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PETITIONER: STATE OF ANDHRA PRADESH AND ORS.ETC

       Vs.

RESPONDENT: MCDOWELL & CO.AND ORS.ETC.

DATE OF JUDGMENT:       21/03/1996

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) AHMADI A.M. (CJ) SEN, S.C. (J)

CITATION:  1996 AIR 1627            1996 SCC  (3) 709  JT 1996 (3)   679        1996 SCALE  (3)146

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T B.P. JEEVAN REDDY.J      Leave granted in special leave petitions.      In response  to wide  spread agitation  by the women of Andhra Pradesh,  the  Government  prohibited  the  sale  and consumption of  intoxicating liquors  by an Ordinance issued on December  27,1994. In  February, 1995, the Legislature of Andhra Pradesh  enacted the Andhra Pradesh Prohibition Acts, 1995 [hereinafter  referred to  as "the  Act"] replacing the Ordinance. lt  was reserved  for and  received the assent of the President  of India.  The long title and the preamble to the Act reads:      "An Act to introduce Prohibition of      the   Sale   and   Consumption   of      intoxicating liquors  in the  State      of Andhra  Pradesh and  for matters      connected therewith  or  incidental      thereto.      WHEREAS   article    47   of    the      Constitution of  India enjoins that      the State  shall endeavour to bring      about    prohibition     of     the      consumption, except  for  medicinal      purposes  of   intoxicating  drinks      which are injurious to health;      AND WHEREAS there is urgent need in      public interest  to bring about the      prohibition   of   the   sale   and      consumption of intoxicating liquors      except for  medicinal,  scientific,      industrial and  such like purposes,      in the State of Andhra Pradesh.      BE it  enacted by  the  Legislative      Assembly of  the  State  of  Andhra

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    Pradesh in  the Forty-sixth Year of      the Republic of India as follows:-"      Clause (7) of Section 2 defines the expression "liquor" to  include   "(a)  spirits   of  wine,  denatured  spirits, methylated spirits, rectified spirits, wines, beer and every liquid consisting  of or  containing alcohol;  and  (b)  any other intoxicating  substance which  the Government  may, by notification declare  to be  liquor for the purposes of this Act, but  does not  include today".  Section 7  is the  main provision prohibiting  selling, buying  and  consumption  of liquor. It reads:      "Prohibition of selling, buying and      consumption of liquor.      7. The  selling. buying,  being  in      possession   and   consumption   of      liquor,    otherwise     than    in      accordance with  the provisions  of      this Act,  or as  the case  may be,      the  Andhra   Pradesh  Excise  Act,      1968, is hereby prohibited . " Section 8 prescribes the punishment for contravention of the provisions of  Section 7.  Sections 9  and  10  provide  for punishment of persons found in state of intoxication and for abetting the  escape of  persons arrested.  Section 11 makes any contravention  of the  provisions of  the Act  or of any rules notification  or  order  made  thereunder  punishable. Section 12,  13 and  14 deal  with seizure and confiscation, Chapter IV  containing  Sections  15  and  16  provides  for exemptions. Sub-section  (1) of  Section 15  needs to be set out in view of the submissions made before us. It reads:      "15.(1) Subject  to such  rules  as      may be  made in  this  behalf,  the      prescribed authority may issue,-      (i)  permits  to  persons  who  are      foreigners  under   the  Foreigners      Act, 1939  and to  persons who  are      non-resident  Indians   to  consume      liquor;      (ii)   licences   to   hotels   and      restaurants  recognised   as  three      star and  above in  accordance with      such rules  as may  be made  and to      such categories  of institution  as      may be  specified  by  notification      subject to  such criteria as may be      prescribed to  sell foreign  liquor      or Indian  liquor to the holders of      permits granted under this Act;      (iii)   permits to  those  who  are      medically certified by any notified      medical  authority  as  require  to      consume liquor  on account  of  any      diagnosed   health   condition   or      problems, to consume liquor;      (iv) permits  to  persons  who  are      tourists from outside the State and      to persons  who are  not ordinarily      residents of  the State  to consume      liquor;      (v) permits  to members  serving or      retired  belonging   to  the  armed      forces to consume liquor;      (vi)    permits    to    companies,      corporations,         institutions,      industrialists,          exporters,

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    importers    and    similar    such      functionaries as  may be  notified,      who normally  entertain foreigners,      non-resident  Indians   and  guests      coming from  outside the  State  in      pursuance   of    their    business      activity or  the activity connected      with their  institutions to buy and      serve liquors.      (vii) permits  to consume liquor in      cases of medical emergency; and      (viii) permits for sacramental wine      used   in   masses   conducted   in      Churches."      The other sub-sections of Section 15 contain provisions ancillary to  sub-section (1). Section 16 exempts the liquor in possession  of bonafide travellers for their own personal use while passing through any local area in which the Act is in force. It also saves lawful consignment of liquor carried through or  into any  such local  area from the operation of the Act. The remaining provisions in the nature of machinery provision and need not be noticed except Sections 32 and 33. Section 32  excepts certain  operations from  the purview of the Act. It. reads:      "32. Nothing  in this  Act shall be      deemed to preclude,--      (a)  the   Andhra  Pradesh  Pradesh      Beverages  Corporation  Limited  to      carry  on   trade  in   liquor   in      accordance with  rules made in this      behalf;      (b) the  buying selling  of  liquor      carried on by the military canteens      in  the  State  under  any  licence      granted  in   accordance  with  the      provisions of  the  Andhra  Pradesh      Excise Act, 1963 and the rules made      thereunder; and      (c) the  consumption  of  medicines      containing alcohol."      Section 33  confers  the  rule-making  power  upon  the Government while  Section 35 repeals the Ordinance issued in December, 1994.      There are a number of industries in the State of Andhra Pradesh engaged  in the manufacture of intoxicating liquors. They had  taken out  D-2 and  B-2 licences prescribed by the rules made  under the  Andhra Pradesh  Excise Act, 1968. The period of  these licences,  we are told, was one year, i.e., financial year.  The Government of Andhra Pradesh refused to renew the  said licences,  when they came up for renewal, in the light  of the  provisions of  the Act. Several licencees approached the  High Court  of Andhra Pradesh by way of writ petitions challenging  the provisions of the Act and seeking a declaration that the Act does not prohibit the manufacture of  liquor,  though  it  may  well  prohibit  the  sale  and consumption thereof.  The full  Bench, which  heard the writ petitions, agreed  with the  writ petitioners. They declared that Section  7 of  the Act did not prohibit the manufacture of  liquor   though  it  prohibited  consumption,  sale  and possession thereof.  They referred  to the fact that several classes of  persons within  the State  of Andhra Pradesh are exempted from  the operation  of the  Act whose requirements have to  be met.  The prohibition of possession of liquor in Section 7,  the Full  Bench opined, was only for the purpose of consumption, selling and buying within the State and does

