TMI Blog1992 (3) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... dic medicines, containing more than 25 per cent proof alcohol have been brought within the purview of the Delhi Intoxicating spirituous Preparations Import, Export, Transport, Possession and Sale Rules, 1952 (here matter referred to as the Isp Rules, 1952). (4) The Isp Rules of 1952 have been framed under the provisions of the Punjab Excise Act, 1914 (hereinafter referred to as the Excise Act), as extended to the Union Territory of Delhi and a number of contentions have been raised seeking to challenge the validity of the said Notifications of 1987. (5) The Excise Act, 1914 was extended to the Union Territory of Delhi vide Government of India Notification dated 30th May, 1939. This Act was extended by the Central Government in exercise of its powers under the Delhi Laws Act, 1912. Some of the amendments which were made in Punjab to the Punjab Excise Act were also extended, from time to time, to Delhi. The Act, when applied to Delhi, was extended without the preamble but the provisions of the Act, as extended, make it clear that it deals not only with the matters of excise revenue but also with regulation and control of import, export, transport, manufacture, sale and possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime to be, incapable of being issued for potable purposes and declared as such by him by notification. (9) Some of the other relevant Isp Rules are Rule 3 read with Rule 3-A which, inter alia, provide for possession of intoxicating spirituous preparation. Rule 3 of the 1961 Rules is to the effect that no person shall have, except to the extent permitted by Rule 3A, in his possession any quantity of any intoxicating spirituous preparations except under the authority and in accordance with the terms and conditions of a license or permit granted under these rules. Rule 3A specifies as to who may be possessed of intoxicating spirituous preparations, including Ayurvedic or Unani preparations. Provisions with regard to import, export and transport are contained in Rules 4, 5, 5A and 7 of the Isp Rules. According to Rule 9, subject to the conditions to the license, a manufacturer shall sell intoxicating spirituous preparations to a registered medical practitioner or a Homoeo Practitioner or an Ayurvedic or Unani Practitioner or a licensee or permit holder or a private medical practitioner only in such quantity and for such purpose as may be specified in his license or permit. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should have been excluded. Apart from 18 specific intoxicating spirituous preparations, containing any degree of alcohol, which were excluded, the said Notification of 5th March, 1987 also excluded tonics containing up to 25 per cent proof alcohol . (13) By virtue of the two Notifications dated 3rd March, 1987 and 5th March, 1987 the aforesaid four Ayurvedic drugs have come within the purview of the Excise Act as well as the Isp Rules, 1952. (14) The main. contention of the petitioners is that the Punjab Excuse Act has no applicability to the Ayurvedic preparations in question. The submission is that Drugs Control and Cosmetic Act, 1940 (by the Federal Legislature), the Drugs (Control) Act, 1950, the spirituous Preparations (Inter-State Trade and Commerce) Control Act, 1955, the Medicinal and Toilet Preparations (Excise Duty) Act, 1955 and the Delhi Municipal Corporation Act, 1957 collectively cover the entire field of legislation in respect of which the Isp Rules have been framed. Elaborating the contention it has been submitted that the aspect of manufacturing is regulated by the Medicinal and Toilet Preparations (Excise Duty) Act, 1955. The aspect of the grant of manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not apply to the Ayurvedic, Siddha or Unani drags. It is clear, Therefore, that as far as the medicines in question are concerned it is only Chapter IV-A of the 1940 Act which is relevant. (16) Reading Sections 33-C to 33-0, which are contained in this Chapter IV-A, we do not find any specific provision dealing with the transportation and the manner of sale of manufactured Ayurvedic medicines, and of the four medicines in particular with which we are concerned in this case. Section 33C provides for the setting up of a Ayurvedic, Siddha and Unani Drugs Technical Advisory Beard. Section 33D enables the Central Government to constitute an Ayurvedic, Siddha and Unani Drags Consultative Committee. Section 33E defines as to what is deemed to be misbranding of Ayurvedic, Siddha or Unani drugs while Section 33-EE stipulates as to what is deemed to be an adulterated drug. Section 33-EEA specifies as to what are deemed to spurious