1992 (2) TMI 363 - SC - Companies Law

Summary

Issues Involved:
1. Constitutional validity of Section 58(A) of the Bombay Prohibition Act, 1949.
2. Whether there is a quid pro quo for the supervisory charges levied.

Summary of Judgment:

1. Constitutional Validity of Section 58(A):
The appellant challenged the constitutional validity of Section 58(A) of the Bombay Prohibition Act, 1949, which mandates the payment of supervisory charges for the staff appointed to oversee the manufacture of industrial alcohol. The Supreme Court upheld the validity of Section 58(A), referencing the case of Southern Pharmaceuticals & Chemicals v. State of Kerala, AIR 1981 SC 1863, which validated similar regulatory measures. The Court noted that the supervisory charges are a regulatory measure to ensure that industrial alcohol is not diverted for use as potable alcohol. This regulatory power is within the state's jurisdiction as per the observations in Synthetics & Chemicals Ltd. v. State of U.P. & Ors., [1989] Supp. 1 SCR 623.

2. Quid Pro Quo for Supervisory Charges:
The appellant contended that there was no quid pro quo for the supervisory charges levied. However, the Court dismissed this argument, stating that the High Court had already noted the absence of such a contention. The Court reiterated that the supervisory charges are justified as they cover the cost of the staff appointed to prevent the misuse of industrial alcohol. The judgment referenced Southern Pharmaceuticals & Chemicals (supra), which established that a fee may be charged for the privilege or benefit conferred, or service rendered, and that there is a broad co-relationship between the fee collected and the cost of the establishment.

The appeal was dismissed with costs, affirming the High Court's decision and the validity of Section 58(A) of the Bombay Prohibition Act, 1949.