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not affect  the manufacture.  Accordingly, a  direction  was issued to  the State  of  Andhra  Pradesh  to  consider  the applications filed by the manufacturers for renewal of their licences without  reference to  the prohibition policy or to the provisions of the Act. The orders rejecting applications for  renewal   were  quashed.  The  Full  Bench  thought  it unnecessary  to   go  into   the  question   of  legislative competence of  the Andhra  Pradesh Legislature  to make  the said Act  in view  of the  interpretation placed  by  it  on Section 7. The judgment was delivered on April 28, 1995.      Against the  judgment of  the Full  Bench of the Andhra Pradesh High  Court, the  State of  Andhra Pradesh preferred Special Leave  Petitions (C)  Nos.13936-13941 of  1995. They were entertained  by this  Court and  notice issued  to  the respondents therein.  It was  directed that  pending further orders status  quo as  on the  date of  the said order [July 21,1995]  shall   be  maintained.   The  writ   petitioners- respondents were,  however, permitted  to manufacture  their products with  the existing  stocks of raw material upto and inclusive of  August 16,  1995. It  was directed  that  they should not  continue their  manufacturing operations  beyond the said  date irrespective of the fact whether their stocks of raw materials were exhausted or not by that date. It was further directed  that the finished products manufactured by them until the said date may be allowed to be cleared by the State in  accordance with  law and subject to the conditions laid down  in the  letter of the Commissioner of Prohibition and Excise  No.9736/95/Ex/J-5 dated May 24, 1995 referred to in the  letter of  the Commissioner  dated June 16, 1995. It was also  clarified that  the said  order shall not preclude the Governor  of Andhra  Pradesh from  issuing an  ordinance seeking to amend the Acts if he is so advised with a view to remove the alleged defects pointed out by the Full Bench.      On July 18, 1995, the Governor of Andhra Pradesh issued Ordinance No.12  of 1995  amending certain provisions of the Act. Sections  2, 3 and 5 of the Ordinance were given effect from January 16, 1995 (the date of commencement of the Act). Section 2 amended the long title of the Act by including the expression "manufacture" within the ambit of the prohibition envisaged by  it. By  Section 3, the preamble to the Act was also similarly  amended. Section 4 amended the definition of "liquor" contained  in clause  (7) of Section 2 of the Act . The amended definition reads as follows:      "(7). ’Liquor’ includes,--      (a) spirits of wine, wine, beer and      every  liquid   consisting  of   or      containing alcohol including Indian      liquor and Foreign liquor;      (b)    any    other    intoxicating      substance which  the Government may      by  notifications,  declare  to  be      liquor for  the  purposes  of  this        Acts  but    does   not   include      toddy,        denatured,   spirits,      methylated             spirits  and      rectified spirits;"        This amendment was evidently effected in the light of the seven-judge Constitution Bench decision of this Court in Synthetics and  Chemicals Limited  v. State of Uttar Pradesh [1970 (1) S.C.C.109]      Section 5 inserted Section 7-A after Section 7. Section 7-A  is a short one. It reads: "7A. Manufacturing of liquor, is   hereby prohibited."   Sections   6   to   9   of    the Ordinance amended  certain other provisions of the Act which need not be noticed for the purpose of these appeals.

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    On October  12,1995 the  Legislature of  Andhra Pradesh enacted the Andhra Pradesh Prohibition (Amendment) Act, 1995 in terms  of Ordinance  No.12 of  1995  with  certain  minor changes  which   are  not  relevant  for  our  purpose.  The manufacturers of intoxicating liquors in Andhra Pradesh have now come  forward with these writ petitions under Article 32 of the  Constitution of India challenging the constitutional validity of  Act 35  of 1995 [hereinafter referred to as the "amending Act"].      Sri Ashok  Desai, learned counsel for the petitioner in Writ Petition (C) No.569 of 1995 submitted that the amending Act insofar as it prohibits the manufacture of liquor within the State  of  Andhra  Pradesh  is  beyond  the  legislative competence  af   the  Andhra  Pradesh  Legislature.  Learned Counsel submitted  that by  virtue of  the enactment  of the Industries (Development  and Regulation)  Act, 1951  [I.D R. Act]  and   the   inclusion   of   fermentation   industries (manufacturing alcohol  and other  products of  fermentation industries)  in   the  schedule   to  the   Act,  the  State Legislature is  denuded of its power to licence and regulate the manufacture  of liquor.  Learned counsel  placed  strong reliance  upon  the  holding  in  Synthetics  and  Chemicals Limited  that   after  the  1956  Amendment  to  I.D.R.  Act including  alcohol  industries  as  Item  26  in  the  First Schedule to  that Act, the control of the alcohol industries is vested  exclusively in  the Union  and  that  thereafter, licences to  manufacture both  potable and   non-potable  is vested in the Central Government [Para 85  of the judgment]. The next  submission of  Sri Desai  was that   the  Act   is violative   of Article  14  insofar  as  it  prohibited  the manufacture of  liquor by  the units  in Andhra Pradesh even for limited  local consumption. Even after the Amending Act, learned counsel   submitted  several classes  of persons are exempted  from   the  operation   of  the   Act  and   their requirements have  to be  met. Closing  down the  industries manufacturing liquor  in Andhra  Pradesh and  importing  the requirements of  the consuming classes (exempted categories) from outside  the State  is discriminatory  and violative of Article 14, he submitted.      Sri  Ganguly,   learned  counsel   appearing  for   the petitioner in  Writ Petition  (C) No. 602 of 1995, submitted that the  later decision  of the  Constitution Bench of this Court in  Khoday Distilleries   v.  State of Karnataka (1995 (1) S.C.C.574)  does not  altogether rule  out the  argument that right  to trade  in intoxicating  liquors is within the ambit of  Article 19(1)(g).  The learned  counsel reiterated the submissions of Sri Desai in other respects.      Sri Rohinton  F.Nariman, learned  counsel appearing for the petitioner  in Writ  Petition (C)  No.593 of  1995, laid stress upon the provisions contained in clauses (1), (2) and (3) of  Article 246  of the  Constitution and submitted that the power  of the  State Legislature  to  make  a  law  with reference to  matters enumerated  in List-II  in the Seventh Schedule to  the Constitution  (provided by  clause  (3)  of Article 246)  is subject to the Parliament’s power specified in clauses  (1) and  (2) of  the said  Article. Relying upon certain decisions  of this  courts learned counsel contended that once  the Parliament  has enacted  the l.D.R.  Act  and included the  fermentation industries  within the purview of that Act by 1956 Amendments the Parliament must be deemed to have expressed  its clear  intention, to  occupy the  entire field   of   fermentation   industries   including   alcohol industries. If  so, the  State Legislatures have no power to make any  law with  respect  to  the  said  industries.  The control over  the said industries is exclusively that of the

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Union. Learned  counsel reiterated  the  submission  of  Sri Desai based upon Article 14.      Sri G.Ramaswamys  learned  counsel  appearing  in  Writ Petition (C)  No. 680  of 1995,referred  to the  Constituent Assembly Debates  with respect  to Entry  52  in  List-I  of Seventh Schedule  to the  Constitution as well as to certain decisions of  this Court  which  according  to  the  learned counsels help  in understanding the principles enunciated in Synthetics and  Chemicals Limited. Learned counsel submitted that by  not prohibiting  toddy which  contains more alcohol than beer  and some other wines,the Act has brought about an invidious distinction  which is  a negation  of the equality clause contained in Article 14.      Sri Soli  J.Sorabjee, learned counsel appearing for the State of  Andhra Pradesh,  on the other hand, submitted that the State has the exclusive power to make a law with respect to Entry  8, which  entry is  in no  manner impinged upon by Entry 52  in List-I or by the Act made in pursuance thereof. Learned counsel  submitted that  wherever  the  question  of legislative competence  is raised,  the  matter  has  to  be examined applying the doctrine of pith and substance, as has been repeatedly  affirmed by  the Federal  Court as  well as this  Court  in  a  number  of  decisions.  Learned  counsel submitted that  any  incidental  trenching  upon  the  field reserved for the Union cannot be characterised as travelling beyond the assigned field. He submitted that the decision in Synthetics and  Chemical Limited should be read in the light of the  question raised  therein and should not be read as a statute. The observations relied upon by the learned counsel for  the   writ  petitioners,   he  submitted,   cannot   be characterised  as   constituting  the   ratio  of  the  said decision. They  cannot be  understood as  decisions on those issues since  those issues  were not  in controversy  before the court nor were the parties at issue thereon. He referred to certain  later decisions  of this  Court to  indicate how they  have   understood  the   decision  in  Synthetics  and Chemicals  Limited.   Learned  counsel  submitted  that  the decisions of  this Court  in Harshankar v. Deputy Excise and Taxation  Commission   (1975  (3)   S.C.R.254)  and   Khoday Distilleries conclusively  lay down  that no citizen of this country has  a fundamental  right to  trade in  liquor. Once they have no such right, the learned counsel submitted, writ petition under  Article 32  of the  Constitution, which lies only  to  enforce  a  fundamental  right,  is  misconceived. Learned  counsel   also  disputed  the  correctness  of  the petitions’ submissions based upon Article 14. P A R T - II      Part  XI  of  the  Constitution  deals  with  relations between the  Union and  the States.  Chapter-I in  this Part bears the  heading "Legislative  Relations: Distribution  of Legislative Powers". Clause (1) of Article 245 declares that "subject to  the provisions of this Constitution, Parliament may make  laws for the whole or any part of the territory of India, and  the Legislature of a State may make laws for the whole or  any part of the State." Clause (1) of Article; 246 declares that "notwithstanding anything contained in clauses (2) and  (3), Parliament  has exclusive  power to  make laws with respect to any of the matters enumerated in List III in the seventh  Schedule (in  this Constitution  referred to as the ’Union  List’)". Clause (2) of Article 246 declares that "notwithstanding anything  in clause  (3),  Parliament  and, subject to  clause (1),  the Legislature  of any  State also have power  to make laws with respect. to any of the matters enumerated in  List III  in the  Seventh Schedule  (in  this Constitution referred  to as  the ’State List’)". Clause (3)