drugs. Regulation of manufacture for sale of such drugs is provided by Section 33-EEB. Section 33-EBC provides for prohibition of manufacture and sale of certain Ayurvedic, Siddha or Unani drugs and the said provision is as follows : 33-EEC. Prohibition of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the question of transportation of Ayurvedic drugs. The prohibition contained in Section 33-EEC is essentially to the manufacture for sale or for distribution of misbranded, adulterated or spurious drugs. This provision also does not permit the sale or stocking of any drug which has been manufactured in contravention of any of the provisions of the Act but there is no control with regard to sale of any drug which is manufactured in accordance with the provisions of the said Chapter. (17) The effect of notifying the impugned drugs as intoxicants and bringing them within the ambit of the Excise Act and the Isp Rules is to regulate and control the transportation and sale of the said drugs. These drugs may be medicinal but they are capable of and are being misused and consumed as beverages as they have alcohol content of over 25 degree proof. The sale of such medicinal drugs if manufactured properly and if not misbranded, spurious or adulterated would not come within the ambit of Chapter IV-A and Section 33-EEC of the 1940 Act but the sale of same can be controlled or regulated under the Isp Rules. The provisions of Chapter IV-A of the 1940 Act do not, to our mind, overlap any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirements of any other law relating to such drugs. By virtue of Section 2 of the 1940 Act, Therefore, the provisions of the Isp Rules and the Excise Act would continue to apply, in addition to the provisions of the 1940 Act. The said judgment was approved by the Supreme Court in Indian C P Works v. State of A.P., [1966]2SCR110. Furthermore the Supreme Court in Indian C P Work's case (supra) observed that a drug could possibly fall under two Central Acts namely Dangerous Drugs Act, 1930 and Drug Act, 1940. On the same reasoning a medicinal preparation , like the one with which we are concerned in the present case, can also fall under two Central laws namely the Drugs Act. 1940 and the Excise Act and the rules framed therein. The provisions of the two Acts are not incompatible and the Drugs Act, 1940 does not in anyway efface the Excise Act or the Isp Rules. (20) With reference to the Medicinal and Toilet Preparations (Excise Duty) Act, 1955 (hereinafter referred to as the 1955 Act) it was submitted by the learned counsel for the petitioners that the said Act also deals with drugs which are medicinal preparations. Our attention was drawn to the decision of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e domain of the Parliament under Entry 84 of List I of the Seventh Schedule. The Supreme Court referred nut only to I the 1955 Act but also to the Drugs and Cosmetics Act, 1940 and upheld the decision of the High Court by holding that the 1955 Act did not prevent the State legislature from making a law under Entry 8 of List-11 of the Seventh Schedule with respect to intoxicating liquors. It was held that the Central Government and the State legislations in that case operated in two different and distinct fields and though the Central Act and the rules framed there under, to some extent, trench upon the field reserved to the State legislature but that is merely incidental to the main purpose, that is, to levy duties of excise on medicinal and toilet preparations containing alcohol. Similarly some of the impugned provisions may be almost similar to some of the provisions of the Central Rules but that does not imply that the State legislature had no competence to enact the provisions. (22) With regard to the power of the State Legislature under Entry 8 of List-11 it was observed that: 14. It is sufficient to say upon the first ground that the impugned legislation is confined t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us that the Isp Rules are an unreasonable restrictions on the freedom of trade guaranteed under Article 19(l)(g) of the Constitution. Similar contention was also raised in Southern Pharmaceuticals' case (supra) and was repelled in the following manner: 32. It is to be observed that the restriction imposed by Section 12-A of the Act as to the quantity of medicinal preparations to be manufactured relates not only to such preparations to which alcohol is added, but also to medicinal preparations in which alcohol is self generated .There can be no doubt that ayurvedic asavas and arishtas which are capable of being misused as alcoholic beverages can come within the purview of the definition of liquor contained in Section 