TMI Blog1994 (10) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... n constitutional validity of the (i) Karnataka Excise (Distillery and Warehouse) (Amendment) Rules, 1989, (ii) Karnataka Excise (Manufacture of Wine from Grapes) (Amendment) Rules, 1989, (iii) Karnataka Excise (Brewery) (Amendment) Rules, 1989, (iv) Karnataka Excise (Sale of Indian and Foreign Liquors) (Amendment) Rules, 1989 and (v) Karnataka Excise (Bottling of Liquor) (Amendment) Rules, 1989 was unsuccessfully challenged by various parties before the Karnataka High Court, inter alia on the ground that the Rules in question affected adversely the fundamental right of the parties to carry on trade or business in liquor and that the said Rules were violative of Articles 14, 19(1)(g), 47, 300-A, 301, and 304 of the Constitution of India. A Bench of three learned Judges of this Court which heard this group of matters has referred them to the Constitution Bench. 2. The second group consists of CA Nos. 6043-50, 6051 and 6052 of 1993. These appeals arise out of the decision of the Kerala High Court upholding the validity of the government order dated 9-12-1992 passed by the Government of Kerala deciding to cancel all foreign liquor licences issued under Rule 13(3) of the Kerala Foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as apart from trade, during the unexpired period of the licences. 6. We will first deal with the matters in groups 1, 2 and 3 and, therefore, with the question whether the appellants/petitioners have a fundamental right to carry on business in liquor. 7. Before we proceed to examine the question, it is necessary at the outset to focus our attention on the precise controversy raised before us and which,it is claimed, arises out of the conflicting decisions of this Court. For the purposes of contentions advanced before us, liquor covers not only those alcoholic liquids which are generally used as beverages and produce intoxication but also all liquids containing alcohol. Liquor is classified broadly into three classes, viz., (i) potable liquor which is used as beverage, (ii) liquor used in medicinal and toilet preparations and (iii) industrial liquor used for industrial purpose. Two rival contentions of law are canvassed before us. One, that there is no fundamental right to trade or business in liquor and that the State has power to regulate the trade or business by placing restrictions on such trade or business in the interests of the general public even to the extent of prohibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... man consumption. The said entry, among others, provides as follows: "Duty of Excise on intoxicating liquor for human consumption." Entry 8 of List II specifically provides for production, manufacture, purchase and sale of intoxicating liquor. The implication of this entry is that till prohibition is introduced by applying Article 47, there is no prohibition on consumption of liquor, and hence there is no prohibition for manufacture and sale of liquor. Secondly, it is submitted that there are other substances like tobacco which are more harmful to health than alcohol and they are being sold freely. A majority of the States did not introduce prohibition and some States which purported to do it, failed and reverted to the earlier pre-prohibition condition. On the other hand, the revenue from the auction of excise, vend fees, liquor and other levies forms a major source of the revenue of the State. Hence the trade in liquor cannot be looked upon as an obnoxious trade. Thirdly, the Union Government itself has recognised under its Industrial Policy Resolution as early as in 1956 that the production of potable alcohol as an industry has to be recognised though regulated and the licences h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide that such trade, business etc., may be carried on exclusively by the State or by a Corporation owned or controlled by it. The right conferred upon the citizens under Article 19(1)(g) is thus subject to the complete or partial prohibition or to regulation, by the State. However, under the provisions of Article 19(6) the prohibition, partial or complete, or the regulation, has to be in the interests of the general public. 13. Article 47 which is one of the Directive Principles of the State Policy reads as follows: "47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health.- The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and, in particular, the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health." This article enjoins upon and in turn enables the State to take measures to raise the level of nutrition and the standard of living of its people and to improve the public health. Towards this end, the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g) is not absolute. It is subject to restrictions imposed by the other provisions of the Constitution. Those provisions are contained in Articles 19(6), 47, 302, 303, 304 and 305. 18. We may now refer to the relevant entries of List 11 of the Seventh Schedule to the Constitution which give power to the State Governments to make the laws in question. Entry 8 reads as follows:- "8. Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors." Entry 51 reads as follows: "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." Thus a State has legislative competence to make laws in respect of the above subjects. 19. The relevant entry in List I which has a bearing on the subject is Entry 52 which reads as follows: "52. Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efer to the relevant authorities cited at the Bar. In State of Bombay v. EN. Balsara 1951 SCR 682 : AIR 1951 SC 318 : 52 Cri LJ 1361 which is a decision of the Constitution Bench of five learned Judges, what fell for consideration was the validity of the Bombay Prohibition Act, 1949. In that case, this Court held that in view of the provisions of Article 47 of the Constitution, the total prohibition on potable liquor would be reasonable. It does not appear that any contentions were raised there on the basis of Article 19(1)(g) and hence there is no discussion with reference to the said provision. 21. In TB. Ibrahim v. Regional Transport Authority 1953 SCR 290: AIR 1953 SC 79 what fell for consideration was the validity of the amendment in 1950 to Rule 268 of the Madras Motor Vehicles Rules, 1940 to empower the Transport Authority to alter from time to time the starting place and termini for motor vehicles. The appellant was the owner of a bus-stand in the municipal limits which was being used for several years as a starting place and terminus for buses plying to and from the said limits. The Transport Authority passed a resolution changing the starting place and terminus for conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The right of every citizen to pursue any lawful trade or business is obviously subject to such reasonable conditions as may be deemed by the governing authority of the country essential to the safety, health, peace, order and morals of the community. Some occupations by the noise made in their pursuit, some by the odours they engender, and some by the dangers accompanying them require regulation as to the locality in which they may be conducted. Some, by the dangerous character of the articles used, manufactured or sold, require also special qualification in the parties permitted to use them, manufacture or sell them. The Court in this connection referred to the observations of Field, J. in P. Crowley v. Henry Christensen 34 L Ed 620: 137 US 86 (1890) a part of which is as follows: "The sale of such liquors in this way has, therefore been, at all times, by the courts of every State, considered as the proper subject of legislative regulation. ... Their sale in that form may be absolutely prohibited. It is a question of public expediency and public morality and not of federal law. The police power of the State is fully competent to regulate the business to mitigate its evils or to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the notification concerned was void. While dealing with the contentions raised therein, the Court held that a perusal of the Act and the Rules made it clear that no person had any absolute right to sell liquor, and the purpose of the Act and the Rules was to control and restrict the consumption of intoxicating liquors, such control and restriction being obviously necessary for the preservation of public health and morals, and to raise revenue. 24. In State of Bombay v. R.M.D. Chamarbaugwala 1957 SCR 874: AIR 1957 SC 699 which is also a decision of a Constitution Bench of five learned Judges, the challenge was to the Bombay Lotteries and Prize Competition Control and Tax Act, 1948 as amended by the Bombay Lotteries and Prize Competition Control and Tax (Amendment) Act, 1952. After referring to the observations made in the American decision in Phalen v. Virginia 12 L Ed 1030: 49 US 163 (1850) the Court held as follows: (SCR p. 925) "It will be abundantly clear from the foregoing observations that the activities which have been condemned in this country from ancient times appear to have been equally discouraged and looked upon with disfavour in England, Scotland, the United ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions have been enacted to control gambling by issuing licences and by imposing taxes does not in any way alter the nature of gambling which is inherently vicious and pernicious. The Court further held that the same result can be arrived at by applying the doctrine of pith and substance. When Article 19(1)(g) guarantees or Article 301 declares the freedom of trade, they describe human activities in a specific aspect. They single out attributes which the act or transaction may wear and make the freedom, which they confer, depend upon those attributes. The freedom secured by the two articles implies that no unreasonable restraint or burden shall be placed upon the act falling under that description because it is trade or commerce or intercourse. The Court, then held that the Act impugned there did not purport directly to interfere with trade, commerce or intercourse as such, for the criterion of its application was the specific gambling nature of the transaction which it restricted. The purpose of the Act was not to restrict anything which brought the transactions under the description of trade, commerce or intercourse. The Act was in pith and substance, an Act with respect to bett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that the authorities cannot be said to pass purely administrative orders which were beyond the ambit of High Court's power of supervision and control. 