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CASE NO.: Appeal (civil)  5300 of 2006

PETITIONER: State of Kerala & Ors.

RESPONDENT: Unni & Anr.

DATE OF JUDGMENT: 01/12/2006

BENCH: S.B. Sinha & Makandey Katju

JUDGMENT: J U D G M E N T

[Arising out of S.L.P. (Civil) No.3612 of 2005] W I T H CIVIL APPEAL NOS. 5301, 5299, 5298, 3973, 5297 and 5296 OF 2006 [Arising out of S.L.P.  (Civil) Nos. 5130, 6769-6775  of 2005, 7003, 14142 and 14189 and 18142 of 2006]

S.B. SINHA, J :

       Delay condoned in S.L.Ps.

       Leave granted.

       Abkari Act (for short, ’the Act’) was enacted by Maharaja of Cochin  By Act No.10 of 1967, it was extended to the whole of Kerala.  By reason of  the provisions of the said Act, manufacture or sale of liquor, including  country liquor is regulated.  The regulatory statute, indisputably, is made in  terms of Entry 8 of List II of the 7th Schedule of the Constitution of India.  A  licence is granted under the Act.  The licensee is indisputably required to  carry out the manufacture or sale of country liquor in terms of the provisions  of the Act, rules framed thereunder as also the terms and conditions of the  licence.   

’Alcohol’ has been defined in Rule 2(b) of the Kerela Rectified Spirit  Rules, 1972 in the following terms  :          "Alcohol" means ethyl alcohol of any strength and purity  having the chemical composition C2 H2 OH."

"Country Liquor" has been defined in Section 3(12) of the Act to  mean  ’toddy or arrack’.                                           ’Toddy’ has been defined in section 3(8) of the Act to mean :    "Toddy" means fermented or unfermented juice  drawn from coconut, palmyra, date, or any other kind of  palm tree."

Rules were framed by the State of Kerala in exercise of its rule  making power conferred upon it under Section  5 of the Act, pursuant  whereto or in furtherance whereof ’Kerala Abkari Shops (Disposal in  Auction) Rules, 2002 were framed.   Rule 9(2) of the said Rules reads as  under :

"No toddy other than that drawn from the Coconut

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Plamyrah or Choondapana palms shall be sold by the  licensees.  All toddy kept or offered for sale should be of  good quality and unadulterated.  Nothing shall be added  to it to increase its intoxicating power or for any other  purpose.  The ethyl alcohol content of toddy kept or  offered for sale drawn from Coconut, Palmyrah and  Choondapana palms should not exceed 8.1% v/v 5.2%  v/v and 5.9% v/vrespectively."         

Violation of any of the provisions of the Rules, inter alia, attract the  penal   provisions of Section 56 of the Act, clause (b) whereof reads as  under: "56. For misconduct by licensee, etc. \026 Whoever,  being the holder of a licence or permit granted under this  Act or being in the employ of such holder and acting on  his behalf \026

(a)     \005            \005            \005

(b)     Willfully does or omits to do anything in  breach of any of the conditions of his licence or permit  not otherwise provided for in this Act; or

       \005            \005            \005

shall, on conviction before a Magistrate, be punished for  each such offence with imprisonment for a term which  may extend to six months, or with fine which may extend  to two thousand rupees, or with both."    

Section 57 of the Act, however, provides for a penal provision for  adulteration of liquor by a licenced vendor or manufacturer, in the following  terms :

"57. For adulteration etc. by licensed vendor or  manufacturer \026 Whoever being the holder of a licence for  the sale or manufacture of liquor or of any intoxicating  drug under this Act.

(a) mixes or permits to be mixed with the liquor or  intoxicating drug, other than a noxious drug or any  foreign ingredient likely to add to its actual or apparent  intoxicating quality or strength, or any article prohibited  other than an article which the Government shall deem to  be noxious by any rule made under Section 29, clause  (k), when such admixture shall not amount to the offence  of adulteration under Section 272 of the Indian Penal  Code; or  

(b)     \005    \005            \005 (c)     \005    \005            \005 (d)     \005    \005            \005

shall on conviction before a competent court, be punished  for each such offence with imprisonment for a term  which may extend to five years, or with fine which may  extend to fifty thousand rupees, or which both."

