IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Writ Petition (PIL) No.36 of 2015
Udai Narayan Tiwari
……. Petitioner Versus
State of Uttarakhand & others
… Respondents
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Ms. Prabha Naithani, Advocate for the petitioner. Mr. D.K. Sharma, Addl. Advocate General, for the State. Mr. Arvind Vashisth, Sr. Advocate, for respondent no.5.
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Dated: November 8, 2016 Hon’ble Rajiv Sharma , J. Hon’ble Alok Singh, J.
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Per: Hon’ble Rajiv Sharma , J.
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The present petition has been filed pro bono
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publico. 2.
According to the averments made in the
petition, respondent no.5, in violation of the laid down norms, was running a Liquor Bar in a Banquet Hall at Haridwar on the basis of the Licence issued by the Excise Department.
It is also averred that the issuance of
licence was in violation of the Government Order dated 24.2.2002. 3.
A
Government.
reply
has
been
filed
by
the
State
According to the averments made in the
reply, no liquor is being served in the banquet hall, though, the licence has been issued for running a Bar. 4.
Learned Advocate, appearing on behalf of the
petitioner, has vehemently argued that in violation of the Government Order dated 24.4.2002, the Bar has been
2
permitted to run within a radius of 1.6 kilometres from the municipal limits of Haridwar. 5.
We have gone through the Government Order
dated 24.4.2002, wherein, there is complete prohibition for selling liquor in the religious places within the municipal limits of Haridwar and Rishikesh, 1.6 kilometres from Piran Kaliyar as well as in Badrinath, Kedarnath, Gangotri & Yamnotri Dhams, Purnagiri, Ritha Sahib, Hemkund Sahib and Nanakmatta religious places.
The excise licence has
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been issued for running the Liquor Bar 300 meters away from the boundaries of Municipal Board.
An endeavour
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has been made on the basis of Government Order dated
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24.4.2002 to control the sale of liquor in the State of Uttarakhand.
A suitable number of check posts are
ordered to be set up to check the smuggling of liquor. The The sale of liquor at Char Dhams has been
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reduced.
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liquor vends in the countryside have been ordered to be banned. A decision has been taken not to open the liquor
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shops in the areas falling within Char Dhams. 6.
Endeavour has also been made by issuing the
directions that no liquor vends shall be opened en-route the religious places. The vends shall also not be set up at the places near the educational institutions and hospitals. However, the distance has not been mentioned. 6A.
Article 47 of the Constitution of India lays down
that it is the duty of the State to raise the level of nutrition and
the
standard
of
living
of
its
people
and
the
improvement of public health. Article 47 reads as under:-
47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health-The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health
as
among
its
primary
duties
and,
in
3
particular, the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health. 7.
It is thus, evident from a plain language of
Article 47 of the Constitution that the State has to make endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and
The
consumption
injurious to health.
of
liquor
is
definitely
It has destroyed many families.
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8.
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of drugs which are injurious to health.
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Recently, the State of Bihar, taking into consideration the evil consequences of consumption of liquor, has imposed the complete prohibition on liquor vide Bihar Prohibition
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& Excise Act, 2016 published in Extraordinary Gazette
9.
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on 2nd October, 2016.
In Constitutional Debates, Hon’ble B.G. Gher,
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while introducing the Article 38, has debated that for every single rupee that the State gets by way of revenue from excise, society loses three times that money by the increase of crime. The general impression about bringing prohibition is that it may result in law and order situation.
The
prohibition
can
be
imposed
by
strengthening the law and order machinery. 10.
Their Lordships of Hon. Apex Court in A.I.R.
1954 S.C. Page 220 in the case of ‘Cooverjee B. Bharucha v. Excise Commissioner, Ajmer’, have held that the Legislature of the State is fully competent to regulate the business of vending intoxicating liquor, to mitigate its evils or to suppress it entirely. There is no inherent right in a citizen to sell intoxicating liquors by retail. It is not a privilege of a citizen. As it is a business attended with danger to the community, it may be entirely prohibited,
4
or be permitted under such conditions as will limit to utmost its evils.
Their Lordships, in paragraph no.7,
have held as under: “7. Article 19(1)(g) of the Constitution guarantees that all citizens have the right to practice any profession or to carry on any occupation or trade or business and clause (6) of the article authorises legislation which imposes reasonable restrictions on this right in the
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interests of the general public. It was not disputed that in order to determine the reasonableness of the
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restriction regard must be had to the nature of the
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business and the conditions prevailing in that trade. It is obvious that these factors must differ from trade to trade and no hard and fast rules concerning all
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trades can be laid down. It can also not be denied
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that the State has the power to prohibit trades which are illegal or immoral injurious to the health and
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welfare of the public. Laws prohibiting trades in noxious or dangerous
goods or trafficking in women cannot be held to be illegal as enacting a prohibition and not a mere regulation. The nature of the business is, therefore, an important element in deciding the reasonableness of the restrictions. The right of every citizen to pursue any lawful trade or business is obviously subject to such reasonable conditions as may be deemed by the governing authority of the country essential to the safety, health, peace, order and morals of the community. Some occupations by the noise made in their pursuit, some by the odours they engender, and some by the dangers accompanying them, require regulations as to the locality in which they may be conducted. Some, by the dangerous character of the
5
articles used, manufactured or sold, require also special qualifications in the parties permitted to use, manufacture or sell them. These propositions were not disputed, but it was urged that there was something wrong in principal and objectionable in similar restrictions being applied to the business of selling by retail, in small quantities, spirituous and intoxicating liquors. It was urged that
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their sale should be without restriction, that every person has a right which inherits in him, i.e., a
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natural right to carry on trade in intoxicating liquors
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and that the State had no right to create a monopoly in them. This contention stands answered by what 620, 623.) :
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Field J. said in Crowley v. Christensen 34 Law. Ed.
