State of Andhra Pradesh and ... vs Mcdowell & Co.and Ors.etc on 21 March, 1996

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  • Supreme Court of IndiaState Of Andhra Pradesh And ... vs Mcdowell & Co.And Ors.Etc on 21 March, 1996Equivalent citations: 1996 AIR 1627, 1996 SCC (3) 709Author: B Jeevan ReddyBench: Jeevan Reddy, B.P. (J) PETITIONER:STATE OF ANDHRA PRADESH AND ORS.ETC



    DATE OF JUDGMENT: 21/03/1996


    CITATION: 1996 AIR 1627 1996 SCC (3) 709 JT 1996 (3) 679 1996 SCALE (3)146




    J U D G M E N T B.P. JEEVAN REDDY.J Leave granted in special leave petitions.

    In response to wide spread agitation by the women of Andhra Pradesh, the Government prohibitedthe sale and consumption of intoxicating liquors by an Ordinance issued on December 27,1994. InFebruary, 1995, the Legislature of Andhra Pradesh enacted the Andhra Pradesh Prohibition Acts,1995 [hereinafter referred to as "the Act"] replacing the Ordinance. lt was reserved for and receivedthe assent of the President of India. The long title and the preamble to the Act reads:

    "An Act to introduce Prohibition of the Sale and Consumption of intoxicating liquorsin the State of Andhra Pradesh and for matters connected therewith or incidentalthereto.

    State Of Andhra Pradesh And ... vs Mcdowell & Co.And Ors.Etc on 21 March, 1996

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  • WHEREAS article 47 of the Constitution of India enjoins that the State shallendeavour to bring about prohibition of the consumption, except for medicinalpurposes of intoxicating drinks which are injurious to health; AND WHEREAS thereis urgent need in public interest to bring about the prohibition of the sale andconsumption of intoxicating liquors except for medicinal, scientific, industrial andsuch like purposes, in the State of Andhra Pradesh. BE it enacted by the LegislativeAssembly of the State of Andhra Pradesh in the Forty-sixth Year of the Republic ofIndia as follows:-" Clause (7) of Section 2 defines the expression "liquor"

    to include "(a) spirits of wine, denatured spirits, methylated spirits, rectified spirits, wines, beer andevery liquid consisting of or containing alcohol; and (b) any other intoxicating substance which theGovernment may, by notification declare to be liquor for the purposes of this Act, but does notinclude today". Section 7 is the main provision prohibiting selling, buying and consumption ofliquor. It reads:

    "Prohibition of selling, buying and consumption of liquor.

    7. The selling. buying, being in possession and consumption of liquor, otherwise thanin accordance with the provisions of this Act, or as the case may be, the AndhraPradesh Excise Act, 1968, is hereby prohibited . "

    Section 8 prescribes the punishment for contravention of the provisions of Section 7. Sections 9 and10 provide for punishment of persons found in state of intoxication and for abetting the escape ofpersons arrested. Section 11 makes any contravention of the provisions of the Act or of any rulesnotification or order made thereunder punishable. Section 12, 13 and 14 deal with seizure andconfiscation, Chapter IV containing Sections 15 and 16 provides for exemptions. Sub-section (1) ofSection 15 needs to be set out in view of the submissions made before us. It reads:

    "15.(1) Subject to such rules as may be made in this behalf, the prescribed authoritymay issue,-

    (i) permits to persons who are foreigners under the Foreigners Act, 1939 and topersons who are non-resident Indians to consume liquor;

    (ii) licences to hotels and restaurants recognised as three star and above inaccordance with such rules as may be made and to such categories of institution asmay be specified by notification subject to such criteria as may be prescribed to sellforeign liquor or Indian liquor to the holders of permits granted under this Act;

    (iii) permits to those who are medically certified by any notified medical authority asrequire to consume liquor on account of any diagnosed health condition or problems,to consume liquor;

    State Of Andhra Pradesh And ... vs Mcdowell & Co.And Ors.Etc on 21 March, 1996

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  • (iv) permits to persons who are tourists from outside the State and to persons whoare not ordinarily residents of the State to consume liquor;

    (v) permits to members serving or retired belonging to the armed forces to consumeliquor;

    (vi) permits to companies, corporations, institutions, industrialists, exporters,importers and similar such functionaries as may be notified, who normally entertainforeigners, non-resident Indians and guests coming from outside the State inpursuance of their business activity or the activity connected with their institutions tobuy and serve liquors.