        The State of Kerala published Excise Manual, the relevant provisions  whereof are as under :

"6(a).-Fermented  liquors : Toddy, Beer, Wines, etc.  come under the category of fermented liquors.  The

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maximum self-generated alcohol content that will be  present in a fermented liquor, which is not fortified is  only 12% by volume.  Because when alcohol reaches this  volume, the yeast responsible for the fermentation is  destroyed by its own bye-product and no further alcohol  formation is possible."  

Paragraphs 4, 5 and 6 of Chapter X contained in volume II of the  Manual read as under :

"4. The toddy yield from each kind of tree and the  alcoholic strength of toddy varies according to the season  of the year, the time during which it is drawn and other  attendant circumstances.  The daily average yield for  Excise Departmental purposes may be taken as 1 = litres  per coconut tree, 4 = litres per palmyrah tree and 6 >   litres per sago tree.

5.      Alcoholic fermentation of toddy which is self  generated by the action of  wild yeasts starts in the  collecting pot itself and this continues for a limited  period \026 say a maximum period of 3 days.  Subsequent to  this, bacterial (acetic) fermentation starts, bringing down  the alcohol content.  The bacteria and pseudo yeasts are  responsible for the rather strong smell of toddy and the  acidity developed.  If  toddy is left over a period of time,  (without even any other foreign matter being added to it),  alcohol content comes down and acetic acid is formed  and this is how vinegar (Acetic acid) is manufactured in  many of the parts of Kerala.  At the peak point of  fermentation, the average alcoholic strength of fermented  toddy may be taken as follows :

Coconut         \005                    8.1% by volume Palmyrah        \005                    5.2%  "       " Date            \005                    4.9     "       " Sago            \005                    5.9     "        "

6.      Toddy is claimed to be having considerable  nutritive value and is rich in sugars and vitamins.  It is  also claimed that "Toddy improves the quality of blood  and supplies the necessary vitamins for all the organs,  nerves and tissues of the body, that it is good diuretic and  has been utilized effectively in cases of Lithasis, that it is  preventive for the occasional diseases, such as silicosis  and pneumoconioisic which is a fibrous of the lungs  caused by the inhalation of silicious particles of dust of  grit".  It can be consumed in reasonable amounts without  harm to the system."       

       In State of Kerala and Others v. Maharashtra Distilleries Ltd. and  Others.  [(2005) 11 SCC 1], the history of the said Act and its subsequent  amendments were noticed by a Constitution Bench of this Court.

On obtaining samples of toddy taken from the business premises of  the licensees, it was, inter alia, found that ethyl contained therein was 9.50%  v/v.  They were prosecuted under Section 57(a) of the Act.

It is not in dispute that if a prosecution is instituted under Section  57(a) of the Act, renewal of the licence shall not be granted, whereas  renewal of the licence would not be a bar if the licensee is prosecuted under  Section 56 thereof.   

Writ petitions were filed, inter alia, questioning the validity or  otherwise of Rule 9(2) of the Rules and/or applicability of Section 57(a) of

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the Act, in the event sample of toddy was found to be exceeded 8.1%.   