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"There is in this position an assumption of a fact which does not exist, that when the liquors are
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taken in excess the injuries are confined to the party offending. The injury, it is true, first falls upon him in his health, which the habit undermines; in his morals, which it weakens; and in the self-abasement which it creates. But as it leads to neglect of business and waste of property and general demoralisation, it affects those who are immediately connected with and dependent
upon
him.
By
the
general
concurrence of opinion of every civilized and Christian community, there are few sources of crime and misery to society equal to the dram shop,
where
intoxicating
liquors,
in
small
quantities, to be drunk at the time, are sold indiscriminately to all parties applying.
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The statistics of every State show a greater amount of crime and misery attributable to the use of ardent spirits obtained at these retail liquor saloons than to any other source. The sale of such liquors in this way has therefore, been, at all times, by the courts of every State, considered as the proper subject of legislative regulation. Not only may a licence be exacted from the keeper of the
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saloon before a glass of his liquors can be this disposed of, but restrictions may be imposed as to
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the class of persons to whom they may be sold, and
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the hours of the day, and the days of the week, on which the saloons may be opened. Their sale in that form may be absolutely prohibited. It is a
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question of public expediency and public morality,
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and not of federal law. The
police
power
of
the
State
is
fully
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competent to regulate the business - to mitigate its evils or to suppress it entirely. 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 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. That authority may vest in such officers as it may deem proper the power of passing upon applications for permission to carry it on, and to issue licences for that purpose. It is a matter of legislative will only."
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These
observations
have
our
entire
concurrence and they completely negative the contention raised on behalf of the petitioner. The provisions of the regulation purport to regulate trade in liquor in all its different spheres and are valid.” 11.
Their Lordships of Hon. Supreme Court in
(1975) 1 S.C. Page 29 in the case of ‘Nashirwar & others
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v. State of M.P. & others’, have held that trade in liquor has stood on a different footing from other trades. The
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fact that the State can prohibit business in liquor
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establishes that the State has exclusive right or privilege of manufacture, possession and sale of intoxicating
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liquor and therefore it grants such right or privilege in the shape of licence or lease.
Their Lordships, in
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paragraphs nos.23, 35 and 36, have held as under: -
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“23. There are three principal reasons to hold that
there is no fundamental right of citizens to carry on trade or to do business in liquor. First, there is the
police power of the State to enforce public morality to prohibit
trades
in
noxious
or
dangerous
goods.
Second, there is power of the State to enforce an absolute
prohibition
of
manufacture
or
sale
of
intoxicating liquor. Article 47 states that the State shall endeavour to bring about prohibition of the consumption
except
for
medicinal
purposes
of
intoxicating drinks and of drugs which are injurious to health. Third, the history of excise law shows that the State
has
the
exclusive
manufacture or sale of liquor.
right
or
privilege
of
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35. Trade in liquor has historically stood on a different footing from other trades. Restrictions which are not permissible with other trades are lawful and reasonable so far as the trade in liquor is concerned. That is why even prohibition of the trade in liquor is not only permissible but is also reasonable. The reasons are public morality, public interest and harmful and dangerous character of the liquor. The
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State possesses the right of complete control over all aspects of intoxicants viz. manufacture, collection, sale
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and consumption. The State has exclusive right to
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manufacture and sell liquor and to sell the said right in order to raise revenue. That is the view of this Court in Bharucha case and Jaiswal case. The nature of the
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trade is such that the State confers the right to vend
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liquor by farming out either in auction or on private treaty. Rental is the consideration for the privilege
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granted by the Government for manufacturing or vending liquor. Rental is neither a tax nor an excise duty. Rental is the consideration for the agreement for grant of privilege by the Government. 36. This Court in A.B. Abdulkadir v. State of Kerala said that in British India there used to be public auction of the right to possess and sell excisable goods like country liquor, ganja and bhang and the amount realised was excise revenue. The auction system which was in force was said by this Court in Abdulkadir case to be only a method of realising duty from the grant of licences to those who made the highest bid at the auctions.” 12.
Their Lordships of Hon. Supreme Court in
(1975) Supreme Court Page 1121 in the case of ‘Har Shankar
&
others
v.
The
Dy.
Excise
&
Taxation
9
Commissioner & others’, have held that there is no fundamental right to do trade or business in intoxicants. The State, under its regulatory powers, has the right to prohibit absolutely every form of activity in relation to intoxicants- its manufacture, storage, export, import, sale and possession.