3(1.0) of the Act being liquids' containing alcohol. The contention that Nore to Rule 3(1) of the spirituous Preparations (Control) Rules, 1969 is an unreasonable restriction on the freedom of trade guaranteed under Article 19(1)(g) of the Constitution has no substance. It provides that unless otherwise declared by the Expert Committee, asavas and arishtas and other preparations containing alcohol are deemed to be spurious if their self-generated alcohol cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Excise Act. as applicable to the Union Territory of Delhi are in no way adversely affected by the enactment of the 1955 Act which was concerned solely with the levy and collection of duty of excise on such medicinal products. (27) The spirituous Preparations (Inter-State Trade and Commerce) Control Act, 1955 (for short the Spirituous Preparations Control Act, 1955) was enacted with a view to impose. in the public interest, certain restrictions on inter-State trade and commerce in spirituous; medicinal and other preparations. The said Act was enacted primarily with a view to preventing such inter-State trade and commerce which results in import into or passage through a prohibition State . The said Act is not concerned with or deals with movement within a State or Union Territory of Delhi or with regard to manufacture or sale of spirituous medicinal products. In other words the said Act and the Excise Act and the Isp Rules operate in different fields (28) The provisions contained in the Delhi Municipal Corporation Act, 1957 (for short the Dmc Act, 1957) pertaining to transit of goods through Delhi also .do not in any way come in conflict with the provisions of the Is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas the Balsara's case dealt with the provisions of the Bombay prohibition Act which prohibited free sale of medicinal products containing alcohol, in the present case, however, under the Excise Act and the Isp Rules there is no prohibition imposed. Regulating transport and sale of spurious preparations, even though they may be medicines, Cannot fall within the ambit of prohibition All that the Supreme Court in Synthetics and Chemicals' case (supra) observed was that the exclusive jurisdiction of the State with regard to medicinal and toilet preparations did not exist. These observations cannot be taken out of the context and they do not mean that the jurisdiction of the State Legislatures was completely ousted. The Supreme Court itself in a recent decision in the case of Shri Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. v. State of Gujarat, Judgment Today 1992 10 S.C. 597 has explained the full import of its earlier judgment in Synthetics and Chemicals Ltd. (supra). In Bileshwar Khand Udyog's case, Section 58A of the Bombay Prohibition Act, inter aha, provided that the State Government may pass general or special orders directing the manufacture, import, expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft with only the following powers to legislate in respect of alcohol : (a) ................ (b) It may lay down regulations to ensure that none potable alcohol is not diverted and misused as a substitute for potable alcohol. (c) .'................ (d) However, in case State is rendering any service, as distinct from its claim of so-called grant of privilege ,it may charge fees based on quid pro quo. (33) Under Entry 81 of List I, in respect of medicinal and toilet preparations, it is the Parliament which has the jurisdiction to levy duties of excise. In Balsara's case (supra) the provision with regard to prohibition of sale of medicinal products containing liquor was not struck down on the ground of legislative competence. It was held to be un-reasonable under Article 19(l)(f) of the Constitution. (34) Under Entry 8 of List Ii it Is the State Legislature which has been given power to legislate in respect to intoxicating liquors even if the said liquors are regarded as medicines. Medicinal products may also fall under Entry 19 of List Iii dealing with the subject of drugs and poisons which would give both the Parliament as well . s the State Legislatures the power to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, as a Central Act. The argument of. the leaned counsel for the petitioners with regard to the conflict in the legislative powers of the State vis- -vis the Parliament cannot arise in the .present case. Parliament as regards Delhi, being the sole authority who can legislate with regard to any of the entries in any of the three Lists of Seventh Schedule and the Excise Act being regarded as a piece of Central legislation the question of there being any conflict in legislative competence cannot arise. In Mithan