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of Article  246 then  declares that  "subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of  the matters  enumerated in  List II  in the  Seventh Schedule (in  this Constitution  referred to  as the  ’State List’)." Clause  (4) says that "Parliament has power to make laws with  respect  to  any  matter  for  any  part  of  the territory of  India not included in a States notwithstanding that such  matter is a matter enumerated in the State List". Article 248  vests the  residuary legislative  power in  the Union. Article 249 empowers the Parliament to legislate with respect to  a matter  in the State List in national interest while Article  250 empowers the Parliament to legislate with respect to any matter in the State List if a proclamation of emergency  is  in  operation.  Article  251  says  that  the provisions of Articles 249 and 250 do not restrict the power of the  Legislature to make any law which it is competent to make but  if such  law is repugnant to any of the provisions of the  law made  by the Parliament under the said Articles, the law made by Parliament shall prevail so long only as the law made by the Parliament continues to have effect. Article 252 empowers  the Parliament  to legislate  for two  or more States by  their consent.  It also  provides for adoption of such legislation  by other States. Article 254 declares that if any  provision of  law made by the Legislature of a State with respect to matters enumerated in the Concurrent List is inconsistent with  the provisions  of any  law made  by  the Parliaments, whether  made earlier to the State enactment or later, the State enactment shall to the extent of repugnancy be void.  If, however  , the State enactment is reserved for and received  the assent  of the  President, such  law  will prevail in  that State notwithstanding its repugnancy with a Parliamentary enactment.      After considering  the  aforesaid  provisions  and  the scheme of  the Constitution a nine-Judge Bench of this Court in S.R.Bommai  &   Qrs. v. Union of India (1994 (3) S.C.C.1) has opined  that within  the sphere allotted to States, they are supreme.      It has  been repeatedly  pointed out  by this Court and the Federal  Court (dealing  with a  similar distribution of legislative powers  among the Centre and the provinces under the Government  of India Act, 1935) that the several entries in  the  three  Lists  in  the  Seventh  Schedule  are  mere legislative heads  and that  it is  quite likely  that  very often they  overlap. Wherever such a situation arises, lt is held, the  issue must be solved by applying the rule of pith and substance.  As explained  by T.L. Venkatarama Iyer,J. in A.S.Krishna & Ors. v. State of Madras (1957 S.C.R.399):      "It must  be remembered that we are      construing a  federal Constitution.      It is  of the  essence  of  such  a      Constitution that there should be a      distribution  of   the  legislative      powers of  the  Federation  between      the Centre  and the  Provinces. The      scheme of  distribution has  varied      with different  Constitutions,  but      even    when    the    Constitution      enumerates elaborately  the  topics      on which  the Centre and the States      could legislate,  some  overlapping      of the  fields  of  legislation  is      inevitable.   The   British   North      America Act. 1867 which established      a federal  Constitution for Canada,

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    enumerated  in  ss.91  and  92  the      topics on  which the  Dominion  and      the  Provinces  could  respectively      legislate. Notwithstanding that the      lists  were  framed  so  as  to  be      fairly  full  and  comprehensive,it      was not  long before  it was  found      that the  topics enumerated  in the      two sections  overlapped,  and  the      Privy Council had time and again to      pass on  the  constitutionality  of      laws  made   by  the  Dominion  and      Provincial legislatures.  It was in      this  situation   that  the   Privy      Council evolved  the doctrine, that      for deciding  whether  an  impugned      legislation was  intra vires,regard      must  be   had  to   its  pith  and      substance. That  is to  say,  if  a      statute is  found in  substance  to      relate  to   a  topic   within  the      competence  of  the  legislature,it      should be  held to  be intra vires,      even though  it might  incidentally      trench on  topics  not  within  the      competence   of   the   legislative      competence.  The   extent  of   the      encroachment on  matters beyond its      competence may  be  an  element  in      determining whether the legislation      is colourable,  that is, whether in      the guise  of making  a  law  on  a      matter within  its competence,  the      legislature is,  in truth, making a      law  on   a  subject   beyond   its      competence. But  where that  is not      the  position,  then  the  fact  of      encroachment does  not  affect  the      vires of  the law  even as  regards      the  area   of  encroachment.  Vide      Citizens   Insurance   Company   of      Canada v. William Parsons, (1881) 7      AC  96;  The  Attorney-General  for      Ontariao v.  Attorney  General  for      the  Dominion   of   Candna,   1894      A.C.189; The  Attorney  General  of      Ontaria v. Attorney-General for the      Dominion   1896   AC   348;   Union      Colliery  Company   of      British      Columbia v.  Bryden, 1899  AC  580;      Attorney-General  for   Canada   v.      Attorney-General for Ontaria , 1937      AC   335;    Attorney-General   for      Alberta  v.   Attorney-General  for      Canada, 1939  AC 117;  and Board of      Trustees of  Letherbridge  Northern      Irrigation District  v. Independent      Order of Foresters, 1940 AC 513."      The learned  Judge pointed out that this very principle was enunciated  by the Federal Court in Subramanyan Chettiar v. Muttudesmi  Gaundan (1940  F.C.R. 188)  and by  the Privy Council in  prafulla Kumar  v. Bank  of Commerce Ltd. (A.I.R 1947 P.C.60)  wherein the  statement of  law in  Subramanyan Chettiar was endorsed in full.      Sri Sorabjee  invited our  attention to the decision of

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the Federal  Court in Bhola Prasad v. The King-Emporer (1940 F.C.R.17) where  it was  held that  the power  to  legislate "with respect  to intoxicating  liquors conferred  upon  the Provincial  Legislature   by  Entry  31  in  the  Provincial Legislative List  includes a  power to prohibit intoxicating ligours throughout  the province  or any  specified part  of province unless  the meaning of the words used is restricted or controlled  by the  context or by other provisions in the Act."      Learned counsel  also invited  our attention to another decision of  the Federal Court in Miss Kishori Shetty v. The King (1949  F.C.R.650). The  appellant was charged for being in possession of a certain quantity of foreign liquor/whisky in excess  of the  limit  provided  under  the  notification issued under  Section 14B  of the  Bombay  Abkari  Act.  The appellant  contended   that  Section   148  insofar   as  it prohibited possession  of  foreign  whisky  was  beyond  the legislative  competence   of  the   Provincial   Legislature inasmuch as  it amounts  in effect to prohibiting the import of such goods into the country which can be done only by the Central Legislature.  It was submitted that under Item 19 in List-I of  the Seventh] Schedule to the 1935 Act, the Centre had the  exclusive power  to make  a  law  with  respect  to "import and export across customs frontier as defined by the dominion frontiers" whereas States’ power to make a law with respect to  intoxicating liquors  was limited  to Item 31 in List-II  (which  read  "intoxicating  liquors  and  narcotic drugs,  that   is  to   says  the  production,  manufacture, possession, transport,  purchase and  sale  of  intoxicating liquors, opium  and other  narcotic drugs"). She, therefore, contended that Section 14B is void to the  extent   it  prohibited   the  possession  of  imported whisky/liquor. This contention was rejected in the following words:      "We are  unable to  accede to  this      contention. As  pointed out by this      court  in   Bhola  Prasad  v.  King      Emporer   (1942    F.C.R.17)    the      legislative  power   given  to  the      Provinces under  Item 31 of List II      is   expressed    in    wide    and      unqualified terms  which  in  their      natural and  ordinary-sense are apt      to cover such an enactment as s.14-      B in  its amended  forms and we see      nothing in  the Federal Legislative      List and  more particularly in Item      19 to  lead us to cut down the full      meaning of  the Provincial entry by      excluding foreign  liquors from its      purview. There  is in  our view, no      irreconcilable conflict  here  such      as would  necessitate  recourse  to      the principle  of Federal supremacy      laid   down   in   s.100   of   the      Constitution Act. Section 14-B does      not purport to restrict or prohibit      dealings in  liquor in  respect  of      its  importation   or   exportation      across the sea or land frontiers of      British India.  It purports to deal      with the possession of intoxicating      liquors which,  in tho  absence  of      limiting   words,    must   include      foreign liquors. It is far-fetched,