26.In Narendra Kumar v. Union of India (1960) 2 SCR 375 : AIR 1960 SC 430 which is a decision of the Constitution Bench of five learned Judges, the question whether restriction on fundamental rights includes their prohibition, fell for consideration squarely. On different dates prior to 3-4-1958, the petitioners in that case had entered into contracts of purchase of copper with importers at Bombay and Calcutta, but before they could take delivery from the importers, the Government of India in exercise of its powers under Section 3 of the Essential Commodities Act, 1955, issued on 2-4-1958 Non-ferrous Metal Control Order, 1958. Clause (3) of the Order provided that no person shall sell or purchase any non-ferrous metal at a price which exceeded the amount represented by an addition of 3.5 per cent to its landed cost, while clause (4) prohibited any person from acquiring any non-ferrous metal except under and in accordance with the permit issued in that behalf by the Controller in accordance with such principles as the Central Gove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the rights conferred by sub-clause (b) where the restrictions are 'in the interests of the public order'; by clauses 4, 5 and 6 in respect of the rights conferred by sub-clauses (c), (d), (e), (f) (g) the restrictions are 'in the interest of the general public' in clause 5 which is in respect of rights conferred by sub-clauses (d), (e) (f) also where the restrictions are 'for the protection of the interests of any scheduled tribe'. But for these saving provisions such laws would have been void because of Article 13, which is in these words: All laws in force in the territory of India immediately before the commencement of this Constitution, insofar as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency be void; (2 The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void As it was to remedy the harm that would otherwise be caused by the provisions of Article 13, that these saving provisions were made, it is proper to remember the words of Article 13 in interpreting the words ` reasonable re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved locality. Writ Petition filed by the appellant for quashing the order of the Commissioner was dismissed by the High Court. While dealing with the appeal against the High Court's order, this Court commenting on the combined reading of clauses (1) and (6) of Article 19 observed as follows: (SCR pp. 53-54) "A combined reading of clauses (1) and (6) of Article 19 makes it clear that a citizen has a fundamental right to carry on any trade or business, and the State can make a law imposing reasonable restrictions on the said right in the interests of the general public. It is, therefore, obvious that unless dealing in liquor is not trade or business, a citizen has a fundamental right to deal in that commodity. The learned Advocate General contended that dealing in liquor was not business or trade, as the dealing in noxious and dangerous goods like liquor was dangerous to the community and subversive of its morals. The acceptance of this broad argument involves the position that the meaning of the expression 'trade or business' depends upon and varies with the general acceptance of the standards of morality obtaining at a particular point of time in our country. Such an approac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stricted in public interests. 32.Nor, according to the Court, did the decision in Cooverjee case 1954 SCR 873 : AIR 1954 SC 220 lay down any such proposition. According to the Court, in that case this Court held that the impugned regulation was a reasonable restriction within the meaning of Article 19(6). Referring to the extract from the judgment of Field, J. in Crowley v. Christensen 34 L Ed 620: 137 US 86 (1890) referred to in that judgment (which we have already quoted above) and the concurrence expressed by the Court there with the said observations, the Court observed that the said passage from the judgment of Field, J. had nothing to do with the construction of Article 19(1)(g) of the Constitution. According to the Court, there the learned Judge was considering the scope of the "police power" and the said observations were made in that context and those observations were applied by this Court in Cooverjee case 1954 SCR 873 : AIR 1954 SC 220 in considering the reasonableness of the restrictions imposed upon the fundamental rights. According to the Court, the perusal of the entire judgment shows that the Court had indeed conceded the fundamental right but held that the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by our Constitution- makers to be raised to the status of trade, commerce or intercourse and to be made the subject matter of a