A learned Single Judge of the Kerala High Court by a judgment and  order dated 31.03.2003  held the said rules to be ultra vires.  The learned  Single Judge, however, did not consider it necessary to go into the question  of interpretation of the two penal provisions viz. Section 56(b) and Section  57(a) of the Act.  The criminal proceedings as against the licensee were  quashed.  In an intra-court appeal, the Division Bench, however, upheld the  validity of Rule 9(2) of the Rules, opining that it had not imposed any  condition which was unworkable and/or was impossible to be performed.    Upon construction of Section 56(b) and Section 57(a), it was opined that  having regard to the fact that ethyl alcohol is an essential component or  ingredient of toddy,  only because percentage of ethyl alcohol found to be  more, it would not amount to addition of a foreign ingredient as envisaged  under Section 57(a) of the Act.  It was, therefore, held :

"In the result, the challenge against the vires of  Rule 9(2) of the Abkari Shops (Disposal in Auction)  Rules, 2002 is repelled.  Prosecution proceedings against  the Respondents under Section 56(b) of the Abkari Act  are not liable to be declared illegal.  Proceedings to  prosecute the Respondents under Section 57(a) of the Act  are quashed."

The Division Bench of the High Court in subsequent cases followed  its earlier orders.

Both the licensees as also the State of Kerala are before us.

Mr. K.N. Bhat, the learned Senior Counsel appearing on behalf of the  State, would submit that the provisions of Section 57(a), in view of its  purport and object must receive a purposive construction as even in a case of   fermentation;  once the percentage of ethyl alcohol is found to be in excess  of the permissible limit, the same would amount to addition of foreign  material so as to attract the provision of Section 57(a) of the Act.  Strong  reliance, in this behalf, has been placed on S. Sundaram Pillai and Others  etc. v. V.R. Pattabiraman and Others etc. [(1985) 1 SCC 591].

The learned counsel would furthermore submit that the law must  receive strict interpretation where adulteration of an edible commodity is  alleged.  Reliance, in this behalf, has been placed on Bhagwan Das Jain v.  State of Punjab [(1993) Supp. 3 SCC 736].

The learned counsel appearing on behalf of Respondents, on the other  hand, would submit that Rule 9(2) should have been declared ultra vires as it  is unworkable.  It was urged that there does not exist any mechanical  equipment to measure the contents of ethyl alcohol in toddy. Even the  Excise Department, it was contended, did not have any facility in this behalf  and each sample is sent to the laboratory for chemical analysis.

Excise Manual has been made by the State of Kerala itself.  It is  presumed to have been prepared upon making scientific studies.  It has  defined ’fermented liquor’, which states that the maximum self-generated  alcohol content that would be present in a fermented liquor, which is not  fortified,  is only 12% by volume.  It is not the case of the State that the  licensees had added any foreign material.  Paragraph 5 occurring in Chapter  X of the Excise Manual, however, provides that average alcoholic strength  of fermented toddy may be taken as follows :

       Coconut         :               8.1% by volume         Palmyrah                :               5.2%  "        "         Date                    :               4.9%  "        "         Sago                    :               5.9%  "        "

                                               [Emphasis supplied]

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It, therefore, does not rule out the possibility of  fermented toddy  containing ethyl alcohol of more 8.1% v.v.  It is accepted that the  fermentation is a natural process.  No scientific data is available on records,  nor the State could furnish any information as to how much time would it  require for toddy to become fermented which would contain  more than  8.1% of ethyl alcohol.  Toddy, as noticed hereinbefore, has been defined in  Section 3(8) of the Act, to include fermented or unfermented juice drawn  from coconut tree.   

       Rule 9(2) of the said Rules, in our opinion, should be given a plain  meaning.  It should be read in its entirety.  It is in two parts.  The intention of  the legislature must be gathered having regard to the expressions used  therein.  Rule 9(2) read in its entirety, states the context that thereby what is  essentially sought to be prevented is adulteration of toddy.  It is aimed at  prevention of adulteration.  The penal provision contained in first part not  only directs that all toddy kept or offered for sale should be of good quality  and unadulterated but also provides that nothing shall be added to it to  increase its intoxicating power or for any other purpose.  If the second part  prescribing the contents of the ethyl alcohol in toddy is read in the context of  the first part vis-‘-vis Section 57(a) of the Act, it would be evident that  prohibition is aimed at adulteration by addition of any foreign substance to  increase its intoxicating power or for any other purpose.

       Validity of Rule 9(2), therefore, can be saved if the said provision is  read in its entirety and rule of harmonious construction is resorted to.  If,  however, Rule 9(2) is sought to be invoked even for the purpose of initiating  a prosecution as against a licensee even he does not add any foreign  substance to it, the same, in our opinion, would render the same ultra vires,  as would appear from the discussions made hereinafter.

It is not in dispute that there does not exist any mechanical devise to  measure the contents of ethyl alcohol present in toddy.  It also stands  admitted that contents of ethyl alcohol in toddy would depend upon various  factors including weather, season or pot in which it is kept etc.    Judicial notice can be taken of the fact that each village would not  have a chemical laboratory where the process of analysis of ethyl alcohol   can be carried out.   For example, if a sample is taken in a village, by the  time sample is sent for and is analyzed, the volume of ethyl alcohol may  increase.  Although we are informed that some chemical is mixed when a  sample is taken, no material has been placed in that behalf.

The validity or otherwise of Rule 9.2 must be considered from this  point of view.

The constitutionality of a statute is presumed in view of the principles  laid down in ’ut rest magis valeat quam pareat’.

The principles on which constitutionality of a statute is judged and  that of a subordinate legislation are different.   

We have noticed the definition of ’toddy’.  It does not limit the extent  of fermentation.  Fermented toddy would, therefore, come within the  purview of definition of toddy.  Manufacture and sale of toddy, which is  fermented, is not prohibited.  Excise Manual clearly points out that the  contents of ethyl alcohol by reason of fermentation in toddy can go upto  12%, whereafter only it ceases to be a toddy.  While laying down the norms  in Excise Manual, the State had used the words ’average yield’.  The  percentage specified therein, thus, is only average.

 If by reason of the rule making power, the State  intended to impose  a condition, the same was required to be reasonable one.  It was required to  conform to the provisions of the statute as its  violation would attract penal

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liability.  It was expected to be definite and not vague.  Indisputably, the  State having regard to the provisions of Article 47 of the Constitution of  India, must strive hard to maintain public health.  While, however, imposing   conditions in regard to the prescription of norms, it was expected of the State  to undertake a deeper study in the matter.  It should have undertaken actual  experiments.  It should have specified mode and manner in which the  percentage of ethyl alcohol can be found out  by the licensee.  A subordinate  legislation  can be questioned on various grounds.  It is also well-known that  a subordinate legislation would not enjoy the same degree of immunity  as a  legislative act would.  [See Vasu Dev Singh & Ors. v. Union of India & Ors.  2006 (11) SCALE 108].

       In Kerala Samsthana Chethu Thozhilali Union v. State of Kerala and  Others [(2006) 4 SCC 327], this Court while interpreting the provisions of  the same Act, opined :                           "The Rules in terms of sub-section (1) of Section 29 of  the Act, thus, could be framed only for the purpose of  carrying out the provisions of the Act. Both the power to  frame rules and the power to impose terms and  conditions are, therefore, subject to the provisions of the  Act. They must conform to the legislative policy. They  must not be contrary to the other provisions of the Act.  They must not be framed in contravention of the  constitutional or statutory scheme."  

       It was furthermore held :   "Furthermore, the terms and conditions which can be  imposed by the State for the purpose of parting with its  right of exclusive privilege more or less have been  exhaustively dealt with in the illustrations in sub-section  (2) of Section 29 of the Act. There cannot be any doubt  whatsoever that the general power to make rules is  contained in sub-section (1) of Section 29. The  provisions contained in sub-section (2) are illustrative in  nature. But, the factors enumerated in sub-section (2) of  Section 29 are indicative of the heads under which the  statutory framework should ordinarily be worked out.    Neither Section 18-A nor sub-sections ( c )  and (d) of  Section 24 of the Act confer power upon the delegatee to  encroach upon the jurisdiction of the other department of  the State and take upon its head something which is not  within its domain or which otherwise would not come  within the purview of the control and regulation of trade  in liquor. The conditions imposed must be such which  would promote the policy or secure the object of the Act.  To grant employment to one arrack worker in each toddy  shop in preference to the toddy workers neither promotes  the policy nor secures the object of the Act. It is not in  dispute that the purport and object of such Rules is to  rehabilitate the former employees of arrack shops.  Rehabilitation of the employees is not within the  statutory scheme and, thus, the Rules are ultra vires the  provisions of the Act. "

Unreasonableness is one of the grounds of judicial review of  delegated legislation. Reasonableness of a statute or otherwise must be  judged having regard to the various factors which, of course, would include  the effect thereof on a person carrying on a business.   