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    in our opinion, to suggest that, in      so  far  as  the  legislation  with      respect  to   import  liquors  into      British India by sea land."      It is  not necessary  to burden  this judgment with any more decisions on this subject.      We  may   now  notice   the  relevant  entries  in  our Constitution. Entries  8,6,24  and  51  in  List-II  of  the Seventh Schedule to the Constitution read thus:      "8. Intoxicating  liquors, that  is      to     say,     the     production,      manufacture, possession, transport,      purchase and  sale of  intoxicating      liquors.      6. Public  health  and  sanitation;      hospitals and dispensaries.      24.  Industries   subject  to   the      provisions of  Entries 7  and 52 of      List I.      51.  Duties   of  excise   on   the      following  goods   manufactured  or      produced   in    the   State    and      countervailing duties  at the  same      or lower  rates  on  similar  goods      manufactured or  produced elsewhere      in India:      (a)  alcoholic  liquors  for  human      consumption;      (b) opium,  Indian hemp  and  other      narcotic drugs and narcotics;      but  not  including  medicinal  and      toilet   preparations    containing      alcohol or  any substance  included      in  sub-paragraph   (b)   of   this      entry."      Entries 52  and 7  in list-I  may now  be set out. They read:      "52.  Industries,  the  control  of      which by  the Union  is declared by      Parliament by  law to  be expedient      in the public interest.      7.    Industries     declared    by      Parliament by  law to  be necessary      for the  purpose of  defence or for      the prosecution of war."      Entry  33   in  List-III   was   substituted   by   the Constitution IIIrd  (Amendment) Act, 1954. The background to this entry  is explained  by this  Court in  Ch.Tika Ramji & Ors.etc. v.  State of Uttar Pradesh & Ors. (1956 S.C.R.393). Entry 33 in List-III reads:      "33. Trade and commerce ins and the      production, supply and distribution      of,-      (a) the  products of  any  industry      where the  control of such industry      by  the   Union  is   declared   by      Parliament by  law to  be expedient      in   the   public   interests   and      imported goods  of the same kind as      such products;      (b) foodstuffs,  including  edible,      oilseeds and oils;      (c)   cattle    fodders   including      oilcakes and other concentrates;      (d) raw  cottons whether  ginned or

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    unginneds and cotton seed; and      (e) raw jute."      The  entries   aforementioned  disclose  the  following features:  the   power  to   make  a  law  with  respect  to "industries" lies  with the States (Entry 24 in List-II) but the said  entry is  made expressly subject to the provisions of Entries  7 and  52  in  List-I.  It  means  that  if  the Parliament declares  by law  that it  is  expedient  in  the public interest  to take  over the  control of  a particular industry or  industries, such  industry  or  industries  get transplanted to  List-I. In  other words,  the industries in respect  of   which  the   Parliament  makes  a  declaration contemplated by Entry 52 in List-I the States are denuded of the power  to make  any law with respect to them under Entry 24  in   List-II.  The   Parliament  has   indeed  made  the declaration contemplated  by Entry 52 in List-I in Section 2 of the I.D.R. Act which reads:      "2.Declaration as  to expediency of      control  by   the  Union.--  It  is      hereby   declared    that   it   is      expedient in  the  public  interest      that the  Union should  take  under      its    control    the    industries      specified in the First Schedule."      By an  amendment effected  in 1956,  the First Schedule was amended.  The Amendment  Act inter alia introduced Entry 26 in  the Schedule. It reads: "Fermentation Industries: (1) Alcohols (2) other products of fermentation industries". The contention of  the learned  counsel for  the petitioners  is based  upon   these  provisions.  The  submission  is  this: manufacture and  production of  intoxicating liquors  is  an industrial activity  falling within  Item 26  of  the  First Schedule to  the I.D.R.  Act; the  I.D.R. Act  provides  for licencing of  industries mentioned  in the First Schedule to the Act  besides providing extensive control and regulation. of such  industries  and  their  products;  the  grant,  the renewal and  the refusal  to grant  or renew the licences __ the exclusive  province of  the Centre; the State has no say in the  matter; the  State  Legislature  is  incompetent  to prohibit  manufacture  of  intoxicating  liquors.  But  this argument, in  our opinion,  ignores the  existence  and  the ambit of  Entry 8  in List-II.  Entry 8  expressly speaks of production, manufacture, possession, transport, purchase and sale of  intoxicating liquors.  It means  that the  power to make a law with respect to said matters rests with the State Legislature. What  is significant  is that  the entry speaks expressly of  production  and  manufacture  of  intoxicating liquors  as  well.  This  would  mean  that  the  industries producing and manufacturing intoxicating liquors fall within the purview  of Entry 8. In other words, we must first carve out the  respective fields  of Entry 24 and Entry 8 in List- II. Entry  24 is  a general  entry  relation  to  industries whereas Entry  8 is  a specific  and special  entry relating inter  alia   to  industries   engaged  in   production  and manufacture of intoxication liquors. Applying the well-known rule  of  interpretation  applicable  to  such  a  situation (special excludes  the  general).  we  must  hold  that  the industries  engaged   in  production   and  manufacture   of intoxication liquors  o not fall within Entry 24 but do fall within Entry 8. This was the Position at the commencement of the Constitution  and this  is the  position today  as well. Once this  is  so,  the  making  of  a  declaration  by  the Parliament as  contemplate by  Entry 52 of List - I does not have the  effect of  transferring or transplanting as it may be  called,   of  industries   engaged  in   production  and

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manufacture of  intoxicating liquors  from the State List to Union List. As a matter of fact. Parliament cannot take over the control  of industries  engaged in  the  production  and manufacture of intoxicating  liquors by making a declaration under Entry  52 of List-I, since the said entre governs only Entry 24  in List  II but  not Entry 8 in List II. [Emphasis added]      Faced with  the above position, learned counsel for the petitioners resorted  to more  than one argument to get over it. Firstly,  it was  submitted that Entries 24 and 8 should be read harmoniously and that such harmonious reading should mean  that   the  industries   engaged  in   production  and manufacture of  intoxicating liquors would fall within Entry 24 because  Entry 24  deals with  industries as  such  while Entry 8,  according to  this readings  would be  confined to matters   other   than   production   and   manufacture   of intoxicating liquors.  It is  not possible to agree with the submission which  runs counter  to the  express language  of Entry 8. It requires us to delete the words "’production and manufacture" from Entry 8 which is not open to us. We cannot re-write the  entry. Another  limb of this argument was that only those  industries  manufacturing  intoxicating  liquors which are not within the purview of the I.D.R. Act will fall under  Entry   8.  Reading  the  definition  of  "industrial undertaking" in  clause (d)  and the definition of "factory" in clause  (c) of  Section  3  of  the  I.D.R.  Acts  it  is submitted that  two types  of industries  are not covered by the I.D.R.  Acts viz.  those where  manufacturing process is carried on  (1) with  the aid of power but with less than 50 workers and (ii) without the aid of power but with less than 100 workers.  The submission  is that these industries which are not  within the  purview of  the I.D.R. Act would remain within the  purview of  Entry 8  while the  other industries would be  under the  control of  the Union. This argument is equally unacceptable.  This argument  is premised  upon  the assumption that  Entry 52  in List-I  over-rides Entry  8 in List-II as  well, which  assumption, as  we shall  presently point outs  is without  a basis  and unacceptable, Moreover, industries which  are  exempted  from  the  I.D.R.  Act  are exempted because  of the  very provisions of the I.D.R. Act- and not by virtue of Entry 8 in List-II. The ambit and scope of  a   constitutional  entry   cannot  be  determined  with reference to  a Parliamentary  enactment. The  definition of "factory" in  clause (c)  of Section 3 of the I.D.R. Act may be changed  tomorrow. The  meaning and  scope of  Entry 8 in List-II does  not and  cannot vary  with the  change in  the provisions of  the  I.D.R.  Act.  This  submission  too  is, therefore, unacceptable. It was then contended that Entry 52 in List-I governs not only Entry 24 in List-II but all other entries in  List-II including  Entry 8  insofar as  it deals with industries.  We cannot accept this submission either. A perusal of  List-II would  show n that whenever a particular entry was  intended to be made subject to an entry in List-I or List-III, it has been so stated specifically. Not one but several entries  in List-II  are made  subject to one or the other entry  in List-I  or List-III. [See Entries 2,3,17,22, 23,26,27 and  33]. Certain  other entries  use  a  different phraseology to  demarcate the  spheres of  the Union and the States. For  example, Entry  32 reads:  "32.  Incorporation, regulation and  winding up  of corporations other than those specified in  List-I and  Universities". All this shows that whenever a  particular entry in List-II is sought to be made subject to  another entry  in List-I  or List-III or where a demarcation is  sought to  be made between the Union and the States within a particular head of legislation, the founding