fundamental right guaranteed by Article 19(1)(g)." Since the Court was not concerned with gambling, the said observations were not relevant. The Court then concluded with the scrutiny of the earlier decisions of this Court referred to above, that they did not support the contention that dealing in liquor was not business or trade. According to the Court, in those decisions this Court was only considering the provisions of the various Acts which conferred a restricted right to business. None of the decisions held that a right to do business in liquor was not a fundamental right. The Court, therefore, held that dealing in liquor was business and a citizen has a right to do business in that commodity; but a State can make a law imposing reasonable restrictions on the said right in public interest. We will have an occasion to deal with the Court's observations and conclusions in this case at the appropriate stage hereinafter. 36. To proceed further with the decisions of this Court in chronological order, we may now refer to the next decision, viz., State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in K.K. Narula case (1967) 3 SCR 50 : AIR 1967 SC 1368, the Court held there as follows: (SCC p. 449, para 13) "It is no doubt true that this Court in the case cited held that dealing in liquor is business and a citizen has a right to do business in that commodity but it was added that the State can make a law imposing reasonable restrictions on the said right in public interest. In dealing with reasonable restrictions no abstract standard or general pattern is possible to lay down. In each case, regard has to be had to the nature of trade or business, the conditions prevailing in such trade or business, the nature of the infringement alleged, and the underlying purpose of the restriction, the imposition of which is alleged to constitute an infringement." 38. The Court then referred to the contention on behalf of the appellant that the provisions of Section 43 of the Bengal Excise Act, 1909 which empowered the licensing authority to withdraw the licence for any reason whatsoever not falling under Section 42 of that Act, were unreasonable and violative of the appellant's fundamental right under Article 19, and held as follows:- (SCC pp. 449- 50, para 15) .lm15 "It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 states that the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health. Third, the history of excise laws shows that the State has the exclusive right or privilege of manufacture or sale of liquor. In Balsara case' this Court referred to Article 47 and said that the idea of prohibition was connected with public health. The challenge to a prohibition law under our Constitution was made under Articles 14 and 19 in Balsara case1951 SCR 682 : AIR 1951 SC 318 : 52 Cri LJ 1361. This Court held that absolute prohibition of manufacture or sale of liquor is permissible and the only exception can be for medicinal preparations. The concept of inherent right of citizens to do business in liquor is antithetical to the power of the State to enforce prohibition laws in respect of liquor. Das, C.J. in State of Bombay v. R.M.D. Chamarbaugwala 1957 SCR 874: AIR 1957 SC 699 said that gambling could not be regarded as trade or business within the meaning of Article 19(1)(f) and (g) and Article 301. Inherently vicious activities cannot be treated as entitling citizens to do business or tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be said to have overruled the decision in Cooverjee case 1954 SCR 873 : AIR 1954 SC 220. 41. In Har Shankar v. Dy. Excise and Taxation Commr (1975) 1 SCC 737 : (1975) 3 SCR 254 which is a decision of Constitution Bench of five learned Judges, the question whether a citizen had a fundamental right to trade in intoxicants and whether State had power to prohibit absolutely every form of activity relating to intoxicants, fell directly for consideration. While dealing with it, after referring to all the earlier decisions including the decision in K.K. Narula case (1967) 3 SCR 50 : AIR 1967 SC 1368, the Court held as follows: (SCC pp. 755-56, paras 47-48) "These unanimous decisions of five Constitution Benches uniformly emphasised 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 the business is inherent in the nature of liquor business, 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 by all civilised communities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity in relation to intoxicants its manufacture, storage, export, import, sale and possession. In all their manifestations, these rights are vested in the State and indeed without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants. In American Jurisprudence, Volume 30 it is stated that while engaging in liquor traffic is not inherently unlawful, nevertheless it is a privilege and not a right, subject to governmental control (page 538). This power of control is an incident of the society's right to self protection and it rests upon the right of the State to care for the health, morals and welfare of the people. Liquor traffic is a source of pauperism and crime (pp. 5 39, 540, 54 1). It was unnecessary in Krishna Kumar Narula case (1967) 3 SCR 50 : AIR 1967 SC 1368 to examine the question from this broader point of view, as the only contention bearing on the constitutional validity of the provision impugned therein was not permitted to be raised as it was not argued in the High Court. The discussion of the question whether a citizen has a fundamental right to do trade or business in liquor proceeded in that case, avowedly, f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rests upon the right of the State to act for the health, moral and welfare of the people. Liquor traffic is a source of pauperism and crime. 