struck F
down by Courts on two gronnds and two grounds alone viz. (i) lack of
legislative incompetence and (2) violation of any of the fundamental rights
guaranteed in Part III of the Constitution or any other constitutional
provision. There is no third gronnd. No enactment can be struck down by
jnst saying that it is arbitrary or unreasonable. Some or other constitu- G
tional infirmity has to be found before invalidating an Act. [752-B-C; Fl

Atti/ Mac Tiller v. Atlantic Coast-line Ranbroad Company, 87 L.Ed.
610; Council of Civil Services Union v. Minister for the Civil Services, (1985)
A.C. 374 and R v. Secretary of State for the Home Department &-parte Brind
& Ors., (1991) A.C. 696, referred to. H
726 SUPREME COURT REPORTS [1996] 3 S.C.R.

A CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 4712-17
of 1996 Etc.

From the Judgment and Order dated 28.4.95 of the Andhra Pradesh
High Court in W.P. Nos. 2506, 2574, 2950, 3248, 3932 and 667/95

B S.J. Sorabjee, R.F. Nariman, A.H. Desai, AK Ganguli, G. Ramas-
wamy, K Ram Kumar, Gopal Jain, C. Balasubramaniam, Mukul Mudgal,
S. Sukumaran, Ms. Punita Singh, Sonu Bhatnagar, Ramesh Babu M.R.,
R.K.Kapoor, P. Varma, S.K. Srivastava, Anis Ahmed Khan, V.S. Yadav,
AM. Dittia, Ashok Mathur, Ms. Nisha Bonarji, J.K. Das and Navin
C Prakash for the Appearing parties.

The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. Leave granted in Special Leave Petitions.

D In response to wide-spread agitation by the women of Andlira
Pradesh, the Government prohibited the sale and consumption of intoxicat- I
ing liquors by an Ordinance issued on December 27, 1994. In February,
1995, the Legislature of Andhra Pradesh enacted the Andhra Pradesh -r
Prohibition Act, 1995 [hereinafter referred to as "the Act"] replacing the
Ordinance. It was reserved for and received the assent of the President of
E India. The long title and the preamble to the Act reads:

"An Act to introduce Prohibition of the sale and consumption of
intoxicating liquors in the State of Andhra Pradesh and for matters
connected therewith or incidental thereto.

F WHEREAS Article 47 of the Constitution of India enjoins that
the State shall endeavour to bring about prohibition of the con-
sumption, except for medicinal purposes, of intoxicating drinks
which are injurious to health;

AND WHEREAS there is urgent need in public interest to bring
G
about the prohibition of the sale and consumption of intoxicating
liquors, except for medicinal, scientific, industrial and such like
purposes, in the State of Andhra Pradesh.

BE it enacted by the Legislative Assembly of the State of Andhra
H Pradesh in the Forty-sixth year of the Republic of India as follows:"
STATE v. MC. DOWELL [B.P. JEEVAN REDDY, J .] 727

Clause (7) of Section 2 defmes the expression "liquor" to include "(a) A
spirits of wine, denatured spirits, methylated spirits, rectified spirits, wine,
, ~ beer and every liquid consisting of or containing alcohol; and (b) any other
intoxicating substance which the Government may; by notification declare
to be liquor for the purposes of this Act, but does not include toddy".
Section 7 is the main provi.<ion prohibiting selling, buying and consumption B
of liquor. It reads:

"Prohibition of selling, buying and consumption of liquor.

7. The selling, buying, being in possession and consumption of
liquor, otherwise than in accordance with the provisions of this C
Act, or as the case may be, the Andhra Pradesh Excise Act, 1968,
is hereby prohibited."

Section 8 prescribes the punishment for contravention of the
provisions of section 7. Sections 9 and 10 provide for punishment of
persons found in state of intoxication and for abetting the escape of D
persons arrested. Section 11 makes any contravention of the provisions of
the Act or of any rule, notification or order made thereunder punishable.
Sections 12, 13 and 14 deal with seizure and confiscation. Chapter JV
containing Sections 15 and 16 provides for exemptions. Sub-section (1) of
Section 15 needs to be set out in view of the submissions made before us.
It reads: E

"15. (1) Subject to such rules as may be made in this behalf, the
prescribed authority may issue,--

(i) permits to persons who are foreigners under the Foreigners
• Act, 1939 and to persons who are non-resident Indians to consume F
liquor;

(ii) licences to hotels and restaurants recognised as three star and
above in accordance with such rules as may be made and lo such
categories of institutions as may be specified by notification subject G
to such criteria as may be prescribed to sell foreign liquor or Indian
liquor to the holders of permits granted under this Act;

(iii) permits to those who are medically certified by any notified
medical authority as requiring to consume liquor on account of
any diagnosed health condition or problems, to consume liquor; H
t
Tli3 SUPREME COURT REPORTS [19%] 3 S.C.R.

A (iv) permits to persons who are tourists from outside the State and
to persons who are not ordinarily residents of the State to consume
liquor;

(v) permits to members serving or retired belonging lo the armed
forces to consume liquor;
B
(vi) permits to companies, corporations, institutions, indcstrialists,
exporters, importers and similar such functionaries as may be
notified, who normally entertain foreigners, non-resident Indians
and guests coming from outside the State in pursuance of their
c business activity or the activity connected with their institutions to
buy and serve liquors.

(vii) permits to consume liquor in cases of medical emergency; and

(viii) permits for sacramental wine used in masses conducted "in
D Churches."

The other sub-sections of Section 15 contain provisions anciilary to
sub-section (1). Section 16 exempts the liquor in possession of bonafide
travellers for their own personal use while passing through any local area
E in which the Act is in force. It also saves lawful consignment of liquor
carried through or into any such local area from the operation of the Act.
The remaining provisions are in the nature of machinery provisions and
need not be noticed except Sections 32 and 33. Section 32 excepts certain
operations from the purview of the Act. it reads:

F "32. Nothing in this Act shall be deemed to preclude,--

(a) the Andhra Pradesh Beverages Corporation Limited to
carry on trade in liquor in accordance with rules made in this
behalf;
G {b) the buying and selling of liquor carried on by the military
canteens in the State under any licence granted in accordance
with the provisions of the Andhra Pradesh Excise Act, 1963
and the rules made thereunder; and

H (c) the consumption of medicines containing alcohol."
STATEv. MC. DOWELL [B.P.JEEVAN REDDY,J.] 729

Section 33 confers the rule-making power upon the Government A
while Section 35 repeals the Ordinance issued in December, 1994.

There are a number of industries in the State of Andhra Pradesh
engaged in the manufacture of intoxicating liquors. They had taken out D-2
and B-2 licences prescribed by the rules made under the Andhra Pradesh B
Excise Act, 1968. The period of these licences, we are told, was one year,
i.e., financial year. The Government of Andhra Pradesh refused to renew
the said licences, when they came up for renewal, in the light of the
provisions of the Act. Several licensees approached the High Court of
Andhra Pradesh by way of writ petitions challenging the provisions of the
Act and seeking a declaration that the Act does not prohibit the manufac- C
ture of liquor, though it may well prohibit the sale and consumption
thereof. The Full Bench, which heard the writ petitions, agreed with the
writ petitioners. They declared that Section 7 of the Act did not prolubit
the manufacture of liquor though it prohibited consumption, sale. and
possession thereof. They referred to the fact that several classes of persons D
within the State of Andhra Pradesh are exempted from the operation of
the Act whose requirements have to be met. The prohibition of possession
of liquor in Section 7, the Full Bench opined, was only for the purpose of
consumption, selling and buying within the State and does not affect the
manufacture. Accordingly, a direction was issued to the State of Andhra
Pradesh to consider the applications filed by the manufacturers for renewal E
of their licences without reference to the prohibition policy or to the
provisions of the Act. The orders rejecting applications for renewal were
quashed. The Full Bench thought it unnecessary to go into the question of
legislative competence of the Andhra Pradesh Legislature to make the said
Act in view of the interpretation placed by it on Section 7. The judgment F
was delivered on April 28·, 1995.

Against the judgment of the Full Bench of the Andhra Pradesh High
Court, the Sate of Andhra Pradesh preferred Special Leave Petitions (C)
Nos. 13936-13941 of 1995. They wete entertained by this Court and notice
issued to the respondents therein. It was directed that pending further G
orders status quo as on the date of the said order [July 21,1995] shall be
maintained. The writ petitioners-respondents were, however, permitted to
manufacture their products with the existing stocks of raw material upto
and inclusive of August 16, 1995. It was directed that they should not
continue their manufaduring operations beyond the said date irrespective H
730 SUPREME COURT REPORTS [1996] 3 S.C.R.