Their Lordships, in paragraphs
nos.53, 54 and 55, have held as under: “53. In our opinion, the true position governing
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dealings in intoxicants is as stated and reflected in
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the Constitution Bench decisions of this Court in Balsara case, Cooverjee case, Kidwai case, Nagendra case,
R.M.D.C.
Amar
case,
Chakraborty
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Nath
as
interpreted
case in
and
the
Harinarayan
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Jaiswal case and Nashirwar case. There is no
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fundamental right to do trade or business in intoxicants. The State, under its regulatory powers, has the right to prohibit absolutely every form of
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activity in relation to intoxicants — its manufacture, storage, export, import, sale and possession. In all their manifestations, these rights are vested in the State and indeed without such vesting there can be no effective regulation of various forms of activities in
relation
to
intoxicants.
In
American
Jurisprudence, Vol. 30 it is stated that while engaging in liquor traffic is not inherently unlawful, nevertheless it is a privilege and not a right, subject to governmental control (p. 538). This power of control is an incident of the society’s right to selfprotection and it rests upon the right of the State to care for the health, morals and welfare of the people. Liquor traffic is a source of pauperism and crime (pp. 539, 540, 541).
10
54. It was unnecessary in Krishna Kumar Narula case to examine the question from this broader point of view, as the only contention bearing on the constitutional validity of the provision impugned therein was not permitted to be raised as it was not argued in the High Court. The discussion of the question whether a citizen has a fundamental right to do trade or business in liquor proceeded in that
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case, avowedly, from a desire to clear the confusion arising from the “different views” expressed by the
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two Judges of the High Court. This may explain why
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the Court restricted its final conclusion to holding that dealing in liquor is business and the citizen has a right to do business in that commodity. The
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Court did not say, though such an implication may
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arise from its conclusion, that the citizen has a fundamental right to do trade or business in liquor.
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If we may repeat, Subba Rao, C.J. said: “We, therefore, hold that dealing in liquor is
business and a citizen has a right to do business in that commodity; but the State can make a law imposing reasonable restrictions on the said right, in public interests.” It is significant that the judgment in Krishna Kumar Narula case does not negate the right of the State to prohibit absolutely all forms of activities in relation to intoxicants. The wider right to prohibit absolutely would include the narrower intoxicants
right on
to such
permit terms
dealings of
in
general
application as the State deems expedient.
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55. Since rights in regard to intoxicants belong to the State, it is open to the Government to part with those rights for a consideration. By Article 298 of the Constitution, the executive power of the State extends to the carrying on of any trade or business and to the making of contracts for any purpose. As observed in Harinarayan Jaiswal case, (SCC p. 44, para 13)
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“if the Government is the exclusive owner of those privileges, reliance on Article 19(1)(g) or
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Article 14 becomes irrelevant. Citizens cannot
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have any fundamental right to trade or carry on business in the properties or rights belonging to the
Government,
nor
can
there
be
any
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infringement of Article 14, if the Government tries
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to get the best available price for its valuable rights.”
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Section 27 of the Act recognises the right of the Government to grant a lease of its right to manufacture, supply or sell intoxicants. Section 34 of the Act read with Section 59(d) empowers the Financial Commissioner to direct that a licence, permit or pass be granted under the Act on payment of such fees and subject to such restrictions and on such conditions as he may prescribe. In such a scheme, it is not of the essence whether the amount charged to the licensees is pre-determined as in the appeals of Northern India Caterers and of Green Hotel or whether it is left to be determined by bids offered in auctions held for granting those rights to licensees. The power of the Government to charge
12
a price for parting with its rights and not the mode of fixing that price is what constitutes the essence of the matter. Nor indeed does the label affixed to the price determine either the true nature of the charge levied by the Government or its right to levy the same.” Their Lordships in (1995) 1 SCC Page 574 in
13.
the case of “Khoday Distilleries Ltd. & others v. State of
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Karnataka & others”, have held that Potable liquor as a beverage is an intoxicating and depressant drink which is
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dangerous and injurious to health and is, therefore, an
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article which is res extra commercium being inherently harmful. A citizen has, therefore, no fundamental right to
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do trade or business in liquor. Hence the trade or business in liquor can be completely prohibited.Their
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Lordships further held that Article 47 of the Constitution considers intoxicating drinks and drugs as injurious to
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health which impedes 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
obviously
include
liquor,
except
for
medicinal purposes. Article 47 is one of the Directive Principles which is fundamental in the governance 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 is used and consumed for medicinal purposes.”
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Their Lordships have rejected the contention that a citizen has a fundamental right to carry on trade or business potable liquor till prohibition is introduced. Their Lordships have also rejected the plea that there are more harmful substances like tobacco, the consumption of which is not prohibited and hence there is no justification for prohibiting the business in potable alcohol.
In paragraph nos.52, 55, 56 and 58, Their
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Lordships have held as under: “52. In Synthetics and Chemicals Ltd. v. State of
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U.P. which is a decision of Constitution Bench of
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seven learned Judges, the question was with regard to the validity of levy on industrial alcohol. The Court held that it must accept the decision that the States
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have the power to regulate the use of alcohol and that
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power must include power to make provisions to prevent and/or check industrial alcohol being used as
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intoxicating
or
drinkable
alcohol.