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fathers have  taken care  to say  so expressly.  We  cannot, therefore, accept  the argument  of the  learned counsel for the petitioners that Entry 52 in List-I impinges upon, over- rides and  governs Entry  8 in List-II as well. It does not. We  must   make  it  clear  that  Entry  8  speaks  of  only intoxicating liquors  and does  not, therefore,  apply to or take in  liquors which  do not  fall within  the  expression "intoxicating liquors". The power to make a law with respect to production and manufacture of intoxicating liquors [among other matters  mentioned in  Entry 8]  is that of the States alone. The  prohibition of  production  and  manufacture  of intoxicating liquors  too squarely  falls  within  the  four corners of  Entry 8  read with  Entry 6  in List-II. This is also the  decision  of  the  Constitution  Bench  in  Khoday Distilleries Limited.  In the  summary contained in Para 60, conclusion (d) reads:      "Article  47  of  the  Constitution      considers intoxicating  drinks  and      drugs as  injurious to  health  and      impeding the  raising of  level  of      nutrition  and   the  standard   sf      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  liquors      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      manufactures   sales    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." Counsel for the petitioners, however, say that this issue is no longer  res integra.  According to  them, the  matter  is concluded by the seven-Judge Bench decision of this Court in Synthetics and  Chemicals Limited.  In particular, they rely upon the following observations in Para 85 of the opinion of Sabyasachi Mukharji,J.,  rendered on  behalf of  six learned Judges:      "After the   1956 amendment  to the      IDR Act bringing alcohol industries      (under fermentation  industries) as      Item   26 of  theFirst Schedule  to      IDR     Act  the  control  of  this      industry hasvested  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

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    by the   State.   The  State cannot      itself     manufacture   industrial      alcohol  without  the permission of      the  Central     Government.    The      States   cannot  claim  to  pass  a      right which  they do  not  possess.      Nor can the States claim  exclusive      right      to      produce      and      manufacture   industrial    alcohol      which are  manufactured  under  the      grant of licence from  the  Central      Government.   Industrial    alcohol      cannot   upon      coming      into      existence   under   such  grant  be      amenable   to    States’  claim  of      exclusive       possession       of      privilege. The   State  can neither      rely on  Entry 8  of  List  II  nor      Entry 33  of List   III  as a basis      for such a claim."      Sri  Sorabjee,   however,   submits   that   the   said observations  do  not  constitute  the  ratio  of  the  said decision. They  are in  the nature  of obiter,  he says. The said decision was concerned with the powers of the States to levy vend  fee  on  industrial  alcohol  and  not  with  the legislative competence of the States to regulate and control the industries  engaged in the production and manufacture of intoxicating liquors.  The  said  decision,  therefore,  the learned counsel  says, is  no authority on the issue arising in these appeals.      In  our   opinions  the   decision  in  Synthetics  and Chemicals Limited  does not  help the  petitioners in  these writ petitions  for the  decision expressly  recognises  the power of  the State  to prohibit  the manufactures  sale and consumption  of   intoxicating  liquors.   In  the   summary contained in Para 86, clause (a) reads thus:      "(a) It may pass any legislation in      the  nature   of   prohibition   of      potable liquor referable to Entry 6      of List II and regulating powers."      The discussion  in support  of this conclusion is found in Paras  28  and  29  of  the  Judgment,  where  Sabyasachi Mukharji, J.,  speaking for  himself and  five other learned Judges, quotes the following holding from Har Shankar:      "28.In this  connection, it  may be      necessary   to    refer   to    the      observations of  this Court  in Har      Shankar case  (1975 (1)  SCC  737),      where   Chandrachud,J.    (as   the      learned  Chief  Justice  then  was)      stated: (SCC p.758, para 53)      ’In our  opinion, the true position      governing dealings  in  intoxicants      in as  stated and  reflected in the      Constitution  Bench   decisions  of      this Court  in the  State of Bombam      v.  F.N.Balsara   (1951  SCR  682),      Cooverjee  B.Bharucha   v.   Excise      Commissioner    and    the    Cheif      Commissioner, Ajmer (1954 SCR 873),      State  of  Assam  v.  A.M.  Kidwai,      Commisssion of  Hills Division  and      Appeals, Shilong  (1957  SCR  295),      Nagendra Nath  Bora v. Commissioner      of Hills  Division and Appeal Assam

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    (1958  SCR   1240),  Amar   Chandra      Chakraborty v.  Collector of Excise      Government of Tripura (1972 (2) SCC      442) and  State of  Bombay v. R.M.D      Chamarbauqwala (1957  SCR  874,  as      interpreted in  State of  Orissa v.      Harinarayan Jaiswal  (1972 (2)  SCC      36) and  Nashirwar v. State of M.P.      (1975 (2)  SCC  29).  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,’                         (Emphasis added)      29.Though most  of the  cases dealt      with  the   right  of   the   State      Government  as  regard  auction  of      country liquor,  in  Balsara  case,      Nashirwar  case   and  Har  Shankar      case, this Court was concerned with      the right  of the  State Government      over    foreign    liquor.    After      considering all  the  decisions  of      five    Constitutional     Benches,      Chandrachud,J.   summed    up   the      position at  page 274 of the report      in Har  Shankar  case  as  follows:      (SCC   p.755,   para   47)   ’These      unanimous   decisions    of    five      Constitution   Benches    uniformly      emphasized    after    a    careful      consideration   of    the   Problem      involved that  the  State  has  the      power to  prohibit trades which are      injurious to the health and welfare      of the Public, that elimination and      exclusion from business is inherent      in the nature of liquor by  that no      person has  an  absolute  right  to      deal in  liquor and  that all forms      of dealings  in liquor  have,  from      their inherent nature, been treated      as  a   class  by   themselves  all      civilized communities."                         (Emphasis added)      Reference may  also be had in this behalf to Para 74 of the Judgment.  Towards the  end  of  the  para,  Mukharji,J. observes: "All  the authorities from Cooverjee Bharucha case to Har  Shankar case  dealt with  the problems  or  disputes arising in  connection with  the  with  the  sales  auction, licensing or use of potable liquors". Not only no dissent is expressed from  these decisions,  their principle is in fact reiterated in clause (a) of Para 86 set out above.      Be that as it may, it is enough for us to know that the decision  in   Synthetics  and   Chemicals  Limited  clearly recognizes and  affirms the  power of the States to prohibit the manufacture,  production, consumption and sale et al. lt is not  necessary for  us to go into and express our opinion requiring the  observations in  the judgment with respect to the power of licensing. That may have to await a proper case where that  question may  directly arise. For this reason we