While we are not oblivious of the fact that nobody has any  fundamental right to carry on business in toddy or liquor, but all the  licensees are entitled to be treated equally.  If the matter of validity or

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otherwise of the subordinate legislation is to be considered, Article 14 of the  Constitution of India shall be attracted. [See State of Punjab and Another v.  Devans Modern Breweries Ltd. and Another  (2004) 11 SCC 26, Ashok  Lanka and Another v. Rishi Dikshit and Others (2005) 5 SCC 598 and  Ashok Lanka-II v. Rishi Dikshit  (2006) 9 SCC 90]

When a statute provides for a condition which is impossible to be  performed, unreasonableness of a statute shall be presumed.  It would be for  the State in such a situation to justify the reasonableness thereof.

The Division Bench has, in our opinion, posed a wrong question unto  itself when it proceeded on the premise that availability of a mechanical  instrument to measure the contents of ethyl alcohol is of no moment.  When  a subordinate legislation imposes conditions upon a licensee regulating the  manner in which the trade is to be carried out, the same must be based on  reasonable criteria.  A person must have means to prevent commission of a  crime by himself or by his employees.  He must know where he stands.  He  must know to what extent or under what circumstances he is entitled to sell  liquor.  The statute in that sense must be definite and not vague.  Where a  statute is vague, the same is liable to be struck down. [Hamdard Dawakhana  (Wakf) Lal Kuan, Delhi and Another v. Union of India and Others \026 AIR  1960 SC 554].

The learned Single Judge although did not deal with the matter in  details, but was of the opinion that the statute is not workable.   

Workability of a statute vis-‘-vis the question as to whether it is vague  or otherwise must also be considered having regard to the question as to  whether it is at all practical.

We must state that where two interpretations are possible, having  regard to the workability or unworkability of a statute, the one which leads  to the workability of the statute must be preferred than the other, keeping in  view the principle ’ut rest magis valeat quam pereat’.  [See State of Tamil  Nadu v. M.K. Kandaswami and Others  (1975 (4) SCC 745].  

       We may, however, notice some precedents operating in the field :   

       In M.K. Kandawami (supra), this Court observed :   "It may be remembered that Section 7-A is at once a  charging as well as a remedial provision. Its main object  is to plug leakage and prevent evasion of tax. In  interpreting such a provision, a construction which would  defeat its purpose and, in effect, obliterate it from the  statute book, should be eschewed. If more than one  construction is possible, that which preserves its  workability, and efficacy is to be preferred to the one  which would render it otiose or sterile. The view taken by  the High Court is repugnant to this cardinal canon of  interpretation."  

       In Commissioner of Sales Tax, Delhi and Others v. Shri Krishna  Engg. Company and Others [(2005) 2 SCC 692], it was opined : "In State of T.N. v. M.K. Kandaswami this Court held  that where the object of a provision is to plug leakage and  prevent evasion of tax, in interpreting such provision, a  construction which would defeat its purpose and, in  effect, obliterate it from the statute-book should be  eschewed. If more than one construction is possible, that  which preserves its workability and efficacy is to be  preferred to the one which would render it otiose or  sterile."   

       The said decision was on a interpretation of a taxing statute.