The
question,
according to the Court, was whether in the garb of regulations, the legislation which is in pith and substance fee or levy which has no connection with the cost or expenses administering the regulations can be imposed purely as a regulatory measure. Judged by the pith and substance of the impugned legislation, the Court held that the levies in question could not be treated as part of regulatory measures. The Court further held that the State had power to regulate though not as emanation of police power but as an expression of the sovereign power of the State. But that power has its limitations. The Court then observed that only in two cases the question of industrial alcohol had come up for consideration
14
before this Court. One in Synthetics and Chemicals Ltd. case and the other in Indian Mica and Micanite Industries. The latter cases starting with F.N. Balsara case are of potable liquor. The Court then referred to K.K. Narula case and observed as follows: (SCC pp. 155-56, para 76) “… there was no right to do business even in potable liquor. It is not necessary to say
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whether it is a good law or not. But this must be held that the reasoning therein would
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apply with greater force to industrial alcohol.”
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The Court then observed in paragraphs 77, and 80 to 85 as under: (SCC pp. 156-158) “77. Article 47 of the Constitution imposes
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upon the State the duty to endeavour to bring
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about prohibition of the consumption except for medicinal purpose of intoxicating drinks and
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products which are injurious to health. If the meaning of the expression ‘intoxicating liquor’ is taken in the wide sense adopted in Balsara case, it would lead to an anomalous result. Does Article 47 oblige the State to prohibit even such industries as are licensed under the IDR Act but which manufacture industrial alcohol? This
was
never
intended
by
the
above
judgments or the Constitution. It appears to us that
the
decision
in
the
Synthetics
and
Chemicals Ltd. case was not correct on this aspect. * *
*
80. It was submitted that the activity in potable liquor which was regarded safe and
15
exclusive right of the State in the earlier judgments dealing with the potable liquor were sought to be justifiable under the police power of the State, that is, the power to preserve public health, morals, etc. This reasoning can never apply to industrial alcohol manufactured by industries which are to be developed in the public interest and which are being encouraged
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by the State. In a situation of this nature, it is essential to strike a balance and in striking the
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balance, it is difficult to find any justification
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for any theory of any exclusive right of a State to deal with industrial alcohol. Restriction valid under one circumstance may become invalid in
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changing circumstances. …
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81. It is not necessary for us here to say
anything on the imposts on potable alcohol as
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commonly understood. These are justified by the lists of our legislature practised in this country — see the observations of Hidayatullah, J.,
as
the
Chief
Justice
then
was,
in
Guruswamy v. State of Mysore (at pp. 573-574) and other decisions mentioned hereinbefore. 82. In that view of the matter, it appears to us that the relevant provisions of the U.P. Act, A.P. Act, Tamil Nadu Act, Bombay Prohibition Act,
as
mentioned
hereinbefore,
are
unconstitutional insofar as these purport to levy a tax or charge imposts upon industrial alcohol, namely alcohol used and usable for industrial purposes.
16
83.
Having
regard
to
the
principles
of
interpretation and the constitutional provisions, in the light of the language used and having considered the impost and the composition of industrial alcohol, and the legislative practice of this country, we are of the opinion that the impost in question cannot be justified as State imposts as these have been done. We have
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examined the different provisions. These are not merely regulatory. These are much more than
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that. These seek to levy imposition in their pith
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and substance not as incidental or as merely disincentives but as attempts to raise revenue for
States’
purposes.
There
is
no
taxing
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provision permitting these in the lists in the
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field of industrial alcohol for the State to legislate.
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84. Furthermore, in view of the occupation of
the field by the IDR Act, it was not possible to levy this impost. 85. 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 potable and non-potable alcohol is vested in the Central Government. Distilleries are manufacturing alcohol under the central licences under IDR Act. No privilege for manufacture even if one existed, has been transferred to the distilleries by the State. The State
cannot
itself
manufacture
industrial
alcohol without the permission of the Central
17
Government. The States cannot claim to pass a right which they do not possess. Nor can the State 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
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possession of privilege.
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55. The contention that if a citizen has no
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fundamental right to carry on trade or business in potable liquor, the State is also injuncted from carrying on such trade, particularly in view of the of
Article
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provisions
47,
though
apparently
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attractive, is fallacious. The State’s power to regulate and to restrict the business in potable
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liquor impliedly includes the power to carry on such trade to the exclusion of others. Prohibition is not the only way to restrict and regulate the consumption of intoxicating liquor. The abuse of drinking intoxicants can be prevented also by limiting and controlling its production, supply and consumption. The State can do so also by creating in itself the monopoly of the production and supply of the liquor. When the State does so, it does not carry on business in illegal products. It carries on business in products which are not declared illegal by completely prohibiting their production but in products the manufacture, possession and supply of which is regulated in the interests of the health, morals and welfare of the people. It does so also in
18
the interests of the general public under Article 19(6) of the Constitution. 56. The contention further that till prohibition is introduced, a citizen has a fundamental right to carry on trade or business in potable liquor has also no merit. All that the citizen can claim in such a situation is an equal right to carry on trade or business in potable liquor as against the other
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citizens. He cannot claim equal right to carry on the business against the State when the State
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reserves to itself the exclusive right to carry on
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such trade or business. When the State neither prohibits nor monopolises the said business, the citizens cannot be discriminated against while
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granting licences to carry on such business. But
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the said equal right cannot be elevated to the status of a fundamental right.
