1995 (5) TMI 284 - SC - Indian Laws

Summary

Issues Involved:
1. Licensing authority for the manufacture of potable alcohol.
2. Applicability of the Industries (Development and Regulation) Act, 1951.
3. Employment criteria for defining a factory/industrial undertaking.
4. Validity of tenders submitted by the appellant and respondents.
5. Jurisdiction and powers of the State Government versus the Central Government.

Detailed Analysis:

1. Licensing Authority for the Manufacture of Potable Alcohol:
The appellant, Ramnarayan Satyanarayan Agrawal Distilleries Pvt. Ltd., and the respondent, Associated Alcohols & Breweries Ltd., are both manufacturers of potable alcohol. The appellant was granted a license by the State Government of Madhya Pradesh to encourage competition. However, the respondent contested this on the grounds that only the Central Government has the authority to issue such licenses.

2. Applicability of the Industries (Development and Regulation) Act, 1951:
The appellant argued that the Act does not apply to their industrial unit as it employs less than fifty persons. The Court upheld this contention, stating that the appellant's business, employing only 22 workers, does not qualify as a factory or an industrial undertaking under Sections 3(c) and 3(d) of the Act. Therefore, the appellant is not required to obtain a license under Section 11 of the Act.

3. Employment Criteria for Defining a Factory/Industrial Undertaking:
The Court emphasized that a factory, as defined under Section 3(c) of the Act, must employ fifty or more workers with the aid of power or one hundred or more workers without the aid of power. Since the appellant employs only 22 workers, its establishment does not fall under this definition, and thus, it is not an industrial undertaking requiring a Central Government license.

4. Validity of Tenders Submitted by the Appellant and Respondents:
The appellant's tender for supplying country liquor was significantly lower than that of Castle Douglas Industries Limited, a concern of the Kedia Group. The Court noted that accepting the higher tender would result in a substantial loss to the Exchequer. The respondents initially attempted to challenge the appellant's tender through legal means but failed. The Court found that the respondents' actions were an attempt to perpetuate their monopoly and frustrate the appellant's efforts to secure the contract.

5. Jurisdiction and Powers of the State Government versus the Central Government:
The Court clarified that the production and manufacture of intoxicating liquors fall within the jurisdiction of the State under Entry 8, List II of the Constitution. The appellant, not being an industrial undertaking as defined by the Act, does not require a Central Government license for manufacturing potable alcohol. The Court referenced the case of State of Madhya Pradesh v. Nandlal Jaiswal, which supported the view that a factory employing less than fifty workers does not require a Central Government license.

Conclusion:
The Supreme Court allowed the appeal, stating that the appellant does not require a license under Section 11 of the Industries (Development and Regulation) Act to manufacture potable alcohol. The appellant's tender must be considered in accordance with the law. The Court awarded exemplary costs of Rs. 20,000 to the appellant, noting the respondents' unsuccessful attempts to use legal processes to maintain their monopoly. The appeal in Civil Appeal No. 5527 of 1995 was also disposed of in line with this judgment.