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       Interpreting a rent control legislation, Lahoti, J. (as His Lordship then  was) in Rakesh Wadhwani and Others v. Jagdamba Industrial Corporation  and Others  [(2002) 5 SCC 440], opined : "There are two means of resolving the riddle: firstly, by  placing such meaningful interpretation on the provision  as would enable the legislative intention being  effectuated; and secondly, by devising such procedure  without altering the structure as would enable the  substantive law being meaningfully implemented. Let us  see whether the expression "assessed by the Controller"  qualifies only "the cost of application" or qualifies the  entire preceding expression i.e. "the arrears of rent and  interest at six per cent per annum on such arrears together  with the cost of application". As there is ambiguity and  the provision is susceptible to two meanings, the court  should interpret it in the manner which will best serve the  object sought to be achieved\005"                 Here, no two interpretations are possible for upholding the validity of  statute.  Applying the principle of law as enunciated by this Court in the  decisions noticed hereinbefore, no interpretation would make the statute  workable or definite and thereafter, valid in law.       

       We are concerned herein with construction of a penal statute.    

       Is it possible for a licensee to apply for renewal of his licnece in terms  of Section 57 of the Act is the core question.   

       Toddy ferments automatically after sun rise.  If it is permitted to be  sold within a timeframe after toddy is tapped, reasonableness can be  inferred; but at what point of time precisely ethyl alcohol content would  exceed 8.1% in a toddy is not known.  It will bear repetition to state that the  same would depend upon several factors including the climate.  It is  reasonable to expect that the State would frame rules in consonance with  equity and good  conscience.  A rule may not be worked out if it imposes a  condition which,  unless some other guidelines are issued, would become  impossible to be performed.  We must remind ourselves that the  consequences of a single violation may be disastrous.  If the contention of  the State is correct, it would not only result in penal consequences, but   would also lead to non-renewal of the licence. The licensee, thus, for all  intent and purport looses his right to carry on business.  Carrying on trade of  liquor may not be a fundamental right, but it is a contractual right given to  him in terms of the provisions of a statute.  The terms and conditions are  governed by statute. The violation thereof would lead to penal  consequences.  Interpretation of statute in the aforementioned situation rests  on the principle of reasonableness, equity as well as good conscience.   

       There exists a presumption that the framers of the statute intended to  make it reasonable. [See Bharat Hydro Power Corporation Ltd. & Others v.  State of Assam and Another \026 (2004) 2 SCC 553; and Bombay Dyeing &  Manufacturing Co. Ltd. (3) v. Bombay Environmental Action Group &  Others.  and (2006) 3 SCC 434 \026 Paras 201 & 214].                              A person may be held to be guilty even if the contents of ethyl alcohol  exceed 8.1% marginally.   He must, therefore, be in a position to know as to  what extent he can go and to what extent he cannot. The matter cannot, thus,  be left to  an act of nature.  A penal provision must be definite.  Unless the  statutory intention otherwise provides, existence of mens rea must be read  into a penal statute.  It must be a deliberate act and not an unintentional one,  unless the statute says so explicitly or by necessary implication.  The Act or  the Rules do not say either.  It is in that sense vague or unreasonable.    

       Once, thus,  it is found to be ex facie unreasonable and unworkable,  the court would not hesitate to strike down the said rule.  We do so.  

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       We for the reasons aforementioned, hold Rule 9(2) to be unworkable  being vague in nature, unless read in the manner as suggested supra.

       We may now consider interpretation of Sections 56(b) and 57(a) of  the Rules.   

       Sections 56 and 57 operate in different fields.  They lead to different  consequences.  They  provide for different punishments.  Whereas Section  56 contemplates  penal action in the event terms and conditions of a licence  are found to have been violated; Section 57 of the Act speaks of  adulteration.  The contention of the State, therefore, must be judged from the  aforementioned context.

       A person may violate rule, but thereby may not adulterate liquor.   Whereas violation of the rule may be intentional or unintentional attracting  penal provisions of  Section 56 of the Act. Violation of the provisions of  Section 57 rests on existence of mens rea or actus reus on the part of the  offender.  In a case where extract of juice is subject to automatic  fermentation, one does not have to mix anything for increase of contents of  ethyl alcohol.  It is not the case of the State that the licensee has deliberately  mixed additional ethyl alcohol in the liquor so as to increase the potency  thereof.   