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58. We also do not see any merit in the argument
that there are more harmful substances like tobacco,
the
consumption
of
which
is
not
prohibited and hence there is no justification for prohibiting the business in potable alcohol. What articles and goods should be allowed to be produced, possessed, sold and consumed is to be left to the judgment of the legislative and the executive wisdom. Things which are not considered harmful today, may be considered so tomorrow in the light of the fresh medical evidence. It requires research and education to convince the society of the harmful effects of the products before a consensus is reached to ban its consumption. Alcohol has since long been known all over the world to have had harmful effects on the health of
19
the individual and the welfare of the society. Even long before the Constitution was framed, it was one of the major items on the agenda of the society to ban or at least to regulate, its consumption. That is why it found place in Article 47 of the Constitution. It is only in recent years that medical research has brought to the fore the fatal link between smoking and consumption of tobacco and cancer, cardiac
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diseases and deterioration and tuberculosis. There is a sizeable movement all over the world including
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in this country to educate people about the
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dangerous effect of tobacco on individual’s health. The society may, in course of time, think of prohibiting its production and consumption as in
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the case of alcohol. There may be more such
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dangerous products, the harmful effects of which are today unknown. But merely because their
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production and consumption is not today banned, does not mean that products like alcohol which are proved harmful, should not be banned.”
14.
Their Lordships of Hon. Apex Court in (1996) 3
SCC Page 709 in the case of ‘State of A.P. & others v. MCDOWELL & Co. & others’, have again reiterated that trade or business in intoxicating liquors is not a fundamental
right
under
Article
19(1)(g)
of
the
Constitution of India. Their Lordships have held that even if such a right was to be conceded, the trade and business
in
intoxicating
liquors
can
severely curtailed or even prohibited.
be
restricted,
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
20
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 restriction within the meaning of Clause (6) of Article 19.
In Crowley v. Christensen 34
L.Ed. 620, Justice Field has held 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
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a citizen of the United States. As it is a business attended with danger to the community, it may, as already said, be prohibited,
or
be
permitted
under
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entirely
such
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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 generally
obtaining
under
Article 19(1)(g) and Clause (6) of the Article.
Their
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referred
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proposition, Mahajan, C.J., speaking for the Court, to
the
position
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Lordships, in paragraph no.39 of the above-judgment, have held as under: 39. The contention that a citizen of this country has a fundamental right to trade in intoxicating liquors refuses to die in spite of the recent Constitution
Bench
decision
in
Khoday
Distilleries. It is raised before us again. In Khoday Distilleries, this Court reviewed the entire case-law on the subject and concluded that a citizen has no fundamental right to trade or business in intoxicating liquors and that trade or business 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 commercium
21
(outside
commerce).
Article
47
of
the
Constitution, it pointed out, requires the State to endeavour to bring about prohibition of the consumption 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 manufacture,
possession,
sale
and
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the
distribution of liquor as a beverage. The holding sought
to
be
built
upon
certain
words
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is
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is emphatic and unambiguous. Yet an argument occurring in clauses (e) and (f) of the summary contained in para 60 of the decision. In these
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clauses, it was observed that creation of a
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monopoly in the State to deal in intoxicating liquors and the power to impose restrictions,
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limitations and even prohibition thereon can be imposed both under clause (6) of Article 19 or even otherwise. Seizing upon these observations, Shri Ganguly argued that this decision implicitly recognises
that
business
in
liquor
is
a
fundamental right 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 19(6) or even otherwise”. Similarly,
in
clause
(f),
while
speaking
of
imposition of restrictions and limitations on this business, it held that they can be imposed “both under Article 19(6) or otherwise”. The said words
22
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 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
.IN
upon Article 19(1)(g) is out of place.”
15.
Their Lordships of Hon. Supreme Court in
W
(2004) 11 SCC Page 26 in the case of ‘State of Punjab &
EL A
another v. Devans Modern Breweries Ltd. & another’, have again reiterated that trade in liquor is not a fundamental right. It is a privilege of the State, which it parts with for
IV
revenue consideration.
Moreover, trade in liquor is
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considered inherently noxious, pernicious and is res extra commercium.
Their Lordships have held that the
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liquor is a noxious substance injurious to public health, public order and morality, and therefore, trade therein is res extra commercium. In paragraph nos.103, 113, 116,
220 and 221, Their Lordships have held as under: “103.