Lal v. State of Delhi, [1959]1SCR445 the Supreme Court was concerned with the provision in the Bengal Finance (.Sales Tax) Act, 1941 which imposed tax on building contracts. This Act had been extended to the Union Territory of Delhi by issuing a Notification in Part-C States (Laws) Act, 1950. The imposition of Sales Tax on building contracts by the States had been held to be ultra virus but the question which arose was whether this provision was valid in Delhi, which at that time was a Part-C State. The Supreme Court held that as far as Delhi was concerned because of the provisions of Article 246(4) Parliament alone was competent to enact laws in respect of matters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to intoxicating drinks used for medicinal purposes but, as we have already indicated, the Punjab Excise Act and the Isp Rules do not prohibit the consumption of any intoxicating liquor or any Ayurvedic medicine which may also be regarded as an intoxicating drink. Prohibition under Article 47 would ordinarily be understood as meaning a complete ban on the intake of intoxicating drinks and drugs which are injurious to health. The power of the State Legislature ,and of the Parliament in case of the Union Territory of Delhi to legislate under Entry 8 of List Ii in relation to in dominating drinks which are in the form of Ayurvedic medicines or otherwise, is not in any way abridged or curtailed by Article 47 of the Constitution. The said Entry 8 of List Ii enables law being enacted relating to manufacture ,possession, transport, purchase and sale of intoxicating liquors. A, law made under this Entry, if it does not violate any provision of the Constitution, cannot be regarded as being ultra vires It is difficult for us to conceive that, as far a.s the Union Territory of Delhi is concerned, where Parliament has the sole authority of making law there could be no enactment which can contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e within the category of intoxicants and, Therefore, would be outside the purview of the Isp Rules and the Excise Act. (42) It was also submitted that the Notification dated 3rd March, 1987 was beyond the legislative competence of the U. Governor since he was not acting at the behest of the Central Government hut was acting in pursuance of the powers available under Article 239 of the Contribution of India. We are unable to appreciate this contention. The impugned notification of 3rd March, 1987 clearly states that the Isp Rules are being amended by the Administrator in exercise of the power conferred by Section 58 of the Punjab Excise Act, 1914. Section 58 of ins Excise Act Clearly provides that The Lt. Governor of Delhi may. by notification, make rules.. . . The said Section specifically empowers the Lt. Governor, who is also, the Administrator for the Union Territory of Delhi to frame the rules. The Lt. Governor under Section 58 is the persona designata and he has the authority to make rules turn the purpose of carrying out the provisions of the Act. (43) It was next contended that the Notification dated 3rd March, 1987 bad not been published in accordance with the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner, it has been contended that the said Notification violates Article 14 of the Constitution inasmuch as 19 preparations have been selected for preferential treatment and for such selection and discrimination there is no material on record and no objective criteria has been followed for their selection. (46) We find no merit in this contention. The Notification dated 5th March, 1987 has been issued under Clause (iii) of Rule 24 of the Isp Rules. By this Notification 19 intoxicating spirituous preparations have been exempted from the operation of the said Rules. Which of the intoxicating spirituous preparation is to be exempted under Rule 24(iii), is for the Excise Commissioner to decide. According to Rule 24(iii) the said Rules are not to apply to intoxicating spirituous preparations as are considered by the Excise Commissioner from time to time to be incapable of being misused for potable purpose and declared as such by him by issue of Notification. The powers of the excise Commissioner are, Therefore, not un-bridled. He can only exempt those intoxicating spirituous preparations in respect of which he comes to the conclusion that they are incapable of being misused for pota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly stood did not make the said Rules applicable to Ayurvedic medicines. Even though on 5th March. 