       Section 57 provides for graver offence.  If one act attracts two  offences, the one providing for higher punishment cannot be presumed to  apply unless ingredients thereof are satisfied.  

       A penal statute must receive strict construction.  Only in exceptional  cases the principles of purposive construction shall apply to a penal statute.  [See Indian Handicrafts Emporium and Others  v. Union of India and Others  [(2003) 7 SCC 589] and Balram Kumawat v. Union of India and Others  \026  (2003) 7 SCC 628].

       In this case we are satisfied that the High Court was correct in its view  that the ingredients of Section 57 of the Act are not attracted in the instant  case.   

       In Pratap Singh v. State of Jharkahnd and Another  [(2005) 3 SCC  551], this Court opined :  "Interpretation of a statute depends upon the text and  context thereof and having regard and object with which  the same was made."            In Mathai v. State of Kerala  [(2005) 3 SCC 260], distinguishing  between a charge under Section 325 and a charge under Section 326, this  Court  held : "Some hurts which are not like those hurts which are  mentioned in the first seven clauses, are obviously  distinguished from a slight hurt, may nevertheless be  more serious. Thus a wound may cause intense pain,  prolonged disease or lasting injury to the victim, although  it does not fall within any of the first seven clauses.  Before a conviction for the sentence of grievous hurt can  be passed, one of the injuries defined in Section 320 must  be strictly proved, and the eighth clause is no exception  to the general rule of law that a penal statute must be  construed strictly."

       We are not oblivious that there are certain exceptions to the said rule.         In Iqbal Singh Marwah  and Another v. Meenakshi Marwah and  Another [(2005) 4 SCC 370], a Constitution Bench of this Court held :   "Dr. Singhvi has also urged that since we are dealing  with a penal provision it should be strictly construed and

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in support of his proposition he has placed reliance upon  a Constitution Bench decision in Tolaram Relumal v.  State of Bombay wherein it was held that it is well-settled  rule of construction of penal statutes that if two possible  and reasonable constructions can be put upon a penal  provision, the court must lean towards that construction  which exempts the subject from penalty rather than the  one which imposes penalty and it is not competent for the  court to stretch out the meaning of expression used by the  legislature in order to carry out the intention of the  legislature. The contention is that since Section 195(1)( b  )( ii ) affords protection from private prosecution, it  should not be given a restrictive interpretation to curtail  its scope. We are unable to accept such broad proposition  as has been sought to be urged. In Craies on Statute Law  (1971 Edn., Chapter 21), the principle regarding penal  provisions has been stated as under:  "But penal statutes must never be construed so as to  narrow the words of the statute to the exclusion of  cases which those words in their ordinary  acceptation would comprehend. ’ But where the  thing is brought within the words and within the  spirit, there a penal enactment is to be construed,  like any other instrument, according to the fair  common-sense meaning of the language used, and  the court is not to find or make any doubt or  ambiguity in the language of a penal statute, where  such doubt or ambiguity would clearly not be found  or made in the same language in any other  instrument’."  In Lalita Jalan v. Bombay Gas Co. Ltd. this question was  examined in considerable detail and it was held that the  principle that a statute enacting an offence or imposing a  penalty is to be strictly construed is not of universal  application which must necessarily be observed in every  case. The Court after referring to Murlidhar Meghraj  Loya v. State of Maharashtra, Kisan Trimbak Kothula v.  State of Maharashtra, Supdt. and Remembrancer of  Legal Affairs to Govt. of W.B. v. Abani Maity and State of  Maharashtra v. Natwarlal Damodardas Soni held that  the penal provisions should be construed in a manner  which will suppress the mischief and advance  the object  which the legislature had in view."  