It is well settled by a catena of decisions that
trade in liquor is not a fundamental right. It is a privilege of the State. The State parts with this privilege for revenue consideration. In Punjab, the excise policy of the State is formulated every year. It is also made known to the licensees much before their licences for the year come to an end. It is also a matter of fact that the licensees have paid the fee on demand. The fee was first levied in the year 1992. The licensee, in the Punjab case, had been holding the licence all through this period and never
23
challenged or protested against levy of the fee. The licensees having paid the fee without any protest all through are not entitled to challenge the same, which does not suit them. The licensee cannot approbate and reprobate. In Punjab, the grant of licences is governed by the Punjab Excise Act, 1914 (for short “the Act”) and various rules and orders framed under it. In the Punjab case, the challenge of
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the respondent was limited to the imposition of import fee in addition to the countervailing duty on
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beer. It is not disputed by the respondent that the
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State is competent and is entitled to impose excise duty or countervailing duty, besides there is no bar on the State to charge any other fee on account of of
the
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consideration
privilege
provided
to
the
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licensees to provide them the right to trade in liquor. A perusal of the impugned notification shows that State
Government
substituted
the
existing
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the
provision with regard to import fee and increased the rate of this fee. It is part of the privilege price i.e. consideration amount on account of which the licence was granted to the licensee. Further, the licensees had an option to opt out of the business field if such levies were detrimental to their interest or were to their disadvantage. 113.
In my opinion, Articles 301 and 304(a) of the
Constitution are not attracted to the present case as the imposition of import fee does not, in any way, restrict trade, commerce and intercourse among the States. In my opinion, the permissive privilege to deal in liquor is not a “right” at all. The levy charged for parting with that privilege is neither a tax nor a fee. It is simply a levy for the act of granting
24
permission or for the exercise of power to part with the privilege. In this context, we can usefully refer to Har Shankar v. Dy. Excise and Taxation Commr.3 and Panna Lal v. State of Rajasthan. As noticed earlier, dealing in liquor is neither a right nor is the levy a tax or a fee. Articles 301-304 will be rendered inapplicable at the threshold to the activity in question. Further, there is not even
a single
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judgment which upholds the applicability of Articles 301-304 to the liquor trade. On the contrary,
W
numerous judgments expressly hold these articles to
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be inapplicable to trade, commerce and intercourse in liquor. We can beneficially refer to the judgments in State of Bombay v. R.M.D. Chamarbaugwala, Har
IV
Shankar case, Sat Pal and Co. v. Lt. Governor of
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Delhi and Khoday case. The learned counsel for the respondent submitted that Articles 301-304 are
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violated or transgressed. In view of discussions in the paragraphs above, it is clearly demonstrated as to how and why Articles 301-304 are inapplicable to liquor trade in any form. 116.
The argument advanced by learned counsel
for the licensee was countered by learned Senior Counsel appearing for the State of Kerala. The learned counsel submitted that the import of liquor into the State of Kerala is prohibited under Section 6 of the Abkari Act and, therefore, liquor can be imported only after obtaining permission from the Government in the form of permit issued under Section 24 of the Abkari Act. As a matter of fact, it was submitted that the State has not issued any licence to anybody including Kerala State Beverages Corporation to import liquor. Kerala State Beverages
25
Corporation has licence only for wholesale and retail of liquor which will not authorise them to import liquor and that the only licence issued to import liquor into the State is the permit issued on payment of the import fee and, therefore, it is seen that the levy of import fee is authorised by Sections 6 and 24 of the Abkari Act, 1077. It is not excise duty or countervailing duty referable to Entry 51 of List II. It
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is a collection falling under Entry 8 of List II. It is the price paid to the State for parting with its exclusive
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privilege of dealing in liquor which includes every
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fact of it including its import. In my view, the State has the right to prohibit every form of activity in relation to intoxicants including its import. Though it
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is alleged by the appellant that the State has
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discriminated against it, the same has not been substantiated or established by any material. The
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State, in this case, has granted such permit to Beverages Corporation on their paying the fee fixed for the purpose as per notification enabling the Corporation to import liquor from the petitioner licensees and others. The import fee so paid is passed on to the consumers. Even in the Punjab case, we have already noticed, that the right to import liquor is dependent on the issue of the import permit on payment of the import fee as consideration for parting with the State’s exclusive privilege to import the liquor. It is purely a contractual dealing between the State and the importer and, therefore, no question of violation of Article 301 can arise. The importer had no anterior right to import liquor and hence cannot complain of any violation of Article 301 at that stage as right to trade in liquor is not a
26
fundamental right. His right to import is referable to the import permit which he acquired on payment of the import fee. No further impediment has been created in the import of the liquor, so that Article 301 is not attracted in relation to the payment of the import fee which was prior to getting his privilege of importing. The appellant licensee having entered into a contractual relationship with the State obtained
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the privilege and enjoyed the benefit of it. It is not open to the petitioners to turn round subsequently
W
and repudiate the obligations subject to which they
EL A
obtained the privilege. Regulation in the interest of public health and order takes the case out of Article 301, and regulation for the purpose of Article 301 is
IV
not confined to such regulations alone which will 220.
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facilitate the trade.
In Union of India v. International Trading Co.
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this Court held: (SCC p. 447, para 23) “23. Reasonableness of restriction is to be
determined in an objective manner and from the standpoint of interests of the general public and not from the standpoint of the interests of persons
upon whom the restrictions have been imposed or upon abstract consideration.” 221. For those, however, who fall in exceptional categories in relation to carrying on a business, total prohibition would not be regarded as unreasonable restriction. It is also trite that in such a situation, the greater the restriction, the more would be the need of strict scrutiny by the courts. (See Narendra Kumar v. Union of India.)”
27
16.
Their Lordships of Hon. Apex Court in (2006) 5
SCC Page 112 in the case of “State of Maharashtra & others v. Nagpur Distilleries, Nagpur & others, have held that more and more of the younger generation in the country is getting addicted to liquor.
Their Lordships
have taken judicial notice of this fact. It was held that it has not only become a fashion to consume it but it has also become an obsession with very many. Surely, we do
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not need an indolent nation. Why the State in the face of Article 47 of the Constitution of India should encourage,
W
that too practically unrestrictedly, the trade in liquor is
EL A
something that it is difficult to appreciate. The only excuse for the State for not following the mandate of Article 47 of the Constitution is that huge revenue is
IV
generated by this trade and such revenue is being used
W .L
for meeting the financial needs of the State. What is more relevant here is to notice that the monopoly in the trade
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is with the State. Their Lordships have held in paragraph no.9 as under: “9. Prima facie, we find some merit in the
argument that the decision in Vam Organic Chemicals Ltd. may be distinguishable from cases where the licensee himself does not manufacture the rectified spirit. Here, rectified spirit is not manufactured by the first respondent and such spirit is not being used captively in its own premises for manufacture of IMFL. Respondent 1 is purchasing rectified spirit or extra neutral alcohol from other manufacturers and getting it transported to its own premises for manufacturing and bottling IMFL. This factual distinction apart, we have to keep in mind that the right to trade in liquor is only a privilege farmed out by the State.
28
Article 47 of the Constitution of India clearly casts a duty on the State at least to reduce the consumption of liquor in the State gradually leading to prohibition itself. It appears to be right to point out that the time has come for the States and the Union Government to seriously think of taking steps to achieve the goal set by Article 47 of the Constitution of India. It is a notorious fact, of
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which we can take judicial notice, that more and more of the younger generation in this country is
W
getting addicted to liquor. It has not only become
EL A
a fashion to consume it but it has also become an obsession with very many. Surely, we do not need an indolent nation. Why the State in the face of
IV
Article 47 of the Constitution of India should
W .L
encourage, that too practically unrestrictedly, the trade in liquor is something that it is difficult to
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appreciate. The only excuse for the State for not following
the
mandate
of
Article
47
of
the
Constitution is that huge revenue is generated by this trade and such revenue is being used for meeting the financial needs of the State. What is more relevant here is to notice that the monopoly in the trade is with the State and it is only a privilege that a licensee has in the matter of manufacturing and vending liquor.”
17.
Their Lordships of Hon. Apex Court in (2013) 6
SCC Page 573 in the case of State of Kerala & others v. Kandath Distilleries, have held that the State has the exclusive right or privilege in potable liquor.
A citizen
has no fundamental right to trade or business in liquor as a beverage. The State can completely prohibit trade or
29
business in potable liquor, create a monopoly in itself for trade or business in liquor and can also impose restrictions and limitations on trade or business in liquor as a beverage. Their Lordships, in paragraph no.24, have held as under: “24. Article 47 is one of the directive principles of State
policy
which
is
fundamental
in
the
governance of the country and the State has the
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power to completely prohibit the manufacture,
W
sale, possession, distribution and consumption of liquor as a beverage because it is inherently
EL A
dangerous to human health. Consequently, it is the privilege of the State and it is for the State to
IV
decide whether it should part with that privilege,
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which depends upon the liquor policy of the State. The State has, therefore, the exclusive right or privilege in respect of potable liquor. A
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citizen has, therefore, no fundamental right to trade or business in liquor as a beverage and the activities, which are res extra commercium, cannot be carried on by any citizen and the State can prohibit completely trade or business in potable liquor and the State can also create a monopoly in itself for the trade or business in such liquor. This legal position is well settled. The State can also impose restrictions and limitations on the trade or business in liquor as a beverage,
which
restrictions
are
in
nature
different from those imposed on trade or business in legitimate activities and goods and articles which are res commercium.”
30
18.
The Division Bench of Hon. Kerala High Court
in A.I.R. (1996) Kerala 379 in the case of ‘Sunny Markose v. State of Kerala & others’, in paragraph no.2, has held as under:“2. Article 47 of the Constitution of India) enjoins on the State of bring about prohibition of the consumption except for medicinal purposes of intoxicating
drinks
and
of
drugs
which
are
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injurious to health. The Article enjoins upon and in turn enables the State to take measures to raise
W
the level of nutrition and the standard of living and required
to
EL A
to improve public health. To meet this end, State is bring
about
prohibition
of
the
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consumption of intoxicating drinks and drugs
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which is injurious to health. Prohibition may be complete or partial and it also includes regulation. It cannot be disputed that arrack is one such
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thing.
Hidayatulla,
J.
(as
he
then
was)
in
Sheoshankar v. M. P. State Govt. held that "a vast proportion of the population of this country does believe that drinking is an evil & that a policy of prohibition should be adopted. Whether they are right or wrong is immaterial. To prove that such views are held, it is enough to cite the solemn declaration of the people in Article 47 of the Constitution itself”.
19.
The Full Bench of Andhra Pradesh High Court
in (1997) Andhra Pradesh 312, in the case of ‘A.P. Sampoorna Madya Nisheda Samithi & others etc. v. State of Andhra Pradesh & others’ have held as under: -
31
“While enforcement of total prohibition is the State policy and the State thus has to pursue it, it is equally necessary to see that violators of prohibition do not grow beyond proportion and peace
and
disturbed
harmony by
in
inflow
the
of
society
liquor
is
not
from
the
neighbouring States by illegal means. Violatory activities like illicit distillation and smuggling of
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liquor from the neighbouring States, true, have to be checked. The State cannot say that because it
W
is not able to contain illicit distillation and it
is
entitled
prohibition.
Failure
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smuggling,
of
to
State
withdraw
the
mechanism
in
effectively dealing with the prohibition related
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offences in itself cannot be a ground to abandon
20.
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the prohibition policy.” The State Government has imposed a ban
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on sale of liquor at Char Dhams but in order to give more sanctity to the government order and with a view to save the health of people living in the districts where these Char Dhams are located, the State Government should impose complete prohibition. The prohibition in these areas would bring peace and harmony. It is the poor segment of the society which spends more money on liquor than on food leaving their family and children in misery.
The loss of revenue would be
compensated by restoring the health of the society. The societal interest in every individual is prolonged by ensuring his healthy life.
The use of intoxicants,
drugs and liquor, in fact, affects the morality. Use of alcohol causes depression.
It damages the liver.
may
well.
cause
Cancer
as
The
It
long-term
32
consumption of liquor/alcohol results in death of brain cells.
It may result in cirrhosis including
Pancreatics.
It also affects the social fabric of the
society.
Large number of devotees from all over the
country visit Chardham in the State of Uttarakhand. 21.
It is true that the trade in liquor generates
revenue, however, the fact of the matter is that the health of the nation is equally important. Generation
.IN
of funds can be done by other means but not at the cost of health of nation. The earning of revenue, by
W
trade in liquor, is counterproductive, since it affects
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the health of the society, at large. It is necessary to mitigate and suppress this evil by imposing complete
IV
prohibition in the selected areas to maintain peace and harmony in the society and also to wean away the
Taxation for whom? The State collects the
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22.
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younger generation from drinking.
revenue for the welfare of the people.
The mode of
collection of revenue must also conform to the directive principles. 23.
The
consumption
of
liquor
increases
criminality and brings misery to the society.
The
consumption of liquor is inherently dangerous as well as injurious.
The State has the responsibility to
preserve public health and morals. The State should teach the citizens about the ill-effects of consumption of alcohol. The trade in liquor is noxious, pernicious and is res extra commercium. Consumption of alcohol is injurious to public health, public order and morality. The sale and consumption of tobacco should be discouraged.
33
23.
The State Government, though, has taken
laudable steps for prohibiting the sale of liquor in specified areas but taking into consideration the ever increase consumption of alcohol, more particularly in younger
generation,
the
complete
prohibition
on
possession, distribution, collection, sale, purchase or consumption of liquor/alcohol, including beer and intoxicants, is required, at least, in the districts where
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Chardhams are situate, to begin with. Similarly, the possession, distribution, collection, sale, purchase or
W
consumption of tobacco is also required to be totally
EL A
prohibited within a radius of five kilometres from Nanakmatta, Ritha Sahib and Hemkund Gurudwaras. There is no illegality in issuance of licence to
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24.
respondent no.5 to run the Liquor Bar since the same is
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at a distance of 300 meters away from the boundaries of
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the concerned Municipal Board. 25
Accordingly, the present petition is disposed of
by issuing the following mandatory directions to the State Government: A.
The State Government is directed to impose
complete/total
prohibition
on
the
possession,
distribution, collection, sale, purchase or consumption of alcohol/liquor
including
beer
and
intoxicants
in
Rudraprayag, Chamoli and Uttarkashi districts, from the next financial year i.e. 2017-2018, in order to raise the level of nutrition and the standard of living in the society. B.
The State Government is also directed to
ensure that: -
34
(a) No person consumes liquor or intoxicants in any public place; (b) No person is found drunk or in a state of drunkenness at any public place (c)
No person drinks or creates nuisance or violence at
any place including in his own house or premises. (d) No person shall permit or facilitate drunkenness or
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allow assembly of drunken elements in his own house or
The State Government is further directed to impose
EL A
C.
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premises.
complete prohibition on the possession, distribution, collection, sale, purchase or consumption of tobacco
IV
within a radius of five kilometres from Gurudwara
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Nanakmatta, Gurudwara Ritha Sahib and Gurudwara Hemkund Sahib to maintain religious sanctity of these
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places. Notification to this effect be issued within one week by the State Government. D.
The State Government is directed to ensure that no
liquor vend is open from the next financial year within a radius
of
one
kilometre
from
all
the
educational
institutions, hospitals and religious places in the State of Uttarakhand. E.
The State Government is also directed to gradually
reduce the number of Liquor Vends in the countryside. “Salus populi suprema lex esto- The health of the people should be supreme law.” (Alok Singh, J.)
(Rajiv Sharma, J.) 08.11.2016
Rdang