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are not referring to or dealing with the several submissions of Sri  Sorabjee with  respect to  the  correctness  of  the particular sentence  occurring in  Para 85 of Synthetics and Chemicals Limited.      For the  above reasons,  we hold  that the  judgment in Synthetics and  Chemicals Limited  does not advance the case of the petitioners herein.      It follows  from the above discussion that the power to make a  law with  respect to  manufacture and production and its prohibition (among other matters mentioned in Entry 8 in List-II) belongs exclusively to the State Legislatures. Item 26 in  the First  Schedule to  the I.D.R.  Act must  be read subject to Entry 8 - and for that matter, Entry 6 - in List- II. So  read, the  said item  does not  and cannot deal with manufacture, production  or with  prohibition of manufacture and production  of intoxicating liquors. All the petitioners before us  are engaged  in the  manufacture of  intoxicating liquors.  The  State  Legislature  is  therefore,  perfectly competent to  make a  law prohibiting  their manufacture and production  -   in  addition  to  their  sale,  consumption, possession and transport - with reference to Entries 8 and 6 in List-II  of the Seventh Schedule to the Constitution read with Article 47 thereof.      In view  of our  finding that the impugned enactment is perfectly within  the legislative  competence of  the  State legislature and  is fully covered by Entry 8 read with Entry 6 of  List-II, it  is not  necessary for us to deal with the arguments based  upon clause  (3)  of  Article  246  of  the Constitution except  to say the following: once the impugned enactment is  within the  four corners  of Entry 8 read with Entry 6,  no central  law whether  made with reference to an entry in  List-I or  with reference  to an entry in List-III can  affect  the  validity  of  such  State  enactment.  The argument of occupied field is totally out of place in such a context. If  a particular  matter is  within  the  exclusive competence of  the State  legislature, i.e., in List-II that represents the prohibited field for the Union. Similarly, if any matter  is within the exclusive competence of the Union, it becomes a prohibited field for the States. The concept of occupied field  ss really  relevant in the case of laws made with reference  to entries  in  List-III.  In  other  words, whenever a  piece of  legislation is  said to  be beyond the legislative competence of a State Legislature, what one must do is  to find  outs  by  applying  the  rule  of  pith  and substances whether  that legislation falls within any of the entries in  List II.  If it does no further question arises; the attack  upon the  ground of legislative competence shall fail. It  cannot be that even in such a case, Article 246(3) can be  employed to invalidate the legislation on the ground of legislative incompetence of State Legislature. If, on the other hand the State legislation in question is relatable to an  entry   in  List-III  applying  the  rule  of  pith  and substances then also the legislation would be valids subject to  a   Parliamentary  enactment  inconsistent  with  it,  a situation  dealt   with  by   Article  254.  Any  incidental trenching, as  already  pointed  outs  does  not  amount  to encroaching upon  the field  reserved  for  the  Parliaments though as  pointed out  by T.L.Venkatarama  Iyer,J. in  A.S. Krishna, the  extent of  trenching beyond  the competence of the legislating  body  may  be  an  element  in  determining whether the  legislation is  colourable.  No  such  question arises here.      We may  in this  connection refer  to the  Constitution Bench decision  of this  Court in  Calcutta Gas  Company  v. State of  West  Bengal  (1962  (3)  Suppl.  S.C.R  1)  which

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furnishes a  complete answer  to the petitioners’contentions on this  score. The  West Bengal  Legislature passed  an Act [West Bengal  Oriental Gas Company Acts 1960] with a view to take over  the management  and control of the undertaking of the Oriental  Gas Company.  Notifications were  issued under the Act  taking over the Company which was questioned by way of a  writ petition  in the  Calcutta High  Court. The  writ petition was  dismissed whereupon  the matter was brought to this court.  The main  contention on behalf of the appellant was that  the West  Bengal Legislature  had  no  legislative competence to  enact the  said Act. It was submitted that by virtue of  the Industries  (Development and Regulation) Acts 1951, which  contains a  declaration in terms of Entry 52 in List-I and the schedule whereof included "fuel gases - (coal gas, natural  gas and  the like)" under Item 2(3), the power to make  law with  respect  to  industries  engaged  in  the manufacture of gas has been vested in the Union and that the State has  been  totally  denuded  of  that  power.  It  was contended that  Entry 24  in List-II takes in all industries and that  Entry 24 (which reads: "Gas and gas-works") should be confined to matters other than those covered by Entry 24. Inasmuch as the impugned enactment was a law relating to gas industry, it  was submitted,  the  Act  made  by  the  State Legislature is  incompetent  and  void.  Reliance  was  also placed upon  Article 246  of  the  Constitution.  All  these contentions  were   negatived.  After   referring   to   the provisions of  the I.D.R.  Act and  the impugned West Bengal Act, the  relevant entries  in the  Seventh Schedule  to the Constitution [including  Entries 7  and 52  in  List  I  and Entries 24  to 27  in List-II7  and the principles governing the interpretation  of the  entries in the Seventh Schedule, the Court indicated that the matter was susceptible of three possible constructions, viz., "(1) entry 24 of List II,which provides for  industries, generally,  covers the  industrial aspect of  gas and gas works leaving entry 25 to provide for other aspects  of gas  and gas-works;  (2) entry 24 provides generally for  industries, and entry 25 carves out of it the specific industry of gas and gas-works, with the result that the industry  of gas  and gas  works, is excluded from entry 24; and  (3) the  industry of  gas and gas-works falls under both the  entries, that  is, there  is a real overlapping of the said  entries." The  Court opined  that having regard to the well-settled  principles relating  to interpretation  of these entries,  that  interpretation  which  reconciles  and harmonises the contending entries should be adopted and held thus:      "Entry 24  in List II in its widest      amplitude takes  in all industries,      including  that  of  gas  and  gas-      works. So too, entry 25 of the said      List  comprehends   gas   industry.      There is,  therefore,  an  apparent      conflict between  the  two  entries      and they  overlap  each  other.  In      such a  contingency the doctrine of      harmonious  construction   must  be      invoked.... If industry in entry 24      is interpreted  to include  gas and      gas-works,  entry   25  may  become      redundant, and  in the  context  of      the  succeeding   entries,  namely,      entry 26,  dealing with  trade  and      commerce,  and  entry  27,  dealing      with   production,    supply    and      distribution of  goods, it  will be

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    deprived of  all its  contents  and      reduced to  ’useless lumber’ On the      other   hand,    the    alternative      contention enables  entries 24  and      25   cooperate   fully   in   their      respective fields;  while entry  24      covers a  very wide field, that is,      the field of the entire industry in      the State,  entry 25,  dealing with      gas and  gas-works, can be confined      to a specific industry, that is the      gas industry It is,therefore, clear      that  the   scheme  of   harmonious      construction suggested on behalf of      the State  gives full and effective      scope of  operation  for  both  the      entries in  their respective fields      while  that  suggested  by  learned      counsel for  the appellant deprives      entry 25  of all  its  content  and      even makes it redundant. The former      interpretation must,  therefore, be      accepted  in   preference  to   the      latter. In  this view, gas and gas-      works  are   within  the  exclusive      field allotted  to the  States.  On      this interpretation the argument of      the learned  Attorney-General that,      under Art. 246 of the Constitution,      the legislative  power of  State is      subject  to   that  of   Parliament      ceases to  have any  force, for the      gas   industry   is   outside   the      legislative field of Parliament and      is within  the exclusive  field  of      the Legislature  of the  State. We,      therefore, hold  that the  impugned      Act  was   within  the  legislative      competence  of   the  West   Bengal      Legislature   and    was,therefore,      validly made."      The   Court   proceeded   to   hold      further:      "As we  have indicated earlier, the      expression ’industry’  in entry  52      of List I bears the same meaning as      that in  entry 24  of List II, with      the result that the said expression      if entry  52 of  List also does not      take in  a gas  industry. If so, it      follows that the Central Act, in so      far as  it purported  to deal  with      the gas  industry,  is  beyond  the      legislative      competence      of      Parliament."      The ratio  of the above decision fully supports what we have said  hereinbefore. In  fact, Entry  8 is more specific than Entry  25 in  List-II. While  Entry 25 merely speaks of "gas and gas-works"*, Entry 8 expressly speaks of production and manufacture  besides possession, transport, purchase and sale of  intoxicating liquors. The ratio of the Calcutta Gas Company   fully supports  our conclusion that the industries engaged in  the production  and manufacture  of intoxicating liquors are  outside  the  purview  of  Entry  24  and  fall squarely within Entry 8 in