A of the fact whether their stocks of raw materials were exhausted or not by
that date. It was further directed that the finished products manufactured
by them until the said date may be allowed to be cleared by the State in
accordance with law and subject to the conditions laid down in the letter
of the Commissioner of Prohibition and Excise No. 9736/95/Ex/J-5 dated
May 24, 1995 referred to in the letter of the Commissioner dated June 16,
B 1995. It was also clarified that the said order shall not preclude the
Governor of Andhra Pradesh from issuing an ordinance seeking to amend
the Act, if he is so advised, with a view to remove the alleged defects
pointed out by the Full Bench.

C On July 18, 1995, the Governor of Andhra Pradesh issued Ordinance
No.12 of 1995 amending certain provisions of the Act. Sections 2, 3 and 5
of the Ordinance were given effect from January 16, 1995 (the date of
commencement of the Act). Section 2 amended the long title of the Act
by including the expression "manufacture" within the ambit of the prohibi-
tion envisaged by it. By Section 3, the preamble to the Act was also
D similarly amended. Section 4 amended the definition of "liquor" contained
in clause (7) of Section 2 of the Act. The amended definition reads as
follows:

"(7). 'Liquor' includes,--
E (a) spirits of wine, wine beer and every liquid consisting of
or containing alcohol including Indian liquor and Foreign
liquor;

(b) any other intoxicating substance which the Government
may by notification, declare to be liquor for the purposes of
F
this Act, ..
but does not include toddy, denatured, spirits, methylated
spirits and rectified spirits;"

G This amendment was evidently effected in the light of the seven-Judge
Constitution Bench decision of this Court in Synthetics a11d Chemicals
Limited v. State of Uttar Pradesh, [1990] 1 S.C.C. 109.

Section 5 inserted Section 7-A after Section 7. Section 7-A is a short
one. It reads : "7A. Manufacturing of liquor is hereby prohibited." Sections
H 6 to 9 of the Ordinance amended certain other provisions of the Act which
STATEv. MC. DOWELL[B.P.JEEVAN REDDY,J.] 731

need not be noticed for the purpose of theses appeals. A
On October 12, 1995, the Legislature of Andhra Pradesh enacted the
Andhra Pradesh Prohibition (Amendment) Act, 1995 in terms of Or·
dinance No.12 of 1995 with certain minor changes which are not relevant
for our purpose. The manufacturers of intoxicating liquors in Andhra B
Pradesh have now come forward with these writ petitions under Article 32
of the Constitution of India challenging the constitutional validity of Act
35 of 1995 [hereinafter referred to as the "amending Act"].

Sri Ashok Desa~ learned counsel for the petitioner in Writ Petition
(C) No. 569 of 1995 submitted that the amending Act insofar as it prohibits C
the manufacture of liquor within the State of Andhra Pradesh is beyond
the legislative competence of the Andhra Pradesh Legislature. Learned
Counsel submitted that by virtue of the enactment of the Industries
(Development and Regulation) Act, 1951 [!.D.R. Act] and the inclusion of
fermentation industries (manufacturing alcohol and other products of fer· D
mentation industries) in the Schedule to the Act, the State Legislature is
denuded of its power to licence and regulate the manufacture of liquor.
Learned counsel placed strong reliance upon the holding in Synthetics and
Chemicals Limited that after the 1956 Amendment to !.D.R. Act including
alcohol industries as Item 26 in the First Schedule to that Act, the control
of the alcohol industries is vested exclusively in the Union and that there- E
after, licences to manufacture both potable and non-potable is vested in
the Central government [Para 85 of the judgment]. The next submission of
Sri Desai was that the Act is violative of Article 14 insofar as it prohibited
the manufacture of liquor by the units in Andhra Pradesh even for limited
local consumption. Even after the amending Act, learned counsel sub- F
mitted, several classes of persons are exempted from the operation of the
Act and their requirements have to be met. Closing down the industries
manufacturing liquor in Andhra Pradesh and importing the requirements
of the consuming classes (exempted categories). from outside the State is
discriminatory and violative of Article 14, he submitted.
G
Sri Ganguly, learned counsel appearing for the petitioner in writ
Petition (C) No. 602 of 1995, submitted that the later decision of the
Constitution Bench of this Court in Khoday Distilleries v. State of Kar-
nataka, [1995] 1 S.C.C. 574 does not altogether rule out the argument that
right to trade in intoxicating liquors is within the ambit of Article 19(l)(g). H
)

732 SUPREME COURT REPORTS [1996]3 S.C.R.

A The learned counsel reiterated ·the submissions of Sri Desai in other
respects.

Sri Rohinton F. Nariman, learned· counsel appearing for the
petitioner in writ Petition (C) No. 593 of 1995, laid stress upon the
provisions contained in clauses (1), (2) and (3) of Article 246 of the
B Constitution and submitted that the power of the State Legislature to make
a law with reference to matters enumerated in List-II in the Seventh
Schedule to the Constitution (provided by clause (3) of Article 246) is
subject to the Parliament's power specified in clauses (1) and (2) of the
said Article. Relying upon certain decisions of this Court, learned counsel
C contended that once the Parliament has enacted the I.D.R. Act and
included the fermentation industries within the purview of that Act by 1956
Amendment, the Parliament must be deemed to have expressed its clear
intention to occupy the entire field of fermentation industries including
alcohol industries. If so, the State Legislatures have no power to make any
D law with respect to the said industries. The control over the said industries
is exclusively that of the Union. Learned counsel reiterated the submission
of Sri Desai based upon Article 14.

Sri G. Ramaswamy, learned counsel appearing in Writ Petition (C)
No.680 of 1995, referred to the Constituent Assembly Debates with respect
E to Entry 52 in List-I of Seventh Schedule to the Constitution as well as to
certain decisions of this Court which, according to the learned counsel,
help in understanding the principles .enunciated in Synthetics and Chemi-
cals Limited. Learned counsel submitted that by not prohibiting toddy
which contains more alcohol than beer and some other wines, the Act has
F brought about an invidious distinction which is a negation of the equality
clause contained in Article 14.

Sri Soli J. Sorabjee, learned counsel appearing for the State of
Andhra Pradesh, on the other hand, submitted that the State has the
exclusive power to make a law with respect to Entry 8, which entry is in
G no manner impinged upon by Entry 52 in List-I or by the !.D.R. Act made
in pursuance thereof. Learned counsel submitted that whenever the' ques-
tion of legislative competence is raised, the matter has to be examined
applying the doctrine of pith and substance, as has been repeatedly af-
firmed by the Federal Court as well as this Court in a number of decisions.
H Learned counsel submitted that any incidental trenching upon the field
STATEv. MC. DOWELL [B.P. JEEVAN REDDY, J.] 733

reserved for the union cannot be characterised as travelling beyond the A
assigned field. He submitted that the decision in Sy11thetics a11d Chemicals
·~ Limited should be read in the light of the question raised therein and
should not be read as a statute. The observations relied upon by the
learned counsel for the writ petitioners, he submitted, cannot be charac..
terised as constituting the ratio of the said decision. They cannot be B
understood as decisions on those issues since those issues were not in
controversy before the Court nor were the parties at issue thereon. He
referred to certain later decisions of this Court to indicate how they have
understood the decision in Synthetics a11d Chemicals Limited. Learnec'
counsel submitted that the decisions of this Court in Harsha11kar v. Deputy
I· Excise a11d Taxatio11 Commissioner, [1975] (3) S.C.R. 254 and Khoday C
Distilleries conclusively lay down that no citizen of this country has a
fundamental right to trade in liquor. Once they have no such right, the
learned counsel submitted, writ petition under Article 32 of the Constitu-
tion, which lies only to enforce a fundamental right, is misconceived.
Learned counsel also disputed the correctness of the petitioners submis- D
sions based upon Article 14.

PART-II

Part XI of the Constitution deals with relations between the Union
and the States. Chapter-I in this Part bears the heading "Legislative Rela- E
lions: Distribution of Legislative Powers". Clause (1) of Article 245
declares that "subject to the provisions of this Constitution, Parliament may
make laws for the whole or any part of the territory of India, and the
Legislature of a State may make laws for the whole or any part of the State."
Clause (1) of Article 246 declares that "notwithstanding anything contained F
in clauses (2) and (3), Parliament has exclusive power to make laws with
respect to any of the matters enumerated in List I in the Seventh Schedule
(in this Constitution referred to as the 'Union List')". Clause (2) of Article
246 declares that "notwithstanding anything in clause (3), Parliament and,
subject to clause (1), the Legislature of any State. also have power to make
laws with respect to any of the m'l!ters enumerated in List III in the G
Seventh Schedule (in this Constitution referred to as the Concurrent List)".
"' ,; Clause (3) of Article 246 then declares that "subject to clauses (1) and (2),
the Legislature of any State has exclusive power to make laws for such State
or any part thereof with respect to any of the matters enumerated in List
II in the Seventh Schedule (in this Constitution referred to as the 'State H
734 SUPREME COURT REPORTS [1996] 3 S.C.R.

A List')." Clause (4) says that "Parliament has power to make laws with
respect to any matter for any part of the territory of India not included in
a State, notwithstanding that such matter is a matter enumerated in the
State List". Article 248 vests the residuary legislative power in the Union.
Article 249 empowers the Parliament to legislate with respect to a matter
B in the State List in national interest while Article 250 empowers the
Parliament to legislate with respect to any matter in the State List if a
proclamation of emergency is in operation. Article 251 says that the
provisions of Articles 249 and 250 do not restrict the power of the Legis-
lature to make any law which it is competent to make but if such law is
repugnant to any of the provisions of the law made by the. Parliament under
C the said Articles, the law made by Parliament shall prevail so long only as
the law made by the Parliament continues to have effect. Article 252
empowers the Parliament to legislate for two or more States by their
consent. It also provides for adoption of such legislation by other States.
Article 254 declares that if any provision of law made by the Legislature
D of a State with respect to matters enumerated in the Concurrent List is
inconsistent with the provisions of any law made by the Parliament, be-
tween the Union and the States. Chapter-I in this Part bears the heading
"Legislative Relations: Distribution of Legislative Powers". Clause (1) of
Article 245 declares that " subject to the provisions of this Constitution,
E Parliament may make laws for the whole or any part of the territory of
India, and the Legislature of a State may make laws for the whole or any
part of the State." Clause (1) of Article 246 declares that "notwithstanding
anything contained in clauses (2) and (3), Parliament has exclusive power
to make laws with respect to any of the matters enumerated in List I in the
Seventh Schedule (in this Constitution referred to as the 'Union List')".
F Clause (2) of Article 246 declares that "notwithstanding anything in clause
(3), Parliament and, subject to clause (1), the Legislature of any State also
have power to make laws with respect to any of the matters enumerated in
List III in the Seventh Schedule (in this Constitution referred to as the
Concurrent List')". Clause (3) of Article 246 then declares that "subject to
G clauses (1) and (2), the Legislature of any State has exclusive power to
make laws for such State or any part thereof with respect to any of the
matters enumerated in List II in the Seventh Schedule (in this Constitution
referred to as the 'State List')." Clause (4) says that "Parliament has power
to make laws with respect to any matter for any part of the territory of
H India not included in a State, notwithstanding that such matter is a matter
STATE v. MC. DOWELL [B.P. JEEVAN REDDY, J.] 735

enumerated in the State List". Article 248 vests the residuary legislative A
;
power in the Union. Article 249 empowers the Parliament to legislate with
respect to a matter in the State List in national interest while Article 250
empowers the Parliament to legislate with respect to any matter in the State
List if a proclamation of emergency is in operation. Article 251 says that
the provisions of Articles 249 and 250 do not restrict the power of the
Legislature to make any law which it is competent to make but if such law
B
is repugnant to any of the provisions of the law made by the Parliament
under the said Articles, the law made by Parliament shall prevail so long
only .as the law made by the Parliament continues to have effect. Article
+ 252 empowers the Parliament to legislate for two or more States by their
consent. It also provides for adoption of such legislation by other States. c
Article 254 declares that if any provision of law made by the Legislature
of a State with respect to matters enumerated in the Concurrent List is
inconsistent with the provisions of any law made by the Parliament, whether
made earlier to the State enactment or later, the State enactment shall to
the extent of repugnancy be void. If, however, the State enactment is
D
reserved for and receives the assent of the President, such law will prevail
in that State notwithstanding its repugnancy with a Parliamentary enact-
" ment.

After considering the aforesaid provisions and the scheme of the
Constitution, a nine,Judge Bench of this Court in S.R. Bommai & Ors. v. E
Union of India, (1994] 3 S.C.C. 1 has opined that within the sphere allotted
to States, they are supreme.

It has been repeatedly pointed out by this Court and the Federal
Court (dealing with similar distribution of legislative powers among the
F
Centre and the Provinces under the Government of India Act, 1935) that
the several entries in th~ three Lists in the Seventh Schedule are mere
legislative heads and that it is quite likely that very often they overlap.
Wherever such a situation arises, it is held, the issue must be solved by
applying the rule of pith and substance. As explained by T.L Venkatarama
.. •-f
Iyer, J. in A.S. Krishna & Ors. v. State of Madras, (1957] S.C.R.399: G

"It must be remembered that we are construing a federal Constitu-
tion. It is of the. essence of such a Constitution that there should
be a distribution of the legislative powers of the Federation be-
tween the Centre and the Provinces. The scheme of distribution H
736 SUPREME COURT REPORTS [1996] 3 S.C.R.

A has varied with different Constitutions, but even when the Con-
stitution enumerates elaborately the topics on which the Centre
and the States could legislate, some overlapping of the fields of
legislation is inevitable. The British North America Act, 1867,
which established a federal Constitution for Canada, enumerated
in ss.91 and 92 the topics on which the Dominion and the Provinces
B
could respectively legislate. Notwithstanding that the lists were
framed so as to be fairly full and comprehensive, it was not long
before it was found that the topics enumerated in the two sections
overlapped, and the Privy Council had time and again to pass on
the constitutionality of laws made by the Dominion and Provincial
c legislatures. It was in this situation that the Privy Council evolved
the doctrine, that for deciding whether an impugned legislation
was intra vires, regard must be had to its pith and substance. That
is to say, if a statute is found in substance to relate to a topic within
the competence of the legislature, it should be held to be intra
vires, even though it might incidentally trench on topics not within
D
its legislative competence. The extent of the encroachment on
matters beyond its competence may be an element in determining
whether the legislation is colourable, that is, whether in the guise
of making a law on a matter within its competence, the legislature
is, in truth, making a law on a subject beyond its competence. But
E where that is not the position, then the fact of encroachment does
not affect the vires of the law even as regards the area of encroach-
ment. Vuie Citizens Insurance Company of Canada v. William
Parsons, (1881) 7 AC 96; The Attorney-General for Ontariao v.
Attorney-General for the Dominion of Canada, 1894 A.C. 189; The
Attorney General of Ontaria v. Attorney-General for the Dominion,
F
(1896) AC 348; Union Colliery Company of British Columbia v.
Bryden, (1899) AC 580; Attorney-General for Canada v. Attomey-
General for Ontaria, (1937) AC 355; Attorney-General for Alberta
v. Attorney-General for Canada, (1939) AC 117 and Board of
Trnstees of Letherbridge Northern Inigation District v. Independent
G Order of Foresters, (1940) AC 513."

The learned Judge pointed out that this very principle was enun-
ciated by the Federal Court in Subramanyan Chettiar v. Muttudesmi Goun-
dan, (1940) F.C.R. 188 and by the Privy Council in Praful/a Kumar v. Bank
H of Commerce Ltd., A.l.R.(1947) P.C.60 wherein the statement of law in
STATE v. MC. DOWELL [B.P. JEEVAN REDDY, J.] 737

Subramanyan Chettiar was endorsed in full. A
' " Sri Sorabjee invited our attention to the decision of the Federal
Court in Bhola Prasad v. 171e King-Emporer (1940) F.C.R.17 where it was
held that the power to legislate "with respect to intoxicating liquors con-
ferred upon the Provincial Legislature by Entry 31 in the Provincial Legis-
lative List includes a power to prohibit intoxicating liquors throughout the B
province or any specified part of province unless the meaning of the words
used is restricted or controlled by the context or by other provisions in the
Act. 11

Learned counsel also invited our attention to another decision of the C
Federal Court in Miss Kishori Shetty v. The King (1949) F.C.R.650. The
appellant was charged for being in possession of a certain quantity of
foreign liquor/whisky in excess of the limit provided under the notification
issued under Section 14B of the Bombay Abkari Act. The appellant
contended that Section 14B insofar as it prohibited possession of foreign D
whisky was beyond the legisl.ative competence of the Provincial Legislature
inasmuch as it amounts in effect to prohibiting the import of such goods
into the country which can be done only by the Central Legislature. It was
submitted that under Item 19 in List-I of the Seventh Schedule to the 1935
0

Act; the Centre had the exclusive power to make a law with respect to
"import and export across customs frontier. as defined by the dominion E
frontiers" whereas States' power to make a law with respect to intoxicating
liquors wa:s limited to Item 31 in List-II (which read "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") She, therefore, contended that Section 14B is void to the F
extent it prohibited the possession of imported whisky/liquor. This conten-
tion was rejected in the following words:

"We are unable to accede to this contention. As pointed out by
this court in Bhola Prasad v. King Emporer (1942) F.C.R.17 the
legislative power given to the Provinces under Item 31 of List II is G
expressed in wide and unqualified terms which in theif natural and
ordinary sense are apt to cover such an enactment a~ s.14-B in its
amended form, and we see nothing in the Federal Legislative List
and more particularly in Item 19 to lead us to cut down the full
meaning of the Provincial entry by excluding foreign liquors from H
738 SUPREME COURT REPORTS [1996] 3 S.C.R.

A its purview. There is, in our view, no irreconcilable conflict here
such as would necessitate recourse to the principle of Federal
supremacy laid down in s.100 of the Constitution Act. Section 14-B
does not purport to restrict or prohibit dealings in liquor in respect
of its importation or exportation across the sea or land frontiers
of British India. It purports to deal with the possession of intoxicat-
B ing liquors which, in the absence of limiting words, must include
foreign liquors. It is far-fetched, in our opinion, to suggest that, in
so far as the provision covers foreign liquors, it is legislation with
respect to import of liquors into British India by sea or land."

c It is not necessary to burden this judgment with any more decisions
on this subject.

We may now notice the relevant entries in our Constitution. Entries
8, 6, 24 and 51 in List-II of the Seventh Schedule to the Constitution read
thus:
D
"8. Intoxicating liquors, that is to say, the production, manufacture,
possession, transport, purchase and sale of intoxicating liquors.

6. Public health and sanitation; hospitals and dispensaries.

E 24. Industries subject to the provisions of entries 7 and 52 of List
I.

51. Duties of excise on the following goods manufactured or
produced in the State and countervailing duties at the same or
lower rates on similar goods manufactured or produced elsewhere
F
in India:--

(a) Alcoholic liquors for human consumption;

(b) opium, Indian hemp and other narcotic drugs and nar-
G cotics;

but not including medicinal and toilet preparations contain-
ing alcohol or any substance included in sub-paragraph (b)
of this entry."

H Entries 52 and 7 in List-I may now be set out. They Read:
\
STATEv. MC. DOWELL[B.P.JEEVAN REDDY,J.] 739

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

7. Industries declared by Parliament by law to be necessary for the
purpose of defence or for the prosecution of war."

Entry 33 in List-III was substituted by the Constitution IIJrd B
(Amendment) Act, 1954. The background to this entry is explained by this
Court in Ch. Tika Ramji & Ors. etc. v. State of Uttar Pradesh & 01~., [1956]
S.C.R. 393. Entry 33 in List-III reads:

"33. Trade and commerce m, and the production, supply and
distribution of, -- c
(a) the products of any industry where the control of such in-
dustry by the Union is declared by Parliament by law to be
·expedient in the public interest, and imported goods of the
same kind as such products; D
(b) foodstuffs, including edible, oilseeds and oils;

(c) cattle fodder, including oilcakes and other concentrates;

(dj raw cotton, whether ginned or unginned, and cotton seed; E
and

(e) raw jute."

The entries aforementioned disclose the following features: the
power to make a law with respect to "industries" lies with the States (Entry F
24 in List-II) but the said entry is made expressly subject to the provisions
of Entries 7 and 52 in List-I. It means that if the Parliament declares by
law that it is expedient in the public interest to take over the control of a
particular industry• or industries; such industry or industries get
transplanted to List-I. In other words, the industries in respect of which
the Parliament makes a declaration contemplated by entry 52 in List-I, the G
States are denuded of the power to make any law with respect to them
under Entry 24 in List-II. The Parliament has indeed made the declaration
contemplated by Entry 52 in List-I in Section 2 of the !.D.R. Act which
reads:

"2. Declaration as to expediency of control by the Union.- It is hereby H
740 SUPREME COURT REPORTS (1996] 3 S.C.R.

A declared that it is expedient in the public interest that the Union
should take under its control the industries specified in the First
Schedule."

By an amendment effected in 1956, the First Schedule was amended.
B The Amendment Act inter alia introduced Entry 26 in the Schedule. It
reads: "Fermentation Industries: (1) Alcohol, (2) other products of fermen-
tation industries". The contention of the learned counsel for the petitioners
is based upon these provisions. The submission is this: manufacture and
production of intoxicating liquors is an industrial activity falling within Item
26 of the First Schedule to the !.D.R. Act; the !.D.R. Act provides for I

C licensing of industries mentioned in the First Schedule to the Act besides
providing extensive control and· regulation of such industries and their
products; the grant, the renewal and the refusal to grant or renew the
licences is thus the exclusive province of the Centre; the State has no say
in the matter; the State Legislature is incompetent to prohibit manufacture
D of intoxicating liquors. But this argument, in our opinion, ignores the
existence and the ambit of Entry 8 in List- II. Entry 8 expressly speaks of
production, manufacture, possession, transport, purchase and sale of in-
toxication liquors. It means that the power to make a law with respect to
said matters rests with the State Legislature. What is significant is that the
entry speaks expressly of production and manufacture of in•oxicating li- .
E quors as well. This would mean that the industries producing and manufac-
turing intoxicating liquors fall within the purview of Entry 8. In other words,
we must first caive out the respective fields of Ent1y 24 and entry 8 in List-II.
E11t1y 24 is a general e11try relati11g to industries whereas Entry 8 is a specific
and special ent1y relating inter alia to indust1ies engaged in production and
F manufacture of intoxicati11g liquors. Applying the well-known rule of inter-
pretatio11 applicable to such a situatio11 (special excludes the general), we
must hold that the industries engaged in production and manufacture of
i11toxicating liquors do not fall within Entry 24 but do fall within E11try 8. This
was the positio11 at the commencement of the Constitution and this is the
G position today as well. Once this is so, the making of a deo:laration by the
Parliame11t as contemplated by Entry 52 of List-I does not have the effect of
transfening or transplanting, as it may be called, the industries engaged in
production a11d ma11ufacture of intoxicating liquors from the State List to
Union List. As a matter of fact, the Parliament cannot take over the control
of i11dustries e11gaged in the production and manufacture of intoxicating
H liquors by maki11g a declaran·on u11der Entry 52 of List-I, since the said entry
STATEv. MC. DOWELL[B.P.JEEVAN REDDY, J.] 741

governs only Entry 24 in List II but not Entry 8 in List II. A
[Emphasis added]

Faced with the above position, learned counsel for the petitioners
resorted to more than one argument to get over it. Firstly, it was submitted
that entries 24 and 8 should be read harmoniously and that such har-
monious reading should mean that the industries engaged in production B
and manufacture of intoxicating liquors would fall within Entry 24 because
Entry 24 deals with industries as such while Entry 8, according to this
reading, would be confined to matters other than production and manufac-
ture of intoxicating liquors. It is not possible to agree with the submission
I which runs counter to the express language of Entry 8. It requires us to C
delete the words "production and manufacture" from Entry 8 which is not
open to us. We cannot re- write the entry. Another limb of this argument
was that only those industries manufacturing intoxicating liquors which are
not within the purview of the !.D.R. Act will fall under Entry 8. Reading
the definition of "industrial undertaking" in clause (d) and the definition of
"factory'' in clause (c) of Section 3 of the l.D .R. Act, it is submitted that D
two types of industries are not covered by the !.D.R. Act, viz., those where
manufacturing process is carried on (1) with the aid of power but with less
than 50 workers and (ii) without the aid of power but with less than 100
workers. The submission is that these industries which are not within the
purview of the l.D .R. Act would remain within the purview of Entry 8 while E
the other industries would be under the control of the Union. This argu-
ment is equally unacceptable. This argument is premised upon the assump-
tion that Entry 52 in List-I over-rides Entry 8 in List-II as well, which
assumption, as we shall presently point out, is without a basis and unac-
ceptable. Moreover, industries which are exempted from the !.D.R. Act
are exempted because of the very provisions of the !.D.R. Act - and not F
by virtue of Entry 8 in List-II. The ambit and scope of constitutional entry
cannot be determined with reference to a Parliamentary enactment. The
definition of "factory" in clause (c) of Section 3 of the !.D.R. Act may be
changed tomorrow. The meaning and scope of Entry 8 in List-II does not
and cannot vary with the change in the provisions of the !.D.R. Act. This
submission too is, therefore, unacceptable. It was then contended that G
Entry 52 in List-I governs not only Entry 24 in List-II but all other entries
in List-II including Entry 8 insofar as it deals with industries. We cannot
accept this submission either. A persusal of List II would show that
whenever a particular entry was intended to be made subject to an entry
in List-I or List-III, it has been so stated specifically. Not one but several H
742 SUPREME COURT REPORTS [1996] 3 S.C.R.

A entries in List-II are made subject to one or the other entry in List-I or
List-III. [See Entries 2, 13, 17, 22, 23, 26, 27 and 33]. Certain other entries
use a different phraseology to demarcate the spheres of the Union and the "
States. For example, Entry 32 reads: "32. Incorporation, regulation and
winding up of corporations other than those specified in List-I and Univer-
sities". All this shows that whenever a particular entry in List-II is sought
B to be made subject to another entry in List-I or List-III or where a
demarcation is sought to be made between the Union and the States within
a particular head of legislation, the founding fathers have taken care to say
so expressly. We cannot, therefore, accept the argument of the learned
counsel for the petitioners that Entry 52 in List-I impinges upon, over-rides
and governs Entry 8 in List- II as well. It docs not. We must nake it clear
c that Entry 8 speaks of only intoxicating liquors and does not, therefore,
apply to or take in liquors which do not fall within the expression "intoxicat-
ing liquors". The power to make a law with respect to production and
manufacture of intoxicating liquors [among other matters mentioned in
Entry 8] is that of the States alone. The prohibition of production and
D manufacture of intoxicating liquors too squarely falls within the four
corners of Entry 8 read with Entry 6 in List-II. This is also the decision of
the Constitution Bench in Khoday Distilleries Limited. In the summary
contained in Para 60, conclusion ( d) reads:
"
"Article 47 of the Constitution considers intoxicating drinks and
E drugs as injurious to health and impeding the raising of level of
nutrition and the standard of living of the people and improvement
of the public health. It, therefore, ordains the State to bring about
prohibition of the consumption of intoxicating drinks which ob-
viously include liquor, except for medicinal purposes. Article 47 is
F one of the directive principles which is fundamental in the gover-
+
nance of the country. The State has, therefore, the power to
completely prohibit the manufacture, sale, possession, distribution
and consumption of potable liquor as a beverage, both because it
is inherently a dangerous article of consumption and also because
of the directive principle contained in Article 47, except when it
G is used and consumed for medicinal purposes."

If
Counsel for the petitioners, however, say that this issue is no longer
res i11tegra. According to them, the matter is concluded by the seven-Judge
Bench decision of this court in Symhetics a11d Chemicals Limited. In
H particular, they rely upon the following observations in Para 85 of the
\_
STATEv. MC. DOWELL [B.P. JEEVAN REDDY, J.] 743

opinion of Sabyasachi Mukharji, J., rendered on behalf of six learned A
1, Judges:

"After the 1956 amendment to the IDR Act bringing alcohol
industries (under fermentation industries) as Item 26 of the First
Schedule to IDR Act the control of this industry has vested
exclusively in the Union. Thereafter, licences to manufacture both B
potable and non-potable alcohol is vested in the Central Govern-
ment. Distilleries are manufacturing alcohol under the central
licences under !DR Act. No privilege for manufacture even if one
existed, has been transferred io the distilleries by the State. The
State cannot itself manufacture industrial alcohol without the per- C
mission of the Central Government. The States cannot claim to
pass a right which they do not possess. Nor can the States claim
exclusive right to produce and manufacture industrial alcohol
which are manufactured under the grant of licence from the
Central Government. Industrial alcohol cannot upon coming into
existence under such grant be amenable to States claim of exclusive D
possession of privilege. The State can neither rely on Entry 8 of
List II nor Entry 33 of List III as a basis for such a claim."

Sri Sorabjee, however, submits that the said observations do not
constitute the ratio of the said decision. They are in the nature of obiter,
he says. The said decision was concerned with the powers of the States to E
levy vend fee on industrial alcohol and not with the legislative competence
of the States to regulate and control the industries engaged in the produc-
tion and manufacture of intoxicating liquors. The said decision, therefore,
the learned counsel says, is no authority on the issue arising in these
appeals.
F
In our opinion)•the decision in Synthetics and cheniicals limited does
not help the petitioners in these writ petitions for the decision expressly
recognises the power of the State to prohibit the manufacture, sale and
consumption of intoxicating liquors. In the summary contained in Para 86,
clause (a) reads thus: G
"(a) It may pass any legislation in the nature of prohibition of
potable liquor referable to Entry 6 of List II and regulating
powers. 11

The discussion in support of this conclusion is found in Paras 28 and H
744 SUPREME COURT REPORTS (1996) 3 S.C.R.

A 29 of the judgment, where Sabyasachi Mukharji,J., speaking for himself and
five other learned Judges, quotes the following holding from Har Shankar:

"28. In this connection, it may be necessary to refer to the obser-
vations of this Court in Har Shankar case, [1975) 1 SCC 737, where
Chandrachud, J. (as the learned Chief Justice then was) stated:
B (SCC p.758, para 53)

'In our opinion, the true position governing dealings in in-
toxicants is as stated and reflected in the Constitution Bench
decisions of this Court in the State of Bombay v. F.NBalsara,
[1951) SCR 682, Coover jee B. Bharucha v. Excise Commis- I
c sioner and the Chief Commissioner, Ajmer, [1954] SCR 873,
State of Assam v. A.M. Kidwai, Commissioner of Hills
Division and Appeals, Shillong, [1957] SCR 295; Nagendra
Nath Bora v. Commissioner of Hills Division and Appeals,
Assam, (1958] SCR 1240, Amar Chandra Chakraborty v. Col-
D lector of Excise, Government of Tripura, [1972] 2 SCC 442 and
State of Bombay v. R.M.D.Chamarbaugwala, [1957) SCR 874,
as interpreted in State of Orissa v. Harinarayan Jaiswal, [1972]
2 SCC 36 and Nashirwar v. State of M.P., [1975] 1 SCC 29.
There is no fundamental right to do trade or business in
intoxicants. The State under its regulatory powers, has the right
E to prohibit absolutely every fonn of activity in relation to in-
toxicants its manufacture, storage, export, import, sale and
possession.'

(Emphasis added)

F 29. Though most of the cases dealt with the right of the State
Government as regard auction of country liquor, in Balsara case,
Nashirwar case and Har Shankar case, this Court was concerned
with the right of the State Government over foreign liquor. After
considering all the decisions of five Constitutional Benches,
Chandrachud, J. summed up the position at page 274 of the report
G
in Har Shankar case as follows: (SCC p.755, para 47)

'171ese unanimous decisions of five Constitution Benches unifom1ly
"'
emphasised after a careful consideration of the problem involved that
the State has the power to prohibit trades which are injurious to the
H health and welfare of the public, that elimination and exclusion from
STATEv. MC. DOWELL[B.P.JEEVAN REDDY, J.] 745

business is inherent in the nature of liquor business, that no person A
has an absolute right to deal in liquor and that all forms of dealings
in liquor have, from their inherent nature, been treated as a class
by themselves by all civilised communities."

(Emphasis added)
B
Reference may also be had in this behalf to Para 74 of the Judgment.
Towards the end of the para, Mukharji, J. observes: "All the authorities
from Cooverjee Bharncha case to Har Shankar case dealt with the problems
or disputes arising in connection with the sale, auction, licensing. or use of
potable liquors". Not only no dissent is expressed from these decisions,
; their principle is in fact reiterated in clause (a) of Para 86 set out above. C

Be that as it may, it is enough for us to know that the decision in
Synthetics and Chemicals Limited clearly recognises and affirms the power
of the States to prohibit the manufacture, production, consumption and
. sale et al. It is not necessary for us to go into and express our opinion n·
regarding the observations in the judgment with respect to the power of
licensing. That may have to await a proper case where that question may
directly arise. For this reason, we are not referring to or dealing with the
several submissions of Sri Sorabjee with respect to the correctness of the
particular sentence occurring in Para 85 of Synthetics and Chemicals
Limited. ·E

For the above reasons, we hold that the judgment in Synthetics and
Chemicals Limited does not advance the case of the petitioners herein.

It follows from the above discussion that the power to make a Jaw
with respect to manufacture and production and its prohibition (among F
other matters mentioned in Entry 8 in List-II) belongs exclusively to the
State Legislatures. Item 26 in the First Schedule to the !.D.R. Act must
be read subject to Entry 8 - and for that matter., Entry 6 - in List-II. So
read, the said item does not and cannot deal with manufacture, prqduction
or with prohibition of manufacture and production of intoxicating liquors. G
All the petitioners before us are engaged in the manufacture of intoxicating
liquors. The State Legislature is, therefore, perfectly competent to make a
~ Y. law prohibiting their manufacture and production- in addition to their sale,
consumption, possession and transport - with reference to Entries 8 and 6
in List-II of the Seventh Schedule to the Constitution read with Article 47
thereof. H
746 SUPREME COURT REPORTS [1996] 3 S.C.R.

A In view of our finding that the impugned enactment is perfectly
within the legislative competence of the State legislature and is fully
covered by Entry 8 read \vith Entry 6 of List-II, it is not necessary for us
to deal with the arguments based upon clause (3) of Article 246 of the
Constitution except to say the following: once the impugned enactment is
within the four corners of Entry 8 read with Entry 6, no central law whether
B made with reference to an entry in List-I or with reference to an entry in
List-III can affect the validity of such State enactment. The argument of
occupied field is totally out of place in such a context. If a particular matter
is within the exclusive competence of the State legislature, i.e., in List-II
that represents the prohibited field for the Union. Similarly, if any matter
C is within the exclusive competence of the Union, it becomes a prohibited
field for the States. The concept of occupied field is really relevant in the
case of laws made with reference to entries in List-III. In other words,
whenever a piece of legislation is said to be beyond the legislative com-
petence of a State Legislature, what one must do is to find out, by applying
the rule of pith and substance, whether that legislation falls within any of
D the entries in List II. If it does, no further question arises; the attack upon
the ground of legislative competence shall fail. It cannot be that even in
such a case, Article 246(3) can be employed to invalidate the legislation on
the ground of legislative incompetence of State Legislature. If, on the other
hand, the state legislation in question is relatable to an entry in List-III
applying the rule of pith and substance, then also the legislation would be
E valid, subject to a Parliamentary enactment inconsistent with it, a situation
dealt with by Article 254. Any incidental trenching, as already pointed out,
does not amount to encroaching upon the field reserved for the Parliament,
though as pointed out by T.L. Venkatarama Iyer, J. in A.S. Krishna, the
extent of trenching beyond the competence of the legislating body may be
an element in determining whether the legislation is colourable. No such
F
question arises here.

We may in this connection refer to the constitution Bench decision
of this Court in Calcutta Gas Company v. State of West Bengal, [1%2) (3)
G Suppl. S.C.R. 1 which furnishes a complete answer to the petitioners'
contentions on this score. The West Bengal Legislature passed an Act
[West Bengal Oriental gas Company Act, 1960) with a view to take over
the management and control of the undertaking of the Oriental Gas
Company. Notifications were issued under the Act taking over the Com-
pany which was questioned by way of a writ petition in the Calcutta High
H Court. The writ petition was dismissed whereupon the matter was brought
STATEv. MC. DOWELL [B.P. JEEVAN REDDY, J.] 747

to this Court. The main contention on behalf of the appellant was that the A
West Bengal Legislature had no legislative competence to enact the said
Act. It was submitted that by virtue of the Industries (Development and
Regulation) Act, 1951, which contains a declaration in terms of Entry 52
in List-I and the schedule whereof included "fuel gases - (coal gas, natural
gas and the like)" under Item 2(3), the power to make law with respect to
industries engaged in the manufacture of gas has been vested in the Union B
and that the State has been totally denuded of that power. It was contended
that Entry 24 in List-II takes in all industries and that Entry 25 (which
reads: "Gas and gas-works") should be confined to matters other than those
covered by Entry 24. Inasmuch as the impugned enactment was a law
relating to gas industry, it was submitted, the Act made by the State C
Legislature is incompetent and void. Reliance was also placed upon Article
246 of the Constitution. All these contentions were negatived. After refer-
ring to the provisions of the !.D.R. Act and the impugned West Bengal
Act, the relevant entries in the Seventh Schedule to the Constitution
[including Entries 7 and 52 in List-I and entries 24 to 27 in List-II] and the
principles governing the interpretation of the entries in the Seventh D
Schedule, the Court ·indicated that the matter was susceptible of three
possible constructions, viz., "(1) entry 24 of List II, which provides for
industries, generally, covers the industrial aspect of gas and gas-works
leaving entry 25 to provide for other aspects of gas and gas-works, (2) entry
24 provides generally for industries, and entry 25 carves out of it the E
specific industry of gas and gas-works, with the result that the industry of
gas and gas works, is excluded from entry 24; .and (3) the industry of gas
and gas-works falls under both the entries, that is, there is a real over-lap-
ping of the said entries." The Court opined that having regard to the·
well-settled principles relating to interpretation of these entries, that inter-
pretation which reconciles and harmonises the contending entries should F
be adopted and held thus:

"Entry 24 in List II in its widest amplitude takes in all industries,
including that of gas and gas-works. So too, entry 25 of the said
List comprehends gas industry. There is, therefore, an apparent G
conflict between the two entries and they overlap each other. In
such a contingency the doctrine of harmonious construction must
be invoked ...... .If industry in entry 24 is interpreted to include gas
and gas-works, entry 25 may become redundant, and in the context
of the succeeding entries, namely, entry 26, dealing with trade and
commerce, and entry 27, dealing with production, supply and H
~
I

748 SUPREME COURT REPORTS (1996) 3 S.C.R.

A distribution of goods, it will be deprived of all its contents and
reduced to 'useless lumber' ...... On the other hand, the alternative
contention enables entries 24 and 25 to operate fully in their
respective fields; while entry 24 covers a very wide field, that is,
the field of the entire industry in the State, entry 25, dealing with
gas and gas-works, can be confined to a specific industry, that is
B the gas industry..... .!! is, therefore, clear that the scheme of har-
monious construction suggested on behalf of the State gives full
and effective scope of operation for both the entries in their ·
respective fields while that suggested by learned counsel for the
appellant deprives entry 25 of all its content and even makes it
c redundant. The former interpretation must, therefore, be accepted
in preference to the latter. In this view, gas and gas-works are
within the exclusive field allotted to the States. On this interpreta-
tion the argument of the learned Attorney-General that, under Art.
246 of the Constitution, the legislative power of State is subject to
that of Parliament ceases to have any force, for the gas industry is
D outside the legislative field of Parliament and is within the exclusive
field of the Legislature of the State. We, therefore, hold that the
impugned Act was within the legislative competence of the West
Bengal Legislature and was, therefore, validly made.'

The Court proceeded to hold further:
E
'As we have indicated earlier, the expression 'industry' in entry 52
of List I bears the same meaning as that in entry 24 of List II, with
the result that the said expression in entry 52 of List I also does
not take in a gas industry. If so, it follows that the Central Act, in
so far as it purported to deal with the gas industry, is beyond the
F
legislative competence of Parliament."

The ratio of the above decision fully supports what we have said
hereinbefore. In fact, Entry 8 is more specific than Entry 25 in List-II.
While Entry 25 merely speaks of 'gas and gas-works"*, Entry 8 expressly
G
• Perhaps, it is appropriate to point out in the interest of avoiding any misunderstanding
that Entry 35 of List-II should be read with Entry 53 of List-I, which reads: "53.
Regulation and development of oilfields and mineral oil resources; petroleum and
petroleum products; other liquids and substances declared by Parliament by law to be
expedient in the public interest." Not only mineral gases fall under Entry 53 in List-I,
the words "gas works" also have to be properly understood. In short, both the said
H entries ~ to be read harmoniously and their respective fields delineated properly.
\
STATEv. MC. DOWELL[B.P.JEEVAN REDDY,J.] 749

speaks of production and manufacture besides possession, transport, pur- A
chase and sale of intoxicating liquors. The ratio of the Calcutta Gas
Company fully supports our conclusion that the industries engaged in the
production and manufacture of intoxicating liquors are outside the purview
·., of Entry 24 and fall squarely within Entry 8 in List-II and that Entry 52 in
List-I does not over-ride or impinge upon Entry 8 in List-II. According to B
this decision, the expression "industry' in both Entry 24 in List-II and Entry
52 in List-I must carry the same meaning, which means that if a particular
industry is not within the purview of Entry 24 in List-II, it would equally
not be within the purview of Entry 52 in List-I. The decision also supports
our conclusion that Article 246 cannot be invoked to deprive the State
legislatures of the powers inhering in them by virtue of entries in List-II. C
to wit, once an enactment, in pith and substance, is relatable to Entry 8 in
List-II or for that matter any other entry in List-II, Article 246 cannot be
brought into yet hold that State legislature is not competent to enact that
law.

CONTENTION BASED UPON ARTICLE 19(1)(g)
D

The contention that a citizen of th.is country has a fundamental right
to trade in intoxicating liquors refuses to die inspite of the recent Constitu-
tion Bench decision in Khoday Distilleries. It is raised before us again. In
Khoday Distilleries, this Court reviewed the entire case-law on the subject E
and concluded that a citizen has no fundamental right to trade or business
in intoxicating liquors and that trade or bnsiness in such liquor can be
completely prohibited. It held that because of its vicious and pernicious
nature, dealing in intoxicating liquors is considered to be res extra conimer-
cium (outside commerce). Article 47 of the Constitution, it pointed out, F
requires the State to endeavour to bring about prohibition of the consump-
tion except for medicinal purposes of intoxicating drinks and all drugs
which are injurious to health. For the same reason, the Bench held, the
State can create a monopoly either in itself or in an agency created by it
for the manufacture, possession, sale and distribution of liquor as a
beverage. The holding is emphatic and unambiguous.· Yet an argument is G
sought to be built upon certain words occurring in clauses (e) and (f) of
the summary contained in Para-60 of the decision. In these clauses, it was
observed that creation of a monopoly in the State to deal in intoxicating
liquors and the power to impose restrictions, limitations and even prohibi-
tion thereon can be imposed both under clause (6) of Article 19 or even H
j

750 SUPREME COURT REPORTS [1996] 3 S.C.R.

A otherwise. Seizing upon these observations Sri Ganguly argued that this
decision implicitly recognises that business in liquor is a fundamental right
i
under Article 19(1) (g). If it were not so, asked the learned counsel,
reference to Article 19(6) has no meaning. We do not think that any such
argument can be built upon the said observations. In clause (e), the Bench
held, a monopoly in the State or its agency can be created "under Article
B
19(6) or even othe1wise". Similarly, in clause (f), while speaking of imposi-
tion of restrictions and limitations on this business, it held that they can be
imposed "both under Article 19(6) or otherwise". The said words cannot be
read as militating against the express propositions enunciated in clauses
(b), (c), (d), (e) and (f) of the said summary. The said decision, as a matter
C of fact, emphatically reiterates the holding in Har Shankar that a citizen
has no fundamental right to trade in intoxicating liquors. In this view of the
matter, any argument based upon Article 19(1) (g) is out of place.

For the sake of completeness, and without prejudice to the above
D holding, we may examine the alternate line of thought. In Coover jee
Bha111clza, a Constitution Bench of this Court expressed its whole-hearted
concurrence with the opinion uf Field, J. in Crowley v. Christensen (34
L.Ed. 620) to the effect that: "There is no inherent right in a citizen to thus
sell intoxicating liquors by retail; it is not a privilege of a citizen of the State
or of a citizen of the United States. As it is a business attended with danger
E to the community, it may, as already said, be entirely prohibited, or be
permitted under such conditions as will limit to the utmost its evils. The
manner and extent of regulation rest in the discretion of the governing
authority." While laying down the said proposition, Mahajan, CJ., speaking
for the Court, referred generally to the position obtaining under Article
ij 19(1) (g) and clause (6) of the Article. The learned Chief Justice said that
the reasonableness of the restriction has to be determined having regard
to the nature of the business and the conditions prevailing in the trade. The
learned Chief Justice said: "The nature of business is, therefore, an impor-
tant element in deciding the reasonableness of the restrictions." These
observations, it may be noted, were not made with particular reference to
G trade in intoxicating liquors but are general in nature. Indeed, it is after
making these general observations that the Bench proceeded to refer to
and express its concurrence with the observations of Field, J. referred to
above. The said observations cannot be read as recognising a fundamental
right to trade in intoxicating liquors. Any such proposition would run
H counter to the main holding in the decision referred to above. It is true
\
STATE v. MC. DOWELL [B.P. JEEVAN REDDY, J.] 751

that in Kiishna K11mar Nantla v. State of Jamnm & Kashmir, [1967] 3 S.C.R. A
. t 50, Subba Rao, 0., speaking for the Constitution Bench, adopted a slightly
different approach, viz., every trade is a trade; even the trade in intoxicating
liquor is a trade; however, the nature and character of the business is
relevant for determining the extent of restrictions that can be placed on
such trade or business; inasmuch as intoxicating liquors are inherently B
harmful to the individuals consuming them and to the society as a whole,
it can even be prohibited but it .cannot be said that trade or business in
intoxicating liquors is not a trade or business within the meaning of Article
19(1) (g). Even adopting this approach, it would be evident - and the
decision in Kiishna Kumar Narula recognises it - that the trade and
business in intoxicating liquors can be restricted, severely curtailed or even C
prohibited. The fact that Article 47 of the Constitution expressly speaks.of
the obligation of the State to endeavour to bring about prohibition of the
consumption of intoxicating drinks is itself a clear and definite pointer in
this direction. Imposing prohibition is to achieve the directive principle
adumbrated in Article 47. Such a course merits to be treated as reasonable D
restriction within the meaning of clause (6) of Article 19.

Thus, whichever line of thought one adopts, the result is that the
-r prohibition of manufacture, production, consumption and sale of intoxicat-
ing drinks brought about by the Act (as amended by the Andhra Pradesh ·
Act 35 of 1995) is perfectly valid and beyond challenge. E
CHALLENGE BASED ON ARTICLE 14:

The attack on the amending Act based on Article 14 was mounted
on several grounds.
F
Sri Rohinton Nariman Submitted that inasmuch as a large number
of persons falling within the the exempted categories are allowed to con-
sume intoxicating liquors in the State of Andhra Pradesh, the total prohibi-
tion of manufacture and production of these liquors is "arbitrary" and the
amending Act is liable to be struck down on this ground alone. Support
for this proposition is sought from a judgment of this Cour.t in State of G
Tamil Nadu & Ors. v.Ananthi Ammal & Ors., (1995] 1 S.C.C. 519. Before,
however, we refer· to. the holding in the said decision, it would be ap-
propriate to remind ourselves of certain basic propositions in this behalf.
In the United Kingdom, the Parliament is supreme. There are no limita-
tions upon the power of the Parliament. No Court in the United Kingdom H
752 SUPREME COURT REPORTS (1996] 3 S.C.R.

A can strike down an Act made by the Parliament on any ground. As against
this, the United States of America has a Federal Constitution where the
1
power of the Congress and the State Legislatures to make laws is limited
in two ways, viz., the division of legislative powers between the States and
the federal government and the fundamental rights (Bill of Rights) incor-
porated in the Constitution. In India, the position is similar to the United
B
States of America. The power of the Parliament or for that matter, the
State Legislatures is restricted in two ways. A law made by the Parliament
or the Legislature can be struck down by Courts on two grounds and two
grounds alone, viz., (1) lack of legislative competence and (2) violation of
any of the fundamental rights guaranteed in Part-III of the constitution or
c of any other constitutional provision. There is no third ground. We do not
wish to enter into a discussion of the concepts of procedural unreasonable-
ness and substantive unreasonableness - concepts inspired by the decisions
of United States Supreme Court. Even in U.S.A., these concepts and in
particular the concept of substantive due process have proved to be of
D unending controversy, the latest thinking tending towards a severe curtail-
ment of this ground (substantive due process). The main criticism against
the ground of substantive due process being that it seeks to set up the
courts as arbiters of the wisdom of the Legislature in enacting the par-
ticular piece of legislation. It is enough for us to say that by whatever name
it is characterised, the ground of invalidation must fall within the four
E corners of the two grounds mentioned above. In other words, say, if an
enactment is challenged as violative of Article 14, it can be struck down
only if it is found that it is violative of the equality clause/equal protection
clanse enshrined therein. Similarly, if an enactment is challenged as viola-
tive of any of the fundamental rights guaranteed by clauses (a) to (g) of
Article 19(1), it can be struck down only if it is found not saved by any of
F
the clauses (2) to (6) of Article 19 and so on. No enactment can be struck
down by just saying that it is arbitrary* or unreasonable. Some or other
constitutional infirmity has to be found before invalidating an Act. An
enactment cannot be struck down on the ground that Court thinks it
unjustified. The Parliament and the Legislatures, composed as they are of
G the representatives of the people, are supposed to know and be aware of
• An expression used widely and rather indiscriminately · an expression of inherently
imprecise import. The extensive use of this expression in India reminds one of what
Frankfurter, J. said in Attil Mac Tiller v. Atlantic Coast-line Ranbroad Company, 81 L.
Ed. 610. "Th.e phrase begins life as a Hteraty expression; its felicity leads to its lazy
repetition and repetition soon establishes it as a legal fonnula, undiscriminatingly used
H to express different and sometimes contradictory ideas", said the learned Judge.
\
STATE v. MC. DOWELL [B.P. JEEVAN REDDY, J.] 753

