Holding

The Bihar Excise (Amendment and Validating) Act, 1995 is constitutionally valid and cannot be struck down; the High Court’s order is set aside.

Summary

The State of Bihar enacted the Bihar Excise (Amendment and Validating) Act, 1995 to give statutory basis to the price fixation of country liquor and the deduction of a 0.70‑paise warehouse‑maintenance charge that had been ordered by the Excise Commissioner. Distilleries challenged the Act, arguing it was beyond the State’s legislative competence, violated fundamental rights and was arbitrary. The Supreme Court examined the constitutional validity of the Act, emphasizing the presumption of constitutionality and the need for clear transgression before striking down legislation. It held that the Act was within the State’s competence, did not infringe any fundamental right, and was not void for arbitrariness. Consequently, the Court set aside the Patna High Court’s judgment and dismissed the writ petitions, upholding the amendment.

Issues considered

Whether the Bihar Excise (Amendment and Validating) Act, 1995 is within the legislative competence of the State of Bihar.
Whether the Act violates any provision of Part III of the Constitution of India.
Whether the Act is arbitrary and therefore void.
Whether the deduction of Rs.0.70 per litre as warehouse‑maintenance charge is valid.
Whether the presumption of constitutionality applies to the challenged enactment.

Legislation cited

Bihar Excise Act, 1915
Constitution of Indias. Article 13, s. Part III

Subjects

legislative competenceconstitutional validitypresumption of constitutionalityexcise lawprice fixationwarehouse maintenance chargevalidation of legislationarbitrarinessseparation of powers

Judgment

STATE OF BIHAR AND ORS A
v.
BIHAR DISTILLERY LTD. ETC.

DECEMBER 3, 1996

[B.P. JEEVAN REDDY AND K.S. PARIPOORAN, JJ.] B

Bihar Excise (Amendment and Validating) Act, 1995-Act of
1995-Validity of Challenged-P1ice fu:ation of cowtfly liquor by Commis-
sioner of Excise-Enactment of Amending Act to provide stanaory basis and
legislative impremature to the p1ice fu:ation done by the Commissionei--Held, c
enactment not beyond legislative competence of the state, nor ;iolative of
fundamental rights nor arbitrary in the facts of the case-Hence the validity
cannot be impeached.

Enactment-Constitutionality of-Challenge to---Approach of the cowt
in examining-Held, is to sta1t with the presumption of Constitutionality and D
not with a view to pick holes.or to search defects of drafting.

Judiciary :- Courts-Duty towards Legislature-The Court must recog-
nise the fundamelttal nature and importance of legislative process and accord
due regard and deference to it, just as the legislative and executive are expected E
to show due regard and deference for the judicia1y.

In a batch of writ petitions, High Court, vide an interim order
directed that the supply of country liquors to retailers shall be made
directly by the State through its officers. Generally the system was that the
wholeseller used to supply the same to the retailers and maintenance of F
the warehouse used to be his responsibility. As per the direction of the
High Court, the State took up the task of wholesale supply and main-
tenance of warehouse was its responsibility. On 15.12.1989 in a meeting
between Excise Officers and representatives of distilleries the cost price of
country liquor was agreed to be enhanced and the break up in the cost G
price, one of the components of which was on account of maintenance
charges of ware house was also agreed to by both the parties.

Excise Commissioner directed the Deputy Commissioner to deduct
70 paise as maintenance charge. The distilleries filed writ petition before
High Court challenging the direction of the Excise Commissioner which H
479
4SO SUPREME COURT REPORTS [1996] SUPP.9S.C.R.

A was allowed on the ground that the order of deduction by the Excise
·Commissioner was without ju;i~diction as the power to deduct belonged
to the Board of Revenue alone. The Governor of Bihar came up with
ordinances for amending Bihar Excise Act validating the price fixation by
giving it statutory basis. Pursuant to it Bihar Excise (Amendment and
Validating) Act. 1995 was enacted. The writ petition before High Court
B
challenging the validity of the above Act as well as the Ordinance, was
allowed.

In appeal to this Court the appellant State contended that the
deduction was justified in view of the fact that the wharehouse belonged to
C and were maintained by the State and that the break up of the cost price
was agreed to between the two parties in the meeting.

Allowing the appeal, this Court

HELD : I. The Amending Act 9 of 1995 being Bihar Act 9 of 1995 is
D neither unconstitutional nor it is ineffective to achieve the objective it set
out to achieve the object set out in the Preamble. The validity of the
amending Act cannot be impeached. All that it does is to provide statutory
basis and legislative impremature to the price fixation done by the Com-
missioner and its breakup. It also provides for recovery and deduction of
E the 0.70 paise component on account of maintenance charges of
warehouses. It can neither be suggested that the Bihar legislature did not
have the legislative competence to enact the said Amending Act nor can it
be suggested that the Act violates any of the fundamental rights enshrined
in Part III. An act of Legislature cannot be struck down merely saying it
is arbitrary and the charge of arbitrariness also does not appeal to be
F justified in the facts and circumstances of the case. [498-A-B; 497-E-H]

State of A.P. And Others v. Mcdowell & Company and Others, [1996]
3 sec 709, referred to.

2. The approach of the Court, while examining the challenge to the
G constitutionality of an enactment is to start with the presumption of
constitutionality. The Court should try to sustain its validity to the extent
possible. It should strike down the enactment only when it is not possible
to sustain it. The Court should not approach the enactment with_ a view to
pick holes or to search for defects of drafting, much less inexactitude of
H language employed. Any such defects of drafting should be ironed out as
STATEv. BIHAR DISTILLARY LTD. [B.P.JEEVAN REDDY,J.] 481

part of the attempt to sustain the validity/Constitutionality or the enact- A
men!. An Act made by the Legislature represents the will of the people and
that cannot be lightly interfered with. The unconstitutionality must be
plainly and clearly established before an enactment is declared void. The
same approach holds good while ascertaining the intent and purpose of
enactment or its scope and application. [494-H; 495-A-B]
B
C/zaranjit Lal Chowdlzmy v. Union of India, AIR (1951) SC 41; Bur-
ralatr Coal Company v. Union of India, AIR (1961) SC 654; Ram Krishan
Dalmia etc. v. Justice S.R. Tendulkar & Others, AIR (1958) SC 538 and
Seaford Cowt Estates Ltd. v. Aslw; [1949] 2 K.B. 481, referred to.
c
3. Court must recognise the fundamental nature and importance of
legislative process and accord due regard and deference to it, just as the
Legislature and Executive are expected to show due regard and deference
to the Judiciary. The constitution recognizes and gives effect to the con-
cepts of equality between the three wings of the State and the concept of
'checks and balances' inherent in such scheme. [495-E-F] D ·
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 15112-15
of 1996.

From the Judgment and Order dated 5.1.96 of the Patna High Court
in C.W.J.C. No. 1773, 4272, 2233 and 5828 of 1994. E

S.B. Sanyal and B.B. Singh for the Appellants.

Y. V. Giri, Jyoti Saran and Praveen Kumar for the Respondents.

The Judgment of the Court was delivered by F

B.P. JEEVAN REDDY, J. Leave granted.

The distribution and sale of country liquor in the State of Bihar is
regulated by the Bihar Excise Act, 1915 and the rules made thereunder. It
was a two-tier system. The wholesale dealers (contractors) were lifting the G
liquor from the distilleries and supplying it to the retailers. Both the
wholesale dealers and retailers were selected on the basis of auction/tender
process. The price at which the wholesaler supplied the country liquor
from the warehouse to the retailer was fixed by the Government either
statutorily or on the basis of negotiations between the wholesalers (con- H
482 SUPREME COURT REPORTS (1996] SUPP. 9 S.C.R.
A tractors) and the Government. The price so determined was known as the
cost price of country liquor which was payable by the retailer at the time
of taking delivery from the concerned warehouse. The maintenance of
warehouse was the responsibility of the wholesale supplier (Contractor). )

In the year 1989, a batch of writ petitions, C.W.J.C. No. 4722 of 1989
B and others, were filed in the Patna High Court. The High Court made
interim orders in those writ petitions directing that till the contract is
settled and until further orders from the Court, the supply of country liquor
to the retailers shall be made directly by the State through its officers. In
view of the said orders the Government was obliged to undertake the
C supp!y of country liquor from the warehouses maintained by it to the
retailers. Even after the said batch of writ petitions were disposed of, the
practice of the Government undertaking wholesale supply of country liquor
to retailers continued for some time. This happened during the period
commencing on July 1, 1989, and ending with March 31, 1992. (These facts
are taken from the preamble to the impugned Amendment Act being Bihar
D Act 9 of 1995.)

On December 15, 1989, a meeting was held between the Excise
Officers of the State and the representatives of the distilleries to determine
the cost price of country spirit/liquor. The representatives of the distilleries
E pleaded that since the cost of price of rectified spirit has been increased
by the Government of India Under Ethyl Alcohol (Price Control) Order,
the cost price of country liquor should also be increased. They also pleaded
that in view of the levy of sales tax at the rate of 16% on the rectified spirit
earmarked for country spirit/liquor, with effect from December 1, 1989,
and the rise in price index over the years, the cost price of country liquor
F should be enhanced. The Member, Board of Revenue who was repre-
senting the Government side at the said meeting agreed that in view of the
enhancement of the price of ethyl alcohol and levy of sales tax on rectified
spirit and other incidentals, the price of country-liquor deserves to be
enhanced. The last para of the minutes of the meeting reads thus:
G
"As per discussion between representatives of the Distillers and
Departmental representatives, the Member, Board of Revenue
suggested certain components for proper consideration and fixa-
tion of cost price of spirit by following ways : ...... "

H On February 19, 1990 the Excise Commissioner, Bihar addressed a
STATEv. BIHAR DISTILLARY LTD. [RP. JEEVAN REDDY,J.) 483

letter to all the distilleries fixing the cost price of country liquor. Having A
regard to the crucial relevance of this letter it would be appropriate to
extract the letter in full.

"Patna, dated 19th February, 1990

Sub: Meeting between Excise Officers and representatives of B
distilleries on 15.12.1989 presided by Membe1; Board of
Revenue : regarding refu:ation of cost price of cow1t1y
spirit/liquor.

Sir,
c
Your attention is drawn towards the subject noted above, and
to state that the Government has taken a decision to fix the cost
p1ice of rectified spirit to be supplied as country spirit/liquor from the
country spirit warehouses with immediate effect@ Rs. 3.42 (Rupees
three and paise forty-two only) for L.P. Litre by following com- D
ponents :-

(i) Cost of Spirit Rs. 1.72 per L.P.L.

(ii) Transport/Working Wastage, etc. Rs. 0.08 -do-
E
(iii) Sales Tax Rs. 0.27 -do-

(iv) Transportation Charges of spirit Rs. 0.45 -do-

(v) Maintenance charge of spirit/liquor
warehouses (expenses on coolies wages/ F
house-rent/electric charges/expenses
on communications/Water taxes, etc.) Rs. 0.70 -do-

(vi) Dividend Rs. 0.20 -do-

Total : Rs. 3.42 per L.P.L. G

(Rupees three and paise forty-two only)

2. If you are ready to supply the rectified spilit to the country,
spirit/liquor Warehouses from your distilleries, then please give
your written consent at once accordingly. Thereafter necessary H
484 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A orders will be issued, so that the payment be made after recovery
from the retail vendors.

Yours' faithfully,
Sd/-Illegible
(Mehesh Prasad)
B Excise Commissioner, Bihar, Patna!!

(The break-up of the cost price of Rs. 3.42 paise per L.P.L. men-
tioned in the above letter is the very break-up which is said to have been
mentioned at the end of the Minutes of the Meeting dated 15.12.1989.)

c This letter shows that pursuant to the discussion and negotiations
held at the meeting held on 15th December, 1989, the Government fixed
the cost price of "rectified spirit to be supplied as country spirit/liquor from
the country spirit warehouses" at Rs. 3.42 paise per L.P.L. The break-up
of the said price was also mentioned in the letter which includes, "main-
D tenance charge of spirit/liquor war.ehouses (expenses on coolies
wages/house-rent/electric charges/expenses on communications/water
taxes, etc.)" at Rs. 0.70. paise per L.P.L.

On 20th February, 1990 the Commissioner of Excise, Bihar intimated
all the Collectors/Deputy Commissioners of the State about the said fixa-
E tion of the price. The letter reads :

"Patna - Dated 20th February, 1990

Sub: Fixation of the Cost Price of Country Liquor supplied
from Warehouses
F
Dear Sirs,

With regard to the subject stated above I have been directed
to inform you that the matter regarding fixation of the Cost Price
of country Liquor supplied from Warehouses was under considera-
G tion of the Government. After thorough discussions, the State
Govemment decided that the Cost price of the Country Liquor
supplied from the Warehouses shall be fixed at Rs. 3.42 (Rupees
Three and paise forty two only) per L.P. Litre. This cost price of
Country Liquor will be collected from the retail vendors of Country
H liquor from the date of issue of this order.
STATE v. BIHAR DISTILLARY LTD. [B.P. JEEVAN REDDY, J.] 485

As per Board Notification No. 23-17/89-5, dated 19:12.89 for A
the amendment in Clause No. 15 of Licence Form No. '7, a
separate order is being sent to the non-contracted distilleries for
payment of the aforementioned Cost price for their supply of Spirit
to the Warehouses for manufacture of Country Liquor.

Yours' faithfully, B
Sd/-
Illegible
Excise Commissioner, Bihar"

Evidently, supplies were being made by the distilleries as per the C
letter dated 19th February, 1990.

On 26th "July, 1990, the Excise Commissioner, Bihar addressed a
letter to all the Collectors/Deputy Commissioners in the State directing
them to deduct 70 paise per L.P.L. from the cost price of Rs. 3.42 paise
per L.P.L. and remit it to the Government account. Para 2 of the letter D
which alone is relevant reads thus:

"2. In this context, this is to state that the earmarked component
for meeting the expenses of maintenance of warehouses e.g. wages
to coolies (engaged in the warehouses), house-rent etc. be
E
deposited under budget head - "8433 - Civil deposit - 800 - other
deposit cost price of country spirit/liquor, ganja, etc." After
recovering from distilleries or deducting @ Rs. 0. 70 paise per
L.P.L. from the cost price (Rs. 3.42) so fixed for the rectified spirit
which is meant for country spirit/liquor to be supplied from the
country spirit warehouses. Payment for the expenditure on day-to- F
day expenses, e.g. wages to coolies, electricity charges, expenses
on communications, water supply tax, etc. has to be made twice in
a month from the deposited sum by withdrawing the same as per
need and its account has to be kept as per rule. Payment for the
maintenance of the warehouses, e.g. house-rent, construction of G
the building, erection of the Vats, etc. shall be made by withdraw-
ing from the balanced amount after obtaining sanction order from
the Excise Commissioner and its account of such expenses shall
be kept separately."

Until the receipt of the Commissioner's letter dated 26th July, 1990, H
486 SUPREME COURT REPORTS [1996] SUPP. 9S.C.R.
A the distilleries were being paid at the rate of Rs. 3.42 paise per L.P .L. for
the spirit supplied by them. On receipt of the said letter the Collec-
tors/Deputy Commissioners not only started deducting 0.70 paise from the
price payable to the distilleries but also called upon the distilleries to
refund the excess amount paid to them on that account. The distilleries
B thereupon approached the Patna High Court by way of a batch of writ
petitions challenging the communication/letter of the Commissioner of
Excise, Bihar dated 26th July, 1990 and the communications issued pur-
suant to it. The distilleries submitted that though they demanded the cost
price of Rs. 4.00 per L.P.L., the State Government on its own fixed the
price at Rs. 3.42 paise per L.P.L. as their letter dated 20th February, 1990.
· C They submitted that the distilleries are entitled to receive at least the said
cost price of Rs. 3.42 paise, if not more. They submitted that they are not
concerned with the maintenance of warehouses which is the responsibility
of the Government and that no amount can be deducted from out of the
said cost price on account of maintenance of warehouses. The Government
D opposed the writ petitions submitting that the aforesaid cost price was fixed
in the joint meeting held on 15th December, 1989, that the writ petitioners
were party to the said decision including the break-up of the said cost price
and that, therefore, they are not justified in opposing the deduction of 0.70
paise on account of the maintenance charges of the warehouses. The High
Court allowed the writ petitions on the following reasoning; under Section
E 90(2) of the Bihar Excise Act, the Board of Revenue is given the power to
fix maximum and minimum price of country liquor but the Board has not
chosen to excise that power; instead of doing that the Commissioner of
Excise has chosen to issue Annexures 5, 6 and 7 (Annexure 5 is the
communication dated 26.7.1990 and Annexures 6 and 7 are the consequen-
F tial directions/demands made by the Superintendents of Excise); the Com-
missioner "cannot be said to have exercised the jurisdiction, if any, vested
in the Board of Revenue."* Annexures 5 to 7 are not backed by any
authority of law and are therefore, unforceable. The High Court quashed
the said orders/communications with the observation that "the Government
or the respondents cannot force the petitioners for the refund of the
G
If this reasoning is correct, then the High Court should have held that the very price
fixation under the Comn1unication dated 19th and 20th February, 1990 was illegal, but
the High Court did not say so. It n1erely quashed the Communications proposing to
deduct 70 paise per L.P.L. out of the aforesaid price. The High Court also did not deal
with the argun1ent that the said price was fixed by agree1nent between the Government
and distilleries.
H
STA1Ev. BIHAR DISTILLARYLID. [B.P. JEEVAN REDDY,J.] 487

amount already paid to the 'petitioner and as a logical conclusion, they ale A
bound to carry out the obligations created earlier by the interim orders of
the said Court."

For some unexplained reasons, the Government of Bihar and its
Officials did not choose to appeal against the said judgment, with the result
the judgment became final. Contempt petitions were taken out by the
B
distilleries against the Government and its Officials for disobedience to the
judgment of the High Court. The Governor of Bihar then came forward
with an Ordinance amending the Bihar Excise Act seeking to provide
statutory basis to the aforesaid price fixation and the deduction of 70 paise
per L.P.L. In other words, the Governor of Bihar sought to remove the c
defect pointed out by the High Court viz., that the price fixation by the
Commissioner was without jurisdiction and that that power belonged to the
Board of Revenue alone. By amending the Act itself, the Ordinance sought
to validate the said price fixation by treating it as fixation by the Legislative
itself. It is stated that one after the other, ordinances were issued to the D
same effect, until the enactment of the Bihar Excise (Amendment and
Validating) Act, 1995 being Act 9 of 1995 in the same terms. The Amend-
ing Act was given retrospective effect from 20th February, 1990. The long
Preamble to the Amending Act sets out the circumstances in which the
Government was obliged to undertake supply of country liquor from the
warehouses pursuant to the interim orders of the High Court, the fixation E
of cost price of country liquor at Rs. 3.42 paise per L.P.L. by agreement
between the government and the distilleries, the break-up of the price into
several components and the developments leading to the enactment of the
Amending Act. Having·TCgard to the contentions urged before us and the
findings recorded by th_e High Court in the order under Appeal, it is
F
necessary to set out the entire Preamble to the Act. It reads :

"Preamble.- WHEREAS, it is necessary in public interest that out
of the cost price of Country Spirit the amount of money earmarked
for the maintenance of warehouse be regulated;
G
AND, WHEREAS, the price of country spirit to be supplied
to the retailer by the Contractor (Wholesale supplier) from the
Warehouse belonging to the Contractor or the State or another
person, is fixed by the Government of Bihar, 011 the basis of
negotiations between the Contractor and the Government and such H
488 SUPREME COURT REPORTS (1996) SUPP. 9 S.C.R.

A price being km;iwn as the cost price of country spirit payable by
the retailer at the time of taking or issue of Country liquor from
the warehouse concerned;
..
=~

AND, WHEREAS, as a regulatory measure the maintenance
of warehouse is the responsibility of the contractor;
B
AND, WHEREAS, in the year 1989 in C.W.J .C. No. 4722 of
1989 and other similar cases a situation arose whereby and
whereunder the Patna High Court ordered that till contract is
settled and till further order from the Court, the supply of country
liquor shall be made to the retailers directly by the State through
c its Officers;

AND, WHEREAS, in pursuance to the said direction the
country liquor had to be supplied from different warehouses
situated in the State, by the State Government through its Officers;
D
AND, WHEREAS, after the Final Order of the High Court in
the above writs in the year 1990 the situation emerged that in
certain areas of the State the supply of country liquor to the
retailers continued to be made by the State Government through
its Officers due to non-functioning of the concerned Contractors;
E
AND, WHEREAS, during this period the warehouses were re-
quired to be maintained by the State;

AND, WHEREAS, in flXing the price of country liquor to be
supplied by the Contractor holding exclusive privilege licence the
F State Government had taken into account the cost of spirit, the
cost of transportation of such spirit, the cost of maintenance of
warehouses, sales tax and dividend;

AND, WHEREAS, while flXing the price of country liquor to
be supplied to the retailer, the following components of cost were
G
included in the cost price :-

Rs.
Cost of Spirit 1.72
Transit/Working wastages 0.08
H Warehouse maintenance charges 0.70.
STAIB v. BIHAR DISTILLARY LTD. (B.P. JEEVAN REDDY, J.] 489

Transportation charges 0.45 A
Sales Tax 0.27
Dividend 0.20

Total 3.42

AND, WHEREAS, in February 1990 the Government had B
decided that country spirit would be supplied at the rate of Rs.
3.42 per L.P. Litre which include Rs. 0.70 per L.P. Litre as
maintenance charge of warehouses;

AND, WHEREAS, the amount deposited by the retailers as C
price· of country spirit was to be deposited in Treasury through
Bank draft and thereafter the Distillers (Suppliers) were to be paid
the amount after deduction of the component of price meant for
maintenance of warehouse, that is Rs. 3.42-0.70 = Rs. 2.72;

AND, WHEREAS, in some cases by mistake the entire amount D
of Rs. 3.42 was paid to the Distillers (Suppliers);

AND, WHEREAS, some of the Distillers (Suppliers) chal-
lenged the authority of the State regarding deduction of warehouse
maintenance charges from the cost price fJXed for supply of country
spirit to warehouses; E
AND, WHEREAS, in C.W.J.C. No. 6863/90 and in other
similar writ petitions the Court held that in the absence of Rules
the State Government is not authorised to fJX the price of country
spirit and to make deductions of maintenance of warehouses
charges therefrom;
F

AND, WHEREAS, it has become necessary to levy and
validate the deduction/realisation of warehouse maintenance char-
ges from the cost price of the country spirit fJXed by the State in
the year 1990; G
Be it enacted by the Legislature of the State of Bihar in the
forty sixth year of the Republic of India as follows."

Section 2 of the Amending Act added Section 22-A to the Excise
Act. Section 22-B contains the validation clause while Section 22-C gives H
490 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A overriding effect to the Amending Act over any judgment, decree and
order of the Court or any other law for the time being in force. The said
Sections read as follows :

"22-A. The fixation of cost price of country liquor, by the State •
Government. - (1) The State Government, while granting exclusive
B privilege of manufacturing supplying wholesale or of selling
wholesale or·retail of country liquor may fix the cost price which
includes the price of the spirit, the transportation charges,
warehouse maintenance charges, taxes, if any, and other charges,
such as bottling, packing etc. and dividend.
c
(2) Any person to whom the State Government has granted
exclusive privilege of manufacturing, supplying wholesale or selling
wholesale or retail country liquor during the year 1990 wherein the
cost price of the count1y liquor was fixed by the State Government
taking different components into account including warehouse
D maintenance charges at the rate of 70 paise per L.P. Litre shall be
deemed to have been fixed under this Section.

22-B. Validating of cost price of country liquor and realisation of
warehouse maintenance charges.- (1) Notwithstanding any judg-
ment, decree or order of any court, Tribunal or Authority the price
E
of count1y spirit, including the warehouse maintenance charges at the
rate of 70 paise per L.P. Litre fixed during the year 1990 shall be
deemed to have been fixed under this Act and any amount collected
from the retailer as a cost price of country liquor per L.P. Litre
shall be paid to or payable to the Contractor (Distiller/Supplier)
F after deducting at the rate of 70 paise per L.P. litre as the main-
tenance charges of the warehouses and the said amount shall not
be payable to the Contractor (Distiller/Supplier).

(2) 1he amount so collected shall be deemed to have been
collected under the provision of this Act and the said amount of
G warehouse maintenance charges shall not be refundable and no
Court, Tribunal or Authority shall order for refund of such amount;

Provided that where the amount collected from the retailer has
been paid to the Contractor {Distiller/Supplier), the State Govern-
H ment shall realise such amount from the Contractor {Distiller/Sup-
STATEv. BIHAR DISTILLARY LID. [B.P.JEEVAN REDDY,J.] 491

plier and the Contractor shall be required to refund the said A
amount to the State Government;

Provided further, that the State Government may adjust, the
said amounts from any amount due or payable to the Contractor
by the Government;
B
Provided also that the said amount shall be spent by orders of
the Excise Commissioner under administrative instruction.s issued
for the maintenance of warehouses;

Provided further also, that any amount realised on account of
warehouse maintenance charges but refunded to the supplier, C
under the order of any Court, Tribunal or Authority shall be
refunded by the Supplier and the State Government shall recover
the same from the Contractor (Distiller)/Supplier as arrears of
revenue.
D
22-C. Oveniding effect of the Act.- Notwithstanding anything to
the contrary contained in any judgment, decree or order passed
by any Court and in any other law for the time being in force, the
provisions of this Act shall have the effect."

(emphasis snpplied) E
The portions underlined by us .clearly bring about the scope and
intendment of the Amending Act. To repeat, it is to vest the price fJXation
done by the Commissioner of Excise, under his letters dated 19th and 20th
February, 1990 with the i~gislative authority, that fJXation shall be deemed
to have been done by the Legislature itself. F

Another batch of writ petitions was filed by the distilleries challeng-
ing the validity of the Ordinance and the Amending Act. This batch of writ
petitions have also been allowed by the Patna High Court under the
judgment and order impugned herein. The basis upon which the High G
Court has allowed the writ petitions, without declaring the Amending Act
as invalid, is better set out in their own words. The High Court said :

"12. It will be evident from Section 22-A aforesaid that the same
relates to manufacture/sale of 'country liquor'. So far as Section
22-B is concerned, therein the words 'country liquor' have not been H
492 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A mentioned, nor the words 'rectified spirit'/Commercial spirit' has
been mentioned, rather the 'country spirit' has been mentioned
therein. When query was made from the learned Advocate
General, as to what is 'country spirits', learned Advocate General
submitted that the same is, in fact, 'country liquor' and not 'rec-
tified spirit' from which the 'country liquor is prepared. It was
B
accepted at the Bar by the learned Advocate General that the
Hindi version of the Act 9/95 is the original one, wherein the words
'DESHI SARAB' has been mentioned, which means 'country
liquor' and not the rectified spirit.

c 13. From the aforesaid plain reading of the provisions of Act
9/95, particularly, the Hindi version, it will be manifest and clear
that the Act in question has been promulgated with respect to the
manufacturers/dealers of 'country liquor'. No provision has been
laid down therein with respect to manufactures of 'rectified
spirit'/commercial spirit', which is the original raw material
D manufactured by the petitioners and supplied to the Respondents
No rate has been fJXed by the State Government with respect to
such 'rectified spirit' by the impugned Act 9/95 · and/or earlier
ordinances. Thereby, I hold that the impugned Act 9/95 is not
applicable to the petitioners, who supplied 'rectified spirit' to the
E State in their Warehouses.

It is for the said reason, the question of declaring the impugned
Act as ultra vires does not arise, in the present case, and for similar
reason, there is no necessity of giving any specific finding with
respect to the first three issues raised by the counsel for the
F petitioners. 11

The High Court also made certain observations as to the quantity of
the rectified spirit required for obtaining 1 L.P.L. of country liquor, the
cost structure of the country liquor as well as to the absence of the power
G in the State to fJX the price of rectified spirit.

Mr. S.B. Sanyal, the learned counsel for the State of Bihar assailed
the judgment of the High Court on various grounds. He submitted that
since the warehouses belong to and are maintained by the State Govern-
ment, the State Government was fully justified in seeking to deduct 0.70
H paise per L.P.L. on account of the maintenance of warehouses. Counsel
STATEv. BIHAR DISTILLARY LID. [B.P.JEEVAN REDDY,J.] 493

submitted that the break-up of the cost price of the country liquor was A
agreed to between the two parties and that one of the components of the
said cost price was the item of 0.70 paise per L.P.L. on a_ccount of
maintenance charges of warehouses, which fixation ha~ now been validated
by the Amending Act removing the defect pointed otit by the High Court
in its first judgment. In this view of the matter, he submitted, the distilleries
B
cannot legitimately resist the deduction of 0.70 paise. Counsel submitted
that the High Court has not really appreciated the true nature and char-
acter of the price fixation done by the Commissioner of Excise and the
Amending Act and has allowed the writ petitions adopting a highly tech-
nical approach and on a totally erroneous basis. Mr. Y.V. Giri, learned
counsel for the respondents distilleries, however, supported the reasoning C
and conclusion of the High Court. He submitted that the distilleries have
nothing to do with the supply of country liquor to the retailers. According
to him, the distilleries manufacture only the rectified spirit and that alone
is sold by them to the Government. Counsel submitted that for obtaining
one litre of country liquor, l/4th litre of rectified spirit is required and that D
the price of Rs. 3.42 paise per L.P.L. represents the cost of said quantity
of rectified spirit required for obtaining 1 litre of country spirit and that,
therefore, the claim for deduction of 0.70 paise on account of maintenance
charges is wholly untenable and illegal. Counsel submitted that the distill-
eries have nothing with the warehouses or their maintenance which was the
responsibility of the Government during the relevant period. The cost of 1 E
litre of rectified spirit, he submitted, is much more than Rs. 4.00 and,
therefore, the distilleries cannot be asked to supply country liquor at the
rate of Rs. 2.72 per L.P.L. (i.e., Rs. 3.42 minus 70 paise). The learned
counsel submitted that there was no agreement between the distilleries and
the Government with respect to the price of country liquor at the· joint F
meeting held by 15.12.89 and that the distilleries were unaware of the
Commissioner's letter dated 19.2.1990 as well as the Commissioner's com-
munication dated 20th February, 1990 referred to above.

We have already set out the substance of the minutes of the meeting
held on 15.12.89, the letter dated 19.2.90 (which was issued on the basis of G
the discussions held at the said meeting) as well as to the letter of the
Commissioner dated 20.2.90. The minutes of meeting dated 15th Decem-
ber, 1989 speak of flXation of the cost price of country liquor. The letter
dated 19th February, 1990 speaks of "cost price of rectified spirit to be
supplied as country spirit/liquor from the country spirit warehouses" while H
494 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.

A the letter dated 20th February, 1990 speaks of "cost pri~e of country liquor
supplied from the warehouses." This mix up of the expressions of "rectified
spirit to be supplied as country spirit/liquor" and "country liquor" in the
said proceedings/letters may perhaps be for the reason that all that it takes
to convert the rectified spirit into country spirit, it is said, is adding of water
B to rectified spirit. May be or may not be. That is not material for our
purposes. What is material is that the price of Rs. 3.42 per L.P.L. said to
have been agreed upon at the meeting held on 15th December, 1989, and
referred to in the said letters and which cost price has now been legisla-
tively validated, all give the break-up of the said price which includes the
figure of 70 paise per L.P.L. on account of "warehouse maintenance
C charges". Now, it is admitted - indeed, it is the positive case of Mr. Y.V.
Giri - that the distilleries have nothing to do with maintenance of
warehouses and that they were being maintained by the Government itself
during the said period. The preamble to the Amending Act and the
amended provisions expressly speak of the said cost price and its break-
D up. The Amending Act further provides expressly for deduction of the said
70 paise per L.P.L. component for being credited to the government's
account. In the face of all these facts, it is difficult to understand on what
basis can the distilleries say~ that the said component of 70 paise should
not be deducted. The Amending Act is not taking away anything from the
distilleries; it is merely affirming and validating the acts and orders already I
E issued in view of, and with a view to remove, the defect pointed out by the
High Court in its first judgment. It cannot be disputed, at this stage, by the
distilleries that they were not parties to the meeting held on 15th Decem-
ber, 1989 or that they did not receive the letter of the Commissioner dated
19th February, i990. If this were so, it is understandable on what basis and
F at whose request or order, they were supplying the spirit to the distilleries.
It cannot but be held in the circumstances that the distilleries accepted the
offer contained in the Commissioner's letter dated 19th February, 1990 and
were making supplies on the basis of the said letter and the orders placed
pursuant to that letter and their acceptance of it.

G Now coming to the reasoning in the impugned judgn\ent, we must
say with all respect that we have not been able to appreciate it. The
approach of the Court, while examining the ,chaJlenge to ,the con-
stitutionality of an enactment, is to start with the presumption of con-
stitutionality. The Court should try to sustain its validity to the extent
H possible. It should strike down the enactment only when it is not possible
STATEv.B!HAR DISTILLARYLTD. [B.P.JEEVAN REDDY,J.] 495

- to sustain it. The Court should not approach the enactment with a new to
pick holes or to search for defects of drafting, much less inexactitude of
language employed. Indeed, any such defects of drafting should be ironed
out as part of the attempt to sustain the validity/constitutionality of the
A

enactment. After all, an Act made by the Legislature represents the will of
the people and that cannot be lightly interfered with. The uncon-
B
stitutionality must be plainly and clearly established before an enactment
is declared as void. The same approach holds good while ascertaining the
intent and purpose of an enactment or its scope and application. Now, the
result of the impugned Judgment is that the Amending Act has become an
exercise in futility - a purposeless piece of Legislation. And this result has
been arrived at by pointing out some drafting errors and some imperfection C
in the language employed. If only the High Court had looked into the
minutes of the meeting dated 15th December, 1989 and the two letters of
the Commissioner aforementioned, it would have become clear that the
Amending Act was doing no more than repeating contents of the said
letters and placing the legislative imprimatur on them. As the impugned D
judgment itself suggests, part of the imperfection of language is perhaps
attributable to translation from Hindi to English. Indeed, it is surprising
that the Court has not even referred to the long preamble to the Act which
clearly sets out the context and purpose of the said enactment. It was put
in at such length only with a view to aid the interpretation of its provisions.
It was not done without a purpose. To call the entire exercise a mere waste E
is, to say the least, most unwarranted besides being uncharitable. The court
must recognize the fundamental nature and importance of legislative
process and accord due regard and deference to it, just as the Legislature
and the Executive are expected to show due regard and deference to the
Judiciary. It cannot also be forgotten that our constitution recognizes and p
gives effect to the concept of equality between the three wings of the State
and the concept of 'checks and balances' inherent in such scheme.