44. In Southern Pharmaceuticals and Chemicals v. State of Kerala (1981) 4 SCC 391 : 1981 SCC (Tax) 320 which is a decision of three learned Judges, the Court held that no citizen has any fundamental right guaranteed under Article 19(1)(g) of the Constitution to carry on trade in any noxious and dangerous goods like intoxicating drugs or intoxicating liquors. 45. In State of M.R v. Nandlal Jaiswal (1986) 4 SCC 566 the Bench of two learned Judges reiterated that it is well settled by several decisions of this Court including the decision in Har Shankar case (1975) 1 SCC 737 : (1975) 3 SCR 254 that there is no fundamental right in a citizen to carry on trade or business in liquor. The State under its regulatory power has the power to prohibit absolutely every form of activity in relation to intoxicants and its manufacture, storage, export, import, sale and possession. No one can claim as against the State the right to carry on trade or business in liquor and the State cannot be compelled to part with its exclusive right or privilege of manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Rules on denatured spirit used and possessed by the appellant had sufficient quid pro quo for that levy. The question whether the citizen had a fundamental right to carry on trade or business in industrial alcohol was neither raised nor answered. Dealing with the question raised before it, the Court held, among other things, that before a levy can be upheld as a fee, it must be shown that the levy has a reasonable correlationship with the services rendered by the Government. The correlationship is essentially a question of fact. On the facts of that case, the Court found that the only service rendered by the Government to the appellant and to other similar licensees was that the Excise Department had to maintain an elaborate staff not only for the purposes of ensuring that denaturing is done properly by the manufacturer but also to see that the subsequent possession of denatured spirit in the hands either of a wholesale dealer or retail seller or any other licensee or permit- holder was not misused by converting the denatured spirit into alcohol fit for human consumption. Since the State in that case, had not chosen to place before the Court the material in its possession from wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "specially denatured spirit" for industrial purposes is not different from denatured spirit. The denatured spirit mentioned in the rules in question was treated as including "specially denatured spirit" for industrial purposes. The denatured spirit has ethyl alcohol as one of its constituents. The specially denatured spirit for industrial purposes is different from denatured spirit only because of the difference in the quality and quantity of the denaturants. Specially denatured spirit and ordinary denatured spirits are classified according to the use and the denaturants used. Hence the definition of 'alcohol' in the rules in question included both ordinary as well as specially denatured spirit. 50. The Court further held that although it was true that the stand taken by the State Government in the earlier proceedings in the High Court was that the levy was in the nature of excise duty or a fee and the present stand was that it was neither a duty nor a fee but only a levy for the conferment of the exclusive privilege, that would not make any difference so long as the Government has the right to impose the levy. The levy was imposed for permission granted in favour of the licensee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the States have the power to regulate the use of alcohol and that power must include power to make provisions to prevent and/or check industrial alcohol being used as intoxicating or drinkable alcohol. The question, according to the Court, was whether in the garb of regulations, the legislation which is in pith and substance fee or levy which has no connection with the cost or expenses administering the regulations can be imposed purely as a regulatory measure. Judged by the pith and substance of the impugned legislation, the Court held that the levies in question could not be treated as part of regulatory measures. The Court further held that the State had power to regulate though not as emanation of police power but as an expression of the sovereign power of the State. But that power has its limitations. The Court then observed that only in two cases the question of industrial alcohol had come up for consideration before this Court. One in Synthetics and Chemicals Ltd. Case (1980) 2 SCC 441 and the other in Indian Mica and Micanite Industries (1971) 2 SCC 236. The latter cases starting with EN. Balsara case1951 SCR 682 : AIR 1951 SC 318 : 52 Cri LJ 1361 are of potable liquor. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the U.P Act, A.P. Act, Tamil Nadu Act, Bombay Prohibition Act, as mentioned hereinbefore, are unconstitutional insofar as these purport to levy a tax or charge imposts upon industrial alcohol, namely alcohol used and usable for industrial purposes. 83. Having regard to the principles of interpretation and the constitutional provisions, in the light of the language used and having considered the impost and the composition of industrial alcohol, and the legislative practice of this country, we are of the opinion that the impost in question cannot be justified as State imposts as these have been done. We have examined the different provisions. These are not merely regulatory. These are much more than that. These seek to levy imposition in their pith and substance not as incidental or as merely disincentives but as attempts to raise revenue for States' purposes. There is no taxing provision permitting these in the lists in the field of industrial alcohol for the State to legislate. 84. Furthermore, in view of the occupation of the field by the IDR Act, it was not possible to levy this impost. 85. After the 1956 amendment to the IDR Act bringing alcohol industries (under fer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to call them qualified fundamental rights. To explain this position in law, we may take the same illustration as is given in K. K. Narula case (1967) 3 SCR 50 : AIR 1967 SC 1368. The citizen has undoubtedly a fundamental right to carry on business in ghee. But he has no fundamental right to do business in adulterated ghee. To expound the theme further, a citizen has no right to trafficking in women or in slaves or in counterfeit coins or to carry on business of exhibiting and publishing pornographic or obscene films and literature. The illustrations can be multiplied. This is so because there are certain activities which are inherently vicious and pernicious and are condemned by all civilised communities. So also, there are goods, articles and services which are obnoxious and injurious to the health, morals, safety and welfare of the general public. To contend that merely because some activities and trafficking in some goods can be organised as a trade or business, right to carry on trade or business in the same should be considered a fundamental right is to beg the question. The correct interpretation to be placed on the expression "the right to practise any profession, or to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... izen has no fundamental right to do business but he has only a qualified fundamental right to do business, the practical consequence is the same so long as the former view does not deny the State the power to completely prohibit, trade or business in articles and products like liquor as a beverage, or such trafficking as in women and slaves. This Court in K.K. Narula case(1967) 3 SCR 50 : AIR 1967 SC 1368 has not taken such view. 55. The contention that if a citizen has no fundamental right to carry on trade or business in potable liquor, the State is also injucted from carrying on such trade, particularly in view of the provisions of Article 47, though apparently attractive, is fallacious. The State's power to regulate and to restrict the business in potable liquor impliedly includes the power to carry on such trade to the exclusion of others. Prohibition is not the only way to restrict and regulate the consumption of intoxicating liquor. The abuse of drinking intoxicants can be prevented also by limiting and controlling its production, supply and consumption. The State can do so also by creating in itself the monopoly of the production and supply of the liquor. When the state d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the major items on the agenda of the society to ban or at least to regulate, its consumption. That is why it found place in Article 47 of the Constitution. It is only in recent years that medical research has brought to the fore the fatal link between smoking and consumption of tobacco and cancer, cardiac diseases and deterioration and tuberculosis. There is a sizeable movement all over the world including in this country to educate people about the dangerous effect of tobacco on individual's health. The society may, in course of time, think of prohibiting its production and consumption as in the case of alcohol. There may be more such dangerous products, the harmful effects of which are today unknown. But merely because their production and consumption is not today banned, does not mean that products like alcohol which are proved harmful, should not be banned. 