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TMI Blog2001 (3) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... .1950. For the purpose of this judgment it would suffice to notice the definitions of intoxicating drug and liquor as given in clauses (14) and (15) of Section 3 of the Act which read as under:- 3. Definitions.-In this Act unless there is something repugnant in the subject or context__ xxx xxx xxx xxx xxx xxx xxx xxx xxx xxx (14) Intoxicating drug means- (i) the leaves, small stalks and flowering or fruiting tops of the hemp plant (Cannabia Sativa) including all forms known as Bhang, Sidhi or Ganja; (ii) charas, that is, the resin obtained from the hemp plant, which has not been submitted to any manipulations other than those necessary for packing and transport; (iii) any mixture, with or without neutral materials, of any of the above forms of intoxicating drug, or any drink prepared therefrom; and (iv) any other intoxicating or narcotic substance which the State Government may declare; by notification in the Official Gazette, to be an intoxicating drug, such substance not being opium, coca leaf or a manufactured drug as defined in the Dangerous Drugs Act, 1930 (Central Act II of 1930). (15) Liquor means intoxicating liquor and includes spirit of Wine, Spirit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of Rajasthan Excise Act consequent upon the issuance of the impugned notifications were Mrit Sanjivni, Mrit Sanjivni Sura, Mrit Sanjivni Sudha, Pudin Hara manufactured by Dabur India Ltd. According to the petitioners, the said notifications were beyond the legislative competence of the State Government and also constituted unreasonable restriction on fundamental right to trade and hence were violative of Article 19(1)(g) of the Constitution. The plea has found favour with the High Court of Rajasthan striking down the impugned notifications dated 6.11.1989 and 8.5.1990 as unconstitutional. Before we may proceed to notice the findings arrived at in the impugned judgment and the reasonings in support thereof, it would be useful to set out various relevant entries from Seventh Schedule of the Constitution: SEVENTH SCHEDULE (Article 246) List I - Union List Entry 1. Public order (but not including [the use of any naval, military or air force or any other armed force of the Union or of any other force subject to the control of the Union or of any contingent or unit thereof] in aid of the civil power). dispensaries Entry 6. Public health and sanitation; hospitals and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable for regulating manufacture, production, sale, transport, etc. of medicinal preparations. In the opinion of the Rajasthan High Court, the impugned rules and notification could not be sustained by reference to Entry 8 List II and there was no other power available to the State to regulate manufacture, possession, sale, etc. of medicinal preparations. In the alternative, the Rajasthan High Court has held the State Legislature competent to prevent the consumption of intoxicating beverages and also to prevent use as drinks of alcoholic liquids which are not normally consumed as drinks but they could not prevent the legitimate use of alcoholic preparations which are not beverages or the use of medicinal and toilet preparations containing alcohol. The Rajasthan High Court also held that referable to Entry 52 List I, the Parliament had enacted the Industries (Development and Regulation) Act, 1951. Drugs and Pharmaceuticals were listed as item 22 in the First Schedule of the Act. Chapter III of the ID R Act empowers the Central Government to regulate distribution, transport, disposal, acquisition, possession, use or consumption of and sale or financial transactions relating to such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of Legislative power to enact a particular Law, that can be done only subject to the provisions of any Central Legislation on that point. Thus even if the State Government is deemed to be empowered to enact regulatory Laws in respect of medicinal preparations, they could exercise that regulatory control in respect of medicinal preparations only subject to the provisions in this respect enacted by the Parliament. xxx xxx xxx xxx xxx xxxxxxxxx Even if for a moment it is assumed that the State Government has power to make regulatory provisions apart from constitutional entries, such power would always be subject to the power of Parliament derived from an appropriate entry. Once the Parliament is found to have exercised the said regulatory provisions, resort cannot be taken by the State to the residual sovereign power for framing any regulatory provisions in respect of the covered field. The question as to the availability of the power to make regulatory provisions is totally distinct from the question as to exercise of that power in a case where the field is already covered by Central Legislation. By virtue of provisions contained in Drugs and Cosmetics Act, which is a legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Ayurvedic preparations in question. Drugs Control and Cosmetics Act, 1940 (enacted 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 were framed (as amended). The Delhi High Court extensively dealt with the relevant provisions contained in the Central legislation including the provisions of Chapter IV-A of the Drugs Control and Cosmetics Act, 1940 and held : 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 bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al legislations including Industrial and Regulation Act, the power of the State Government was still saved to legislate in respect of alcohol so as to lay down regulations to ensure that non- potable alcohol is not diverted and misused as a substitute for potable alcohol and also if the 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. The Delhi High Court concluded that under Entry 8 of List II it is the State Legislature which has been given power to legislate in respect of 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 as the State Legislature the field to enact laws. For the purpose of excise, the medicinal product containing liquor may be covered by Entry 84 of List I but otherwise it is the State Government which will have power under Entry 8 of List II to legislate with regard to medicinal product which can be termed as liquor. The decision of Rajasthan High Court, which is impugned in these appeals, was also cited bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prohibited field for the States. The concept of occupied field is really relevant in the case of laws made with reference to entries in List III. In other words, whenever a piece of legislation is said to be beyond the legislative competence of a State Legislature, what one must do is to find out, by applying the rule of pith and substance, whether that legislation falls within any of the entries in List II. If it does, no further question arises; the attack upon the ground of legislative competence shall fail. In other words, once an enactment, in pith and substance, is relatable to Entry 8 in List II or for that matter any other entry in List II, Article 246 cannot be brought in to yet hold that State Legislature is not competent to enact that law. The judgment under appeal rendered by State of Rajasthan is liable to be set aside mainly for two reasons. Firstly, it does not take notice of the decision of this court in Southern Pharmaceutical Chemicals case [AIR 1981 SC 1863]. Secondly, it proceeds upon wrong premises that once a field is covered by Central Legislation referable to List I, the power of State Government to legislate in the filed covered by an entry in List ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitution Bench. In any case we are finding it unnecessary to enter into that exercise in the facts and circumstances of the cases before us. Thirdly, all the learned counsel for the respondents submitted during the course of hearing that their principal anxiety was that the impugned rules and notification, if sustained, are liable to entail heavy financial burden on the respondents in as much as the State of Rajasthan may proceed to levy and recover excise duty or countervailing duty on their products manufactured or brought for sale in the State of Rajasthan under Section 28 of Rajasthan Excise Act. In our opinion, such an apprehension is premature and unfounded. This we say for two reasons. Firstly, Rule 25 of Rajasthan ISP Rules provides that in the matter of duty to be paid on intoxicating spirituous preparations and not leviable under the Medicinal and Toilet Preparation (Excise Duty) Act, 1955, the provisions of the Rajasthan Excise Act, 1950 shall apply; in all other matters, not specified in these rules, the provisions of Rajasthan Excise Rules, 1956 shall apply mutatis mutandis. The rule takes care of the respondents apprehension. Secondly, the writ petitions were filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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