1987 Ayurvedic Medicines including the 19 preparations notified by the Notification of 5th March, 1987, were outside the purview of the Isp Rules, nevertheless as on that date Notification of 3rd March, 1987 had been issued. If the Notification of 5th March, 1987 had not been issued the effect would have been that all Ayurvedic medicines including 19 preparations covered by 5th March, 1987 Notification would have become subject to the Rules w.c.f. 17th March, 1987. The power of the Excise Commissioner under Rule 24(i'i) is an independent Dower and in addition to their exclusion under Section 24(ii) there was no invalidity to the exclusion of 19 preparations from. the operation of the Rules by issuance of the Notification of 5th March, 1987 under Rule 24(iii). It is obvious that the Excise Commissioner knew that w.e.f. 17th March. 1987 clause (ii) of Rule 24 of the Isp Rules would stand deleted and in order that 19 intoxicating spirituous preparations do not become subject to the Isp Rules the impugned Notification was issued in advance, on 5th March, 19S7 under Rule. 24(iii). We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and movement of the drugs which include Ayurvedic medicines as defined and covered under medicinal preparations within the meaning of 1955 Act. Reference in this connection was also sought lobe made to the decision of the Supreme Court in Synthetics and Chemicals Ltd. v. State of U.P. (supra). In that case, with reference to the Idr Act, it was only held that with the promulgation of the said Act the State cannot itself manufacture industrial alcohol, which was the object matter of that case, without the permission of the Central Government. The question with regard to regulation of the drug which was also a potable alcohol under the provisions of the Excise Act and the Rules did not come up for consideration there. Similar contention was also raised and repelled in Southern Pharmaceuticals case (supra) in following words: AS regards the second' ground, the contention that Parliament having made- the requisite declarations in Section 2 of the (Development and Regulation) Act, 1951 declaring drugs and pharmaceuticals to be a scheduled industry being item 22 of Schedule I thereof, the State Legislature was denuded of its competence to enact the impugned provisions under En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the field in respect of which the said Notifications were issued and as the said' Act was an Act of the Parliament, the State of Bihar had no legislative competence in this regard. It was also held that under the provisions of the Bihar Excise Act no Notification had been issued bringing the medicinal preparations within the category of intoxicants. (53) In the present case, however, the requisite Notification has been issued and medicinal preparation containing more than the prescribed quantity of alcohol has been notified to mean an intoxicant. This is an important distinction. Furthermore we find that the Division Bench referred to the decision of the Supreme Court in the case of Adhyaksha Mathur Babu Sakti Oushadhalaya [1963]3SCR957 (supra) and The Hyderabad Chemical and Pharmaceutical Works Ltd. v. State of Andhra Pradesh, [1964]7SCR376 (supra) and came to the conclusion that as these decisions were delivered by larger Benches, Therefore, the later decision of the Supreme Court in Southern Pharmaceuticals' case (supra) need not be followed The Court appeared to find the decision of the Supreme Court in Southern Pharmaceuticals' case as being in conflict with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en issued' under the Rajasthan Excise Act, 1956. While quashing the said Rules that Court held that Entry 8 of List Ii was not available for regulating manufacture, sale, transport etc., of medicinal preparations. It further held that while legislating under Entry 8 List Ii the State Legislature may prevent the consumption of intoxicating beverages and also prevent the use as drinks of alcoholic liquids which are not normally consumed as drinks. But they cannot prevent the legitimate use of alcoholic preparations which are not beverages or the use of medicinal and toilet preparations containing alcohol. The Court further came to the conclusion that there was a conflict between the provisions of the Industries (Development Regulation) Act and Drugs and Cosmetics Act. A 1940 on the one hand and the 1989 Rules on the other. We however, find that the attention of the Rajasthan High Court was not drawn to the decision of the Supreme Court in Southern Pharmaceuticals' case. In Southern Pharmaceuticals' case (supra) it was categorically held that Entry 8 of the List Ii enabled the State Legislature to enact law with respect to intoxicating liquors and that the enumeration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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