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CASE NO.: Appeal (civil)  8105-8107 of 2001

PETITIONER: M/S AMRUT DISTILLERITES LTD

RESPONDENT: SWAMI NANDAGOPALAN & ORS

DATE OF JUDGMENT: 13/02/2008

BENCH: H.K. SEMA & MAKANDEY KATJU

JUDGMENT: JUDGMENT

O R D E R CIVIL APPEAL NOS. 8105-8107 OF 2001 WITH CIVIL APPEAL NOS. 8110-8111 OF 2001 & 2185 OF 2002

       We have heard the parties at length.         The questions involved for determination in this batch of appeals are (1) as to  whether the manufacture of potable  alcohol is vested in the State Government or the  Union Government;  and if so, (2) whether a license is required under Section 11 of the  Industries (Development and Regulation) Act, 1951, for manufacture of potable alcohol.         The Division Bench of the High Court followed the judgment rendered by a  Constitution Bench of this Court in Synthetic & Chemicals Ltd. & Others Vs. State of  U.P. & Others (1990 1 SCC 109) and held that for the manufacture of potable alcohol an  additional license under Section 11 of the Act would also be required.  While saying so,  the Division Bench of the High Court relied on a sentence  that has crept in to paragraph  85  of  the   aforesaid   decision   of  this   Court   through  

inadvertence or clerical error in the judgment. The sentence read as "Thereafter, licences  to manufacture both potable and non-potable alcohol is vested in the Central  Government".  Obviously the aforesaid sentence crept in paragraph 85 of the judgment  through inadvertence or clerical error.  We say so because under the Constitutional  scheme regulation of manufacture and sale etc. of potable alcohol is vested with the State  Government, whereas the regulation of manufacture and sale etc. of Industrial alcohol is  vested with the Union of India.         The aforesaid sentence in paragraph 85 of the Constitution Bench in Synthetic’s  case (supra) has been noticed by the Division Bench of this Court in para 11 of Bihar  Distillery and Another Vs. Union of India & Others [1997 (2) SCC 727].  After noticing  the sentence appearing in paragraph 85 of the Constitution Bench judgment, this Court  clarified in paragraph 12 of the Bihar Distillery’s judgment (supra) as under:         "It is obvious that the words "both potable and" occur here as a result of some  accidental or typographical error.  The entire preceding discussion in the judgment  repeatedly affirms that so far as potable alcohols are concerned, they are governed  by Entry 8 and are within the exclusive domain of the States.  The aforesaid words  cannot fit in with the said repeatedly affirmed reasoning.  We are, therefore, of the  opinion that the said passage cannot be understood as holding that even in respect  of the industries engaged in the manufacture or production of potable liquors, the  control is vested in the union by virtue of Item 26 of the First Schedule to the IDR  Act.  In view of the express language of Entry 8 \026 as has been clearly explained in  McDowell \026 so far as potable liquors are concerned, their manufacture, production,  possession, transport, purchase and sale is within the exclusive domain of the States  and the Union of India has no say in the matter.  For a similar clarification with  respect to the power of the State to levy sales tax on industrial alcohol, reference  may be had to State of U.P. Vs. Synthetics and Chemicals Ltd.’         In  our  view,  the  aforesaid   sentence  crept  in in paragraph 85 of the Constitution Bench judgment in Syntehetic’s case (supra) was clearly  due to a clerical error which has been rightly clarified by the subsequent judgment in

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Bihar Distillery’s case (supra).         We also noticed the High Court’s reference to Article 47 of the Constitution which  is a Directive Principle of State Policy and hence not enforceable.         In that view of the matter, the Division Bench of the High Court fell in error in  following the sentence which crept in inadvertently in paragraph 85 of the Synthetic’s case  (supra) judgment.         In the result, the appeals are allowed.  The judgment of the Division Bench of the  High Court is set aside.  The matter is remitted to the High Court to consider the matter  afresh in terms of the judgment rendered by this Court in Bihar Distillery’s case.         The High Court may consider making Union of India as party respondent.