59. The 1956 Resolution of Industrial Policy adopted by the Central Government also does not help the petitioners/appellants in their contention that the production of industrial alcohol as an industry has to be recognised and all that can be done is to regulate the said production but not to prohibit it. Apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal purposes. Article 47 is one of the directive principles which is fundamental in the governance of the country. The State has, therefore, the power to completely prohibit the manufacture, sale, possession, distribution and consumption of potable liquor as a beverage, both because it is inherently a dangerous article of consumption and also because of the directive principle contained in Article 47, except when it is used and consumed for medicinal purposes. (e) For the same reason, the State can create a monopoly either in itself or in the agency created by it for the manufacture, possession, sale and distribution of the liquor as a beverage and also sell the licences to the citizens for the said purpose by charging fees. This can be done under Article 19(6) or even otherwise. (f)For the same reason, again, the State can impose limitations and restrictions on the trade or business in potable liquor as a beverage which restrictions are in nature different from those imposed on the trade or business in legitimate activities and goods and articles which are res commercium. The restrictions and limitations on the trade or business in potable liquor can again be both. under Arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. The State, however, can place reasonable restrictions on the said trade or business in the interests of the general public under Article 19(6) of the Constitution. (m) The restrictions placed on the trade or business in industrial alcohol or in medicinal and toilet preparations containing liquor or alcohol may also be for the purposes of preventing their abuse or diversion for use as or in beverage. 61. This Court neither in K.K. Narula case(1967) 3 SCR 50 : AIR 1967 SC 1368 nor in the second Synthetics and Chemicals Ltd. Case (1990) 1 SCC 109 has held that the State cannot prohibit trade or business in potable liquor. The observations made in K.K. Narula case (1967) 3 SCR 50 : AIR 1967 SC 1368 that a citizen has a fundamental right to trade or business in liquor are to be understood, as explained above, to mean only that when the State does not prohibit the trade or business in liquor, a citizen has the right to do business in it subject to the restrictions and limitations placed upon it. Those observations cannot be read to mean that a citizen has an unqualified and an absolute right to trade or business in potable liquor. This position in law is explained by this Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19(1)(a) to (g). We are concerned in the present case with clause (6) of Article 19. It will be apparent from the said clause that it only speaks of "operation of any existing law insofar as it imposes ..." "from making any law imposing" reasonable restrictions on the exercise of the rights conferred by Article 19(1)(g). There is nothing in this provision which makes it imperative to impose the restrictions in question only by a law enacted by the legislature. Hence the restrictions in question can also be imposed by any subordinate legislation so long as such legislation Is not violative of any provisions of the Constitution. This is apart from the fact that the trade or business in potable liquor is a trade or business in res extra commercium and hence can be regulated and restricted even by executive order provided it is issued by the Governor of the State. We, therefore, answer the question accordingly. 65. In the view that we have taken, the appeals, special leave petitions and writ petitions will now be placed before an appropriate Bench for decision in accordance with the law laid down above. SLP Nos. 9422-24 of 1994 66. In these petitions, the contention raised is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the word 'business' is more comprehensive than the word 'trade' since it will include manufacture which the word 'trade' may not ordinarily include. The primary meaning of the word 'trade' is the exchange of goods for goods or goods for money. However, the word 'trade' has also secondary meaning, viz., business carried on with a view to profit. In fact, the words 'trade' and 'industry' are also used interchangeably many times. It all depends upon the context in which the words occur. In Words and Phrases Legally Defined, 3rd Edn., (Vol. 4; R-Z) by John B. Saunders, the word 'trade' is explained as: " 'Trade' in its primary meaning is the exchange of goods for goods or goods for money and in a secondary meaning it is any business carried on with a view to profit,, whether manual or mercantile, as distinguished from the liberal arts, or learned professions and from agriculture. However, the word is of very general application, and must always be considered in the context in which it is used. As used in various revenue Acts, 'trade' is not limited to buying and selling, but may include manufacture. In the expression 'restraint of trade' the word is used in its loosest sense to cov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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