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*Perhaps, it  is appropriate to point out in the interest of avoiding any  misunderstanding  that  Entry  35  of  List-II should be  read with  Entry 53  of List-I, which reads: "53. Regulation and  development of  oilfields  and  mineral  oil resources; petroleum  and petroleum  products; other liquids and substances declared by Parliament by law to be expedient in the  public interest."  Not only mineral gases fall under Entry 53  in List-I,  the words  ’gas works" also have to be properly understood. In short, both the said entries have to be read  harmoniously and their respective fields delineated properly. List-II and  that Entry  52 in  List-I does not over-ride or impinge upon Entry 8 in List-II. According to this decision, the expression  "industry" in  both Entry  24 in List-II and Entry 52  in List-I  must carry the same meaning which means that if  a particular  industry is not within the purview of Entry 24  in List-II,  it would  equally not  be within  the purview of  Entry 52  in List-I.  The decision also supports our conclusion that Article 246 cannot be invoked to deprive the State  legislatures of  the powers  inhering in  them by virtue of  entries in List-II. To with once an enactment, in pith and  substance, is  relatable to  Entry 8 in List-II or for that  matter any  other entry  in List-II,  Article  246 cannot be  brought in  to yet hold that State legislature is not competent to enact that law.      CONTENTION BASED UPON ARTICLE 19(1) (g):      The contention  that a  citizen of  this-country has  a fundamental right  to trade  in intoxicating liquors refuses to die  inspite af 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  entra commercium  (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 sarie reason  the Bench held the State can create a monopoly either in  itself or  in an  agency created  by it  for  the manufacture, possession,  sale and distribution of liquor as a beverage.  The holding is emphatic and unambiguous. Yet an argument is  sought to be built upon certain words occurring in clauses  (e) and  (f) of the summary contained in Para-60 of the  decision In  these clauses,  it  was  observed  that creation of  a monopoly in the State to deal in intoxicating liquors and  the power  to impose  restrictions, limitations and even  prohibition thereon  can  be  imposed  both  under clause (6)  of Article  19 or  even otherwise.  Seizing upon these observation  Sri 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  counsels 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 cannot  be read  as  militating  against  the  express propositions enunciated  in clauses  (b), (c), said summary.

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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 upon Article 19(1)(g) is out of place.      For the  sake of completeness, and without prejudice to the above  holding, we  may examine  the alternate  line  of thought. In Cooverjee Bharucha, a Constitution Bench of this Court with  the opinion  of whole-hearted concurrence in (34 L.Ed.620) to the effect that: "There is no inherent right in a citizen to thus sell intoxicating liquors by retail; it is not a privilege of a citizen of the State or of a citizen of the United  States. As it is a business attended with danger to the  community, it  may, as  already  said,  be  entirely prohibited, or  be permitted  under such  conditions as will limit to  the utmost  its evils.  The manner  and extent  of regulation  rest   in  the   discretion  of   the  governing authority."  While   laying  down   the  said   proposition, Mahajan,CJ., speaking  for the  Court, referred generally to the position obtaining under Article 19(1)(g) and clause (6) of the  Article. The  learned Chief  Justice said  that  the reasonableness of  the  restriction  has  to  be  determined having  regard  to  the  nature  of  the  business  and  the conditions prevailing  in  that  trade.  The  learned  Chief Justice said:  "The nature  of  business  is  therefore,  an important element  in deciding  the  reasonableness  of  the restrictions." These observations, it may be noted, were not made with  once to  trade in  intoxicating liquors  but  are general in  nature. Indeeds it is after making these general observations that  the  Bench  proreodea  to  refer  to  and express its  concurrence with  the observations  of Field,J. referred to  above. The  said observations cannot be read as recognizing a  fundamental right  to trade  in  intoxicating liquors. Any  such proposition would run counter to the main holding in  the decision  referred to above. It is true that in Krishna  Kumar Narula  v. State  of Jammu & Kashmir (1967 (3) S.C.R.50), Subba Rao,CJ., speaking for the Constitution Bench, adopted  a slightly  different approach,  viz., every trade is a trade; even the trade in intoxicating liquor is a trade; however,  the nature and character of the business is relevant for determining the extent of that can be placed on such trade or business; inasmuch as intoxicating liquors are inherently harmful  to the individuals consuming them and to the society  as a  whole, it  can even  be prohibited but it cannot be  said  that  trade  or  business  in  intoxicating liquors is  not a  trade or  business within  the meaning of Article 19(1)(g).  Even adopting  this approach, it would be evident  -   and  the   decision  in  Krishna  Kumar  Nanula recognises it  - that the trade and business in intoxicating liquors  can  be  restricted,  severely  curtailed  or  even prohibited. The  fact that  Article 47  of the  Constitution expressly speaks of the obligation of the State to endeavour to  bring   about  prohibition   of   the   consumption   of intoxicating drinks  is itself  a clear and definite pointer in this  direction. Imposing  prohibition is  to achieve the directive principle  adumbrated in Article 47. Such a course merits to  be treated as a reasonable restriction within the meaning of clause (6) of Article 19.      Thus, whichever  line of thought one adopts, the result is  that   the  prohibition   of  manufacture,   production, consumption and sale of intoxicating drinks brought about by the Act (as amended by the Andhra Pradesh Act 35 of 1995) is perfectly valid and beyond challenge.      CHALLENGE BASED ON ARTICLE 14:      The attack  on the amending Act based on Article 14 was

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mounted on several grounds.      Sri Rohinton Nariman submitted that inasmuch as a large number of persons falling within the exempted categories are allowed to  consume intoxicating  liquors in  the  State  of Andhra Pradesh,  the total  prohibition of  manufacture  and production of  these liquors is "arbitrary" and the amending Act is  liable to  be struck  down  on  this  ground  alone. Support for  this proposition  is sought  from a judgment of this Court  in State of Tamil Nadu & Ors. v. Ananthi Ammal & Ors. (1995  (1) S.C.C.519). Before, however, we refer to the holding in  ourselves of  certain basic propositions in this behalf. In  the United  Kingdom, the  Parliament is supreme. There are  no limitations  upon the power of the Parliament. No Court  in the  United Kingdom can strike down an Act made by the Parliament on any ground. As against this, the United States of America has a Federal Constitution where the power of the  Congress and  the State Legislatures to make laws is limited in  two ways,  viz.,  the  division  of  legislative powers between the States and the federal government and the fundamental rights  (Bill of  Rights)  incorporated  in  the Constitution. In  India, the  position  is  similar  to  the United States of America. The power of the Parliament or for that matter,  the State  Legislatures is  restricted in  two ways. A law made by the Parliament or the Legislature can be struck down  by courts on two grounds and two grounds alone, viz., (1)  lack of  legislative competence and (2) violation of any  of the  fundamental rights guaranteed in Part-III of the Constitution  or of  any other constitutional provision. There is  no third  ground. We  do not  with to enter into a discussion of  the concepts  of procedural  unreasonableness and substantive  unreasonableness - concepts inspired by the decisions of  United States  Supreme Court.  Even in U.S.A., these concepts  and in particular the concept of substantive due process  have proved  to be of unending controversy, the latest thinking tending towards a severe curtailment of this ground (substantive due process). The main criticism against the ground of substantive due process being that it seeks to set  up  the  courts  as  arbiters  of  the  wisdom  of  the Legislature in enacting the particular piece of legislation. It is  enough for  us to  say that  by whatever  name it  is characterized, the  ground of  invalidation must fall within the four  corners of  the two  grounds mentioned  above.  In other words, say, if an enactment challenged as violative of Article 14,  it can  be struck down only if it is found that it is  violative of  the  equality  clause/equal  protection clause enshrined  therein  Similarly,  if  an  enactment  is challenged as  violative of  any of  the fundamental  rights guaranteed by clauses (a) to (g) of Article 19(1), it can be struck down  only if  it is  found not  saved by  any of the clauses struck down by just saying that it is arbitrary** or unreasonable. Some  or other constitutional infirmity has to be found before invalidating an Act. An ____________________________________________________________ **An expression used widely and rather indiscriminately - an expression of inherently imprecise import. The extensive use of  this   expression,  in   India  reminds   one  of   what Frankfurter,J. said  in Attil Mac Tiller v. Atlantic Coast - line Ranbroad  Company (87  L.Ed. 610).  "The phrase  begins life as  a literary  expression; its  felicity leads  to its lazy repetition  and repetition  soon establishes  it  as  a legal formula,  undiscriminatingly used to express different and sometimes  contradictory idea", said the learned Judge. enactment cannot  be struck  down on  the ground  that Court thinks it  unjustified. The Parliament and the Legislatures, composed as  they are  of the representatives of the people,

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are supposed to know and be aware of the needs of the people and what  is good  and bad for them. The Court cannot sit in judgment over their wisdom. In this connection, it should be remembered that  even in  the case of administrative action, the scope  of judicial  review is  limited to three grounds, viz., (i)  unreasonableness, which can more appropriately be called irrationality,  (ii) illegality  and (iii) procedural impropriety [See Council of Civil Services Union v. Minister for the  Services (1985  A.C.374) which  decision  has  been accepted by  this  Court  as  well].  The  applicability  of doctrine  of  proportionality  even  in  administrative  law sphere is  yet a debatable issue. [See the opinions of Lords Lowry and  Ackner in  R.v. Secretary  of State  for the Home Department Ex-parte  (1991 A.C.696  at 766-7  and  762].  It would be  rather odd  if an enactment were to be struck down by applying  the said  principle when its applicability even in administrative  law  sphere  is  not  fully  and  finally settled. It  is one  thing to say that a restriction imposed upon a  fundamental right  can  be  struck  down  if  it  is disproportionate,  excessive   or  unreasonable   and  quite another  thing  to  say  that  the  Court  can  strike  down enactment if  it  thinks  it  unreasonable,  unnecessary  or unwarranted. Now,  coming to  the decision in Ananthi Ammal, we are  of the opinion that it does not lay down a different proposition. It  was an  appeal from  the  decision  of  the Madras High  Court striking  down the Tamil Nadu Acquisition of Land  for Harijan  Welfare Schemes Acts 1978 as violative of Articles 14, 19 and 300A of the Constitution. On a review of the  provisions of  the Act,  this Court  found  that  it provided a  procedure which  was substantially unfair to the owners of  the land  as compared to the procedure prescribed by the  Land Acquisition  Act, insofar  as Section 11 of the Act provided  for payment  of compensation in instalments if it exceeded  Rupees two thousand. After noticing the several features of  the Act including the one mentioned above, this Court observed:      "7.  When  a  statute  is  impugned      under Article 14 what the court has      to decide is whether the statute is      so arbitrary  or unreasonable  that      it must  be struck down. At best, a      statute  upon   a  similar  subject      which derives  its  authority  from      another source  can be referred to,      if its  provisions have   been held      to be  reasonable or have stood the      test of  time, only for the purpose      of indicating  what may  be said to      be reasonable  in the  context.  We      proceed to  examine the  provisions      of the said Act upon this basis."      It is  this paragraph  which is strongly relied upon by Sri Nariman.  We are,  however,  of  the  opinion  that  the observations in the said paragraph must be understood in the totality of the decision. The use of the word "arbitrary" in Para-7 was used in the sence of being discriminatory, as the reading of the very paragraph in its entirety discloses. The provisions of  the Tamil  Nadu Act  were contrasted with the provision of  the Land Acquisition Act and ultimately it was found that  Section 11 insofar as it provided for payment of compensation in  instalments  was  invalid.  The  ground  of invalidation is  clearly one  of discrimination.  It must be remembered that  an Act which is discriminatory is liable to be labelled  as arbitrary.  It is  in this  sense  that  the expression "arbitrary" was used in Para-7.

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    Reference was  then made  by  Sri  G.Ramaswamy  to  the decision in  Mithu v.  Union of  India (1983  (2) S.C.C. 27) wherein Section  303 of  the Indian  Penal code  was  struck down. But  that decision  turned mainly on Article 21 though Article 14  is also  referred to  along with Article 21. Not only did  the offending  provision  exclude  any  scope  for application of  judicial discretion,  it also  deprived  the accused of  the procedural  safeguards contained in Sections 235(2) and  354(3) of the Criminal Procedure Code. The ratio of the  said decision  is  thus  of  no  assistance  to  the petitioners herein.      We make  it clear that the above discussion is confined to an  Act made  by the  Legislature. We  express no opinion insofar as delegated legislation is concerned.      Learned counsel  for the  petitioners  then  sought  to demonstrate  the   discriminatory  aspect  of  the  impugned amending Act  in prohibiting  the production and manufacture of intoxicating  liquors in Andhra Pradesh and importing the requirements  of   State  (to  meet  the  need  of  exempted categories) from outside the State. We are unable to see any unreasonableness in  it much  less any  discrimination. This ground  is   really  one  of  unreasonableness  rather  than discrimination. The  Andhra Pradesh  Legislature can  make a law limited  to the  territory of that State but not beyond. The exempted  categories put  together constitute a fraction of the  total consuming  population of  Andhra  Pradesh.  If production  and   manufacture  of  intoxicating  liquors  is permitted in the name of meeting the needs of this miniscule populations it  would give rise to several other problems in turn. The  present capacity  of  the  industries  in  Andhra Pradesh   engaged   in   manufacture   and   production   of intoxicating liquors  is  many  times  over  and  above  the requirements of  the exempted  categories. If the production is to  be  scaled  down  correspondingly  for  each  of  the factories, they  would become  uneconomic  and  not  viable. Choosing one  or two  of them  would be beset with legal and practical difficulties.  In all the circumstances, the State appears to  have thought  it advisable  to import  the small quantities required  rather than  face a  number of problems arising  from   restricted   productions   supervision   and enforcement.      Sri G.Ramaswamy  next contended  that  prohibiting  the production and  manufacturing of  all  intoxicating  liquors while  exempting   toddy  from   the  said   prohibition  is discriminatory. Learned  counsel contended  that the alcohol content of  toddy is higher than the alcohol content of Beer and certain Wines. We are unable to see any substance in the argument. Toddy is a class apart. It is drawn from tree. The Excise Act  and Rules make a clear distinction between toddy on one  hand and  other intoxicating  liquors on  the other, though it  may be  that toddy  is also  included within  the meaning of  intoxicating liquors.  In the  circumstances, it cannot  be  said  that  it  is  not  a  case  of  reasonable classification having  regard to  the object of legislation. Moreover, it  is always  open  to  the  State  to  introduce prohibition  in   stages.  It  is  not  necessary  that  the prohibition should  be total  and absolute  whenever  it  is imposed. This  principle has  been affirmed by this Court in the matter  of nationalization  of bus  routes [C.S.Rewji v. State of Andhra Pradesh (1964 S.C.R.330].      Counsel   for    the    petitioners    complained    of discrimination in  the matter of providing exemptions. It is complained that  there is  no justification in providing for grant of  permits to "companies, corporations, institutions, industrialists,  exporters,   importers  and   similar  such

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functionaries as  may be notified" for entertaining not only foreigners and  N.R.Is. but  also persons  from outside  the State of  Andhra Pradesh  in connection with their business. Similar criticism  is levelled against certain other clauses in Section  15 as  well. We  are of  the opinion  that  this argument  is  not  open  to  manufacturers  of  intoxicating liquors like the petitioners. It would be a different matter if any  person affected  by  such  discriminatory  treatment complains of the same. The petitioners at any rate cannot be heard to  complain of the same. We decline to entertain this argument. We express no opinion thereon.      It  was   suggested  in  parting  that  the  policy  of prohibition is  a difficult  one  to  enforce,  that  though laudable in  principles it  gives rise to several other ills and so on. We need not express any opinion on these comments since we  are concerned  only with  the constitutionality of the impugned statutes and not with their wisdom.      For  the   above   reasons,   the   attack   upon   the constitutionality of  the Andhra  Pradesh (Amendment) Act 35 of 1995  both on the grounds of legislative incompetence and violation of  fundamental rights  fails .  The Amending Act, which has  been given  retrospective effect from the date of commencement of  the Principal  Act,  i.e.,  Andhra  Pradesh Prohibition Act,  1995, is  constitutionally valid. The writ petitions   challenging   its   validity   are   accordingly dismissed.      Insofar as the civil appeals preferred against the Full Bench  judgment   of  the  Andhra  Pradesh  High  Court  are concerned, they  have become  academic in view of the Andhra Pradesh (Amendment)  Act 35  of 1995  and the retrospectives effect given  to it. No separate arguments were addressed in these matters.  It is,  therefore. unnecessary  to deal with the questions  raised therein. They are accordingly disposed of as  unnecessary in the light of the dismissal of the writ petitions challenging  the validity  of the  Andhra  Pradesh Amendment Act 33 of 1995. No costs.