       We are, however, dealing with a different situation.  Section 57 must  also receive strict construction, having regard to the fact that thereby an  offence proved would lead to a higher penalty;  although on the self-same  fact another penal provision involving a minor punishment, viz., Section 56  would be attracted.  It has to be read having regard to the constitutional  protection available to an accused as also other civil consequences, if any,  entailing therefor.  While construing a penal statute, in a case of this nature,  it is necessary  to apply the rule of strict construction.

       In Standard Chartered Bank and Others v. Directorate of Enforcement  and Others [(2005) 4 SCC 530], yet again a Constitution Bench in a case  where two different interpretations were possible, opined :                    "The counsel for the appellant contended that the penal  provision in the statute is to be strictly construed.  Reference was made to Tolaram Relumal v. State of  Bombay, SCR at p. 164 and Girdhari Lal Gupta v. D.H.  Mehta. It is true that all penal statutes are to be strictly  construed in the sense that the court must see that the  thing charged as an offence is within the plain meaning  of the words used and must not strain the words on any

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notion that there has been a slip that the thing is so  clearly within the mischief that it must have been  intended to be included and would have been included if  thought of. All penal provisions like all other statutes are  to be fairly construed according to the legislative intent  as expressed in the enactment. Here, the legislative intent  to prosecute corporate bodies for the offence committed  by them is clear and explicit and the statute never  intended to exonerate them from being prosecuted. It is  sheer violence to common sense that the legislature  intended to punish the corporate bodies for minor and  silly offences and extended immunity of prosecution to  major and grave economic crimes."

       The matter may have to be considered from another angle.  Renewal  of a licence is a valuable right. [See D. Nataraja Mudialiar v. The State  Transport Authority, Madras - AIR 1979 SC 114].

       It is not in dispute that whereas if an offence is committed under  Section 56 of the Act, renewal of licence is permissible; but in a case where  a licensee faces a prosecution under Section 57, renewal of licence would be  denied to him.  Consequences of attracting the provisions of Section 57,  thus, must also be judged from the said angle.   

       Reliance placed by Mr. Bhat upon Sundaram Pillai (supra), in our  opinion, is wholly misplaced. The court therein was considering a rent  control statute.  It laid down law with regard to the interpretation of  ’proviso’ and ’explanation’.  It was while so doing referred to the well- known decision of Seaford Court Estates Ltd. v. Asher [(1949) 2 All ER 155  : (1969) 2 KB 481 (CA)], stating :                          "It has been observed that statutory provisions  must be so construed, if it is possible, that absurdity and  mischief may be avoided.  Where  the plain and literal  interpretation of a statutory provision produced a  manifestly absurd and unjust result, the court might  modify the language used by the Legislature or even do  some violence to it so as to achieve the obvious intention  of the Legislature and produce rational construction and  just results.  See in this connection, the observations in  the case of Bhag Mal v. Ch. Parbhu Ram.  Lord Denning  in the case of  Seaford Court Estates Ltd. v. Asher has  observed :

"\005if the makers of the Act had themselves come  across this ruck in the texture of it, they would have  straightened it must not alter the material of which  the Act is woven, but he can and should iron out the  ceases."

       Ironing out the creases is possible but not rewriting  the language to serve a notation of public policy held by  the Judges.  Legislature must have legislated for a  purpose by Act 23 of 1973 and used the expression "shall  be construed" in Explanation in the manner it did."         

       It, however, added a note of caution that a purposive construction can  be applied if the statute is read as a whole, requires such application.

       Reliance upon Bhagwan Das Jain (supra), in our opinion, is also  misplaced.  In fact, upon construction of a statute, we have held that the  licensees are not guilty of any adulteration.  The said decision has, therefore,  no application.         

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       For the reasons aforementioned, Civil Appeals arising out of Special  Leave Petition (Civil) Nos. 3612 of 2005, 6769-75 of 2005 and 7003 of  2006 filed by the State of Kerala are dismissed and Civil Appeals arising out  of Special Leave Petition (Civil) Nos. 5130 of 2005, 14189 of 2006 and  18142 of 2006 are allowed.  No costs.