    (vii) permits to consume liquor in cases of medical emergency; and

    (viii) permits for sacramental wine used in masses conducted in Churches."

    The other sub-sections of Section 15 contain provisions ancillary to sub-section (1). Section 16exempts the liquor in possession of bonafide travellers for their own personal use while passingthrough any local area in which the Act is in force. It also saves lawful consignment of liquor carriedthrough or into any such local area from the operation of the Act. The remaining provisions in thenature of machinery provision and need not be noticed except Sections 32 and 33. Section 32excepts certain operations from the purview of the Act. It. reads:

    "32. Nothing in this Act shall be deemed to preclude,--

    (a) the Andhra Pradesh Pradesh Beverages Corporation Limited to carry on trade inliquor in accordance with rules made in this behalf;

    (b) the buying selling of liquor carried on by the military canteens in the State underany licence granted in accordance with the provisions of the Andhra Pradesh ExciseAct, 1963 and the rules made thereunder; and

    (c) the consumption of medicines containing alcohol."

    Section 33 confers the rule-making power upon the Government while Section 35 repeals theOrdinance issued in December, 1994.

    There are a number of industries in the State of Andhra Pradesh engaged in the manufacture ofintoxicating liquors. They had taken out D-2 and B-2 licences prescribed by the rules made underthe Andhra Pradesh Excise Act, 1968. The period of these licences, we are told, was one year, i.e.,financial year. The Government of Andhra Pradesh refused to renew the said licences, when theycame up for renewal, in the light of the provisions of the Act. Several licencees approached the HighCourt of Andhra Pradesh by way of writ petitions challenging the provisions of the Act and seeking adeclaration that the Act does not prohibit the manufacture of liquor, though it may well prohibit the

    State Of Andhra Pradesh And ... vs Mcdowell & Co.And Ors.Etc on 21 March, 1996

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  • sale and consumption thereof. The full Bench, which heard the writ petitions, agreed with the writpetitioners. They declared that Section 7 of the Act did not prohibit the manufacture of liquorthough it prohibited consumption, sale and possession thereof. They referred to the fact that severalclasses of persons within the State of Andhra Pradesh are exempted from the operation of the Actwhose requirements have to be met. The prohibition of possession of liquor in Section 7, the FullBench opined, was only for the purpose of consumption, selling and buying within the State anddoes not affect the manufacture. Accordingly, a direction was issued to the State of Andhra Pradeshto consider the applications filed by the manufacturers for renewal of their licences withoutreference to the prohibition policy or to the provisions of the Act. The orders rejecting applicationsfor renewal were quashed. The Full Bench thought it unnecessary to go into the question oflegislative competence of the Andhra Pradesh Legislature to make the said Act in view of theinterpretation placed by it on Section 7. The judgment was delivered on April 28, 1995.

    Against the judgment of the Full Bench of the Andhra Pradesh High Court, the State of AndhraPradesh preferred Special Leave Petitions (C) Nos.13936-13941 of 1995. They were entertained bythis Court and notice issued to the respondents therein. It was directed that pending further ordersstatus quo as on the date of the said order [July 21,1995] shall be maintained. The writ petitioners-respondents were, however, permitted to manufacture their products with the existing stocks of rawmaterial upto and inclusive of August 16, 1995. It was directed that they should not continue theirmanufacturing operations beyond the said date irrespective of the fact whether their stocks of rawmaterials were exhausted or not by that date. It was further directed that the finished productsmanufactured by them until the said date may be allowed to be cleared by the State in accordancewith law and subject to the conditions laid down in the letter of the Commissioner of Prohibitionand Excise No.9736/95/Ex/J-5 dated May 24, 1995 referred to in the letter of the Commissionerdated June 16, 1995. It was also clarified that the said order shall not preclude the Governor ofAndhra Pradesh from issuing an ordinance seeking to amend the Acts if he is so advised with a viewto remove the alleged defects pointed out by the Full Bench.

    On July 18, 1995, the Governor of Andhra Pradesh issued Ordinance No.12 of 1995 amendingcertain provisions of the Act. Sections 2, 3 and 5 of the Ordinance were given effect from January 16,1995 (the date of commencement of the Act). Section 2 amended the long title of the Act byincluding the expression "manufacture" within the ambit of the prohibition envi