the needs of the people and what is good and bad for them. The Court A
t cannot sit in judgment over their wisdom. In this connection, it should be
remembered that even in the case of administrative action, the scope of
judicial review is limited to three grounds, viz., (i) unreasonableness, which
can more appropriately be called irrationality, (ii) illegality and (iii) pro-
cedural impropriety, [See Council of civil Services Union v. Minister for the B
Civil Se1vices, (1985) A.C .. 374 which decision has been accepted by this
Court as well]. The applicability of doctrine of proportionality even in
administrative law sphere is yet a debatable issue. [See the opinions of
Lords Lowry and Ackner in R. v. Secretary of State for the Home Depa1t-
ment Ex-parte Brind & Ors., (1991) A.C. 696 at 766-7 and 762. It would be
rather odd if an enactment were to be struck down by applying the said C
principle when its applicability even in administrative law sphere is not fully
and finally settled. It is one thing to say that a restriction imposed upon a
fundamental right can be struck down if it is disproportionate, excessive or
unreasonable and quite another thing to say that the Court can strike down
enactment if it thinks it unreasonable, unnecessary or unwarranted. Now, D
coming to the decision in Ananthi Ammal, we are of the opinion that it
does not lay down a different proposition. It was an appeal from the
decision of the Madras High Court striking down the Tamil Nadu Acquisi-
tion of land for Harijan Welfare Schemes Act, 1978 as violative of Articles
14, 19 and 300A of the Constitution. On a review of the provisions of the
Act, this Court found that it provided a procedure which was substantially E
unfair to the owners of the land as compared to the procedure prescribed
by the Land Acquisition Act, insofar as Section 11 of the Act provided for
payment of compensation in installments if it exceeded Rupees two
thousand. After noticing the several features of the Act including the one
mentioned above, this Court observed: F

"7. When a statute is impugned under Article 14 what the court
has to decide is whether the statute is so arbitrary or unreasonable
that it must be struck down. At best, a statute upon a similar subject
which derives its authority from another source can be referred to,
if its provisions have been held to be reasonable or have stood the G
test of time, only for the. purpose of indicating what may be said
to be reasonable in the context. We proceed to examine the
provisions of the said Act upon this basis."

It is this paragraph which is strongly relied upon by Sri Nariman. We H
j
I

754 SUPREME COURT REPORTS [1996] 3 S.C.R.

A are, however, of the opinion that the observations in the said paragraph
must be understood in the totality of the decision. The use of the word 1
"arbitrary" in Para-7 was used in the sense of being discriminatory, as the
reading of the very paragraph in its entirety discloses. The provisions of
the Tamil Nadu Act were contrasted with the provisions of the Land
B Acquisition Act and ultimately it was found that Section 11 insofar as it
provided for payment of compensation in instalments was invalid. The
ground of invalidation is clearly one of discrimination. It must be remem-
bered that an Act which is discriminatory is liable to be labelled as
arbitrary. It is in this sense that the expression "arbitrary" was used in
Para-7.
c
Reference was then made by Sri G. Ramaswamy to the decision in
Mithu v. Union of India , [1983] 2 S.C.C. 27 wherein Section 303 of the
Indian Penal code was struck down. But that decision turned mainly on
Article 21 though Article 14 is also referred to along with Article 21. Not
D only did the offending provision exclude any scope for application of
judicial discretion, it also deprived the accused of the procedural
safeguards contained in Sections 235(2) and 354(3) of the Criminal Proce-
dure Code. The ratio of the said decision is thus of no assistance to the
petitioners herein.

E We make it clear that the above discussion is confined to an Act
made by the Legislature. we express no opinion insofar as delegated
legislation is concerned.

Learned counsel for the petitioners then sought to demonstrate the
F discriminatory aspect of the impugned amending Act in prohibiting the
production and manufacture of intoxicating liquors in Andhra Pradesh and
importing the requirements of State (to meet the need of exempted
categories) from outside the State. We are unable to see any unreasonable-
ness in it much less any discrimination. This ground is really one of
unreasonableness rather than discrimination. The Andhra Pradesh Legis-
G lature can make a law limited to the territory of that State but not beyond.
The exempted categories put together constitute a fraction of the total
consuming population of Andhra Pradesh. If production and manufacture
of intoxicating liquors is permitted in the name of meeting the needs of this
miniscule population, it would give rise to several other problems in turn..
H The present capacity of the industries in Andhra Pradesh engaged in
\
"

STATEv. MC. DOWELL [B.P.JEEVAN REDDY,J.] 755

manufacture and production of iutoxicating liquors is many many times A
over and above the requirements of the exempted categories. If the produc-
tion is to be scaled down correspondingly for each of the factories, they
would become uneconomic and not viable. Choosing one or two of them
would be beset with legal and practical difficulties. In all the circumstances,
the State appears to have thought it advisable to import the small quantities B
required rather than face a number of problems arising from restricted
production, supervision and enforcement.

Sri G. Ramaswamy next contended that prohibiting the production
and manufacturing of all intoxicating liquors while exempting toddy from
the said prohibition is discriminatory. Learned counsel contended that the C
alcohol content of toddy is higher than the alcohol content of Beer and
certain wines. We are unable to see any substance in the argument. Toddy
is a class apart. It is drawn from tree. The Excise Act and Rules make a
clear distiuction between toddy on one hand and other intoxicating liquors
on the other, though it may be that toddy is also included within the D
meaning of intoxicating liquors. In the circumstances, it cannot be said that
it is not a case of reasonable classification having regard to the object or
legislation. Moreover, it is always open to the State to introduce prohibition
in stages. It is not necessary that the prohibition should be total and
absolute whenever it is imposed. This principle has been affirmed by this
Court in the matter of nationalisation of bus routes C.S. Rowji v. State of E
A11dhra Pradesh, (1964] S.C.R. 330.

Counsel for the petitioners complained of discrimination in the mat-
ter of providing exemptions. It is complained that there is no justification F
in providing for grant of permits to 11 companies, corporations, institutions,
industrialists, exporters, importers and similar such functionaries as may be
notified" for entertaining not only foreigners and N.R.ls. but also persons
from outside the State of Andhra Pradesh in connection with their busi-
ness. Similar criticism is levelled against certain other clauses in Section 15
as well. We are of the opinion that this argument is not open to manufac- G
turers of intoxicatiug liquors like the petitioners. It would be a different
matter if any person affected by such discriminatory treatment complains
of the same. The petitioners at any rate cannot be heard to complain of
the same. We decline to entertain this argument. We express no opinion
thereon. II
I
756 SUPREME COURT REPORTS [1996) 3 S.C.R.

A It was suggested in parting that the policy of prohibition is a difficult
one to enforce, that though laudable in principle, it gives rise to several
other ills and so on. We need not express any opinion on theses comments 1
since we are concerned only with the constitutionality of the impugned
statutes aud net with their wisdom.

B For the above reasons, the attack upon the constitutionality of the
Andhra Pradesh (Amendment) Act 35 of 1995 both on the grounds of
legislative incompetence and violation of fundamental rights fails. The
Amending Act, which has been given retrospective effect from the date of
commencement of the Principal Act, i.e., Andhra Pradesh Prohibition Act,
C 1995, is constitutionally valid. The writ petitions challenging its validity are
accordingly dismissed.

Insofar as the civil appeals preferred against the Full Bench judg-
ment of the Andhra Pradesh High Court are concerned, they have become
academic in view of the Andhra Pradesh (Amendment) Act 35 of 1995 and
D the retrospective effect given to it. No separate arguments were addressed
in these matters. It is, therefore, unnecessary to deal with the questions
raised therein. They are accordingly disposed of as unnecessary in the light
of the dismissal of the writ petitions challenging the validity of the Andhra
Pradesh Amendment Act 35 of 1995.

E No. costs.

· R.P. Appeals disposed of.