Though the above propositions are well settled, it may not be out of
place to refer to a few decisions. In Charanjit Lal Chowdhary v. Union of G
India, A.LR. (1951) S.C. 41, Fazal Ali, J. stated. "....... .it is the accepted
doctrine of the American Courts, which I consider to be well-fonnded on
principle, that the presumption is always in favour of the constitutionality
of an enactment, and the burden is upon him who attacks it to show that
there has been a clear transgression of the constitutional principles". In
Bu"akur Coal Company v. Union of India, A.LR. (1961) S.C. 654 AT 963, H
496 SUPREME(;QURT REPORTS [1996] SUPP. 9 S.C.R.

A Mudholkar, J., speaking for the Constitution Bench, observed : "Where the
validity of a law made by a competent legislature is challenged in a Court
of law, that Court is bound to presume in favour of its validity. Further,
while considering the validity of the law the cowt will not consider itself
restricted to the pleadings of the State and would be free to satisfy itself
B whether under any provision of the Constitution the law can be sustained."

We may quote the pertinent propositions enunciated in Ram Krishna
Dalmia, Etc. v. S.R. Tendulkar & Others Etc., A.LR. (1958) S.C. 538, to the
following effect :

"(b) that there is always a presumption in favour of the con-
c stitutionality of an enactment and the burden is upon him who
attacks it to show that there hs been a clear transgression of the
constitutional principles;

(e) that in order to sustain the presumption of constitutionality the
D Court may take into consideration matters of common knowledge,
nzatters of conimon report, the history of the tbnes and niay assume
every state of facts which can be conceived existing at the time of
legislation; and .. "

We may also refer to the following perceptive observations in the
E decision of Lord Denning in Seaford Court Estates Ltd. v. Asher (1949) 2
K.B. 491:

''Whenever a statute comes up for consideration it must be remem-
bered that it is not within human powers to foresee the manifold
F sets of facts which may arise, and, even if it were, it is not possible
to provide for them in terms free from all ambiguity. The English
language is not an instrument of mathematical precision. Our
literature would be much the poorer if it were. This is where the
draftsmen of Acts of Parliament have often been unfairly criticized.
A judge, believing himself to be fettered by the supposed rule that
G he must look to the language and nothing else, laments that the
draftsmen have not provided for this or that, or have been guilty
pr some or other ambigoity. it would certainly save the judges
trouble if Acts of Parliament were drafted with divine prescience
and perfect clarity. Jn the absence of it, when a defect appears a
H judge cannot simply fold his hands and blame the draftsman. He
STA1Ev. BIHAR DISTILLARY LTD. [B.P.JEEVAN REDDY,J.] 497

must set to work on the constructive task of finding the intention A
of Parliament, and he must do this not only from the language of
the statute, but also from a consideration of the social conditions
which gave rise to it, and of the mischief which it was passed to
remedy, and then he must supplement the writter word so as to
give 'force and life' to the intention of the legislature. That was
B
clearly laid down by the resolution of the judges in Heydon's case,
and it is the safest guide today. Good practical advice on the
subject was given about the same time by Plowden .... Put into
homely metaphor it is this : A judge should ask himself the question
: If the makers of the Act had themselves come across this ruck
in the texture of it, how would they have straightened it out? He C
must then do as they would have done. A judge must not alter the
material of which it is woven; but he can and should iron out the
creases."

The above observations have been quoted with approval by this
Court in a number of decisions. We felt impelled to reproduce them only D
because of the kind of approach adopted by the High Court in the
J~d~ment und~r Iappeal. It helps to remind ourselves of the above obser-
vati6ns from tii):i~ to time .
. .
Now coming to the validity of the Amending Act we are unable to E
see on what ground cannot its validity impeached. All that it does is to
provide statutory basis and legislative \mprematur to the price fixation done
by the Commissioner and its break-i\p. It also provides for recovery and
deduction of the 0.70 paise component on account of maintenance charges
of warehouses. It can neither be suggested that the Bihar Legislature did F
not have the legislative competence to enact the said Amending Act nor
can it be suggested that the Act violates any of the fundamental rights
enshrined in para III. The general averment of Mr. Y.V. Giri that the Act
is arbitrary is too vague to merit any acceptam:e, apart from the fact that
an act of Legislature cannot be struck down merely saying it is arbitrary - G
See this Court's Judgment in State of A.P. and Others v. Mcdowell &
Company And Others [1996] 3 S.C.C. 709 at 737 to 739, apart from the fact
that the charge does not appear to be justified in the facts and circumstan-
ces of the case.

For the above reasons, the .appeals are allowed, the judgment of the H
498 SUPREME COURT REPORTS [1996] SUPP. 9 S.C.R.
A High Court is set aside and it is declared that the Amending Act 9 of 1995.
being Bihar Act of 9 of 1995 is neither unconstitutional nor is it ineffective
to achieve the objective it set out to achieve - object set out in the
Preamble.

The writ petitions filed by the respondents in the High Court are
B dismissed. Ntl costs.

K.K.T. Appeals allowed.

- .