BIHAR DISTILLERY Vs. UNION OF INDIA

JUDGEMENT

(1.) Until the commencement of the Constitution and for a few years thereafter, rectified spirit was mainly used for the purpose of manufacturing country liquor, Indian Made Foreign Liquors (IMFL) and other intoxicating drinks. Its use for industrial purposes was not significant. The rapid pace of industrialisation from mid-fifties on wards brought into existence several industries, which required rectified spirit as one of their raw materials, with the result the demand of rectified spirit for industrial purposes went up substantially and has been going up. Evidently, in recognition of this fact, did the Union of India amend, in the year 1956, the Schedule to the Industries (Regulation and Development) Act, 1951 including the alcohol industry therein.

(2.) Not withstanding the aforesaid amendment of the Schedule to the Industries (Regulation and Development) Act, 1951, the establishment of a distillery, its working and the distribution and sale of the rectified spirit produced by it continued to be regulated by the States as before, under various enactments in force in those States. Similar was the position in the State of Bihar where the first petitioner-distillery is located. As a matter of fact, right up to the year 1991-92, it was getting its license renewed under the provisions of the Bihar Excise Act. The original license itself was granted under the Bihar Act. In or about the year 1992, the authorities of the Bihar State proposed to cancel the petitioner's license for certain reasons assigned by them. The petitioner objected it on the ground that the grant and cancellation of license in respect of a distillery manufacturing rectified spirit is the exclusive province of the Government of India and that the State Government had no say in the matter. With this contention has it approached this Court. It relies upon the seven-Judge Constitution Bench decision of this Court in Synthetics and Chemicals Limited v. State of Uttar Pradesh, (1990) 1 SCC 109 : (AIR 1990 SC 1927). The petitioner says that it was licensed to manufacture and manufactures only 'industrial alcohol' and no other alcohols or liquors.

(3.) According to the division of legislative powers contained in the Seventh Schedule to the Constitution (relatable to Article 246), the power to legislate on the subject of "industries" is assigned to the States, Entry 24 in List-II reads: "24. Industries subject to the provisions of Entries 7 and 52 of List-I". Entries 7 and 52 in List-I, referred to in Entry 24 of List-II, read thus: