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Khoday Distilleries Ltd. and Ors. v. State of Karnataka and Ors. – (1995) 1 SCC 574

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KHODAY DISTILLERIES LTD. v. STATE OF KARNATAKA

DATE OF JUDGMENT: 19 October 1994

Coram:  M.N. Venkatachaliah, C.J., J.S. Verma, P.B. Sawant, K. Ramaswamy and B.P. Jeevan Reddy, JJ. 

CITATION:
 1995 SCC  (1) 574    JT 1994 (6)   588
 1994 SCALE  (4)528

JUDGMENT:

P.B.  SAWANT, J.- This is a bunch of appeals, special  leave
petitions  and writ petitions.  The first group consists  of
CA  Nos. 4708-12 of 1989, 4718-27 of 1989, WP (C) Nos.  666,
667,  693, 694, 774, and 910 of 1990 wherein  constitutional
validity  of  the  (i)  Karnataka  Excise  (Distillery   and
Warehouse)  (Amendment) Rules, 1989, (ii)  Karnataka  Excise
(Manufacture  of Wine from Grapes) (Amendment) Rules,  1989,
(iii)  Karnataka Excise (Brewery) (Amendment)  Rules,  1989,
(iv)  Karnataka Excise (Sale of Indian and Foreign  Liquors)
(Amendment)  Rules, 1989 and (v) Karnataka Excise  (Bottling
of  Liquor)  (Amendment)  Rules,  1989  was   unsuccessfully
challenged  by  various parties before  the  Karnataka  High
Court,  inter alia on the ground that the Rules in  question
affected  adversely the fundamental right of the parties  to
carry on trade or business in liquor and that the said Rules
were violative of Articles 14, 19(1)(g), 47, 300-A, 301, and
304 of the Constitution of India.  A Bench of three  learned
Judges  of this Court which heard this group of matters  has
referred them to the Constitution Bench.
2.The  second  group consists of CA Nos. 6043-50,  6051  and
6052  of 1993.  These appeals arise out of the  decision  of
the  Kerala  High  Court  upholding  the  validity  of   the
government order dated 9-12-1992 passed by the Government of
Kerala deciding to cancel all foreign liquor licences issued
under Rule 13(3) of the Kerala Foreign Liquor Rules, 1974 to
Hotels,  Restaurants  and  Tourist Homes.  A  Bench  of  two
learned  Judges  has referred the said matters also  to  the
Constitution  Bench  for decision on  the  question  whether
appellants  have  a fundamental right to carry on  trade  in
liquor.
580
3.The third group consists of SLP (C) Nos. 13817-28,  16208,
16601-02, 17935, 17953 of 1993, 185, 2479, 2962-63, 5898  of
1994  and  WP (C) Nos. 587, 591, 592, 608, 612  and  625  of
1993.   These matters arise out of various decisions of  the
Andhra  Pradesh  High Court upholding the  validity  of  the
amendments  to the Andhra Pradesh Foreign Liquor and  Indian
Liquor Rules, 1970 from time to time and A.P (Regulation  of
Wholesale  Trade,  Distribution and Retail Trade  in  Indian
Liquor  and  Foreign  Liquor,  Wine  and  Beer)  Act,   1993
(hereinafter referred to as the "A.P. 1993 Act").  The  High
Court has held that the Rules and the amendments thereto  as
well  as  the Act are not invalid on the  ground  that  they
violate  the right to carry on trade in liquor which is  not
fundamental.
4.It  appears  that  some of the  parties  affected  by  the
decision  of  the Andhra Pradesh High  Court  upholding  the
validity  of the enactments and rejecting the argument  that
the  petitioners have a fundamental right to carry on  trade
in  liquor,  filed writ petitions in the High  Court  for  a
declaration  that though the validity of the enactments  had
been  upheld by the High Court the A.P. 1993 Act deals  only
with  the  taking over of trade but not business  in  liquor
and,  therefore, the State had no right to prevent the  writ
petitioners  from  carrying on with the business  of  liquor
during  the  validity of their licences.  The  argument  was
that  'trade' is different from 'business'.  The High  Court
dismissed the petitions.  SLP (C) Nos. 9422-24 of 1994 filed
against  the  said decision, forming the fourth  group,  has
also  been referred to the Constitution Bench to be  decided
along with the matters in the above three groups.
5.Thus in matters in the first three groups, this Bench  has
to    answer    one    question,    viz.,    whether     the
appellants/petitioners have a fundamental right to carry  on
trade  in liquor.  The question involved in matters  in  the
fourth  group  is different, viz., since the A.P.  1993  Act
referred to above, deals only with the taking over of  trade
in  liquor but not business, whether the State  can  prevent
the petitioners from carrying on with the business of liquor
as  apart  from trade, during the unexpired  period  of  the
licences.
6.We  will first deal with the matters in groups 1, 2 and  3
and,    therefore,   with   the   question    whether    the
appellants/petitioners have a fundamental right to carry  on
business in liquor.
7.Before we proceed to examine the question, it is necessary
at  the  outset  to  focus  our  attention  on  the  precise
controversy raised before us and which,it is claimed, arises
out  of  the conflicting decisions of this Court.   For  the
purposes  of contentions advanced before us,  liquor  covers
not only those alcoholic liquids which are generally used as
beverages  and  produce intoxication but  also  all  liquids
containing alcohol.  Liquor is classified broadly into three
classes, viz., (i) potable liquor which is used as beverage,
(ii)  liquor used in medicinal and toilet  preparations  and
(iii)  industrial liquor used for industrial  purpose.   Two
rival contentions of law are canvassed before us.  One, that
there is no fundamental right to trade or business in liquor
and  that  the  State has power to  regulate  the  trade  or
business by
581
placing  restrictions  on  such trade  or  business  in  the
interests  of  the  general public even  to  the  extent  of
prohibiting   completely   such  business  or   trade.   The
incidental  consequence which flows from this contention  is
that  the State has the exclusive privilege to  sell  liquor
and this privilege can be sold under the relevant law.   The
State can, therefore, have also a monopoly in manufacturing,
possessing and distributing liquor.  The other contention is
that a citizen has a fundamental right to trade or  business
in   liquor  and  the  State  can  only   place   reasonable
restrictions on the said right in the interests   of general
public  by law made for the purpose under Article  19(6)  of
the  Constitution.   The State cannot,  therefore,  prohibit
completely the said trade or business in liquor in the  garb
of regulating it, and the limitations or restrictions placed
have  to pass the test of reasonableness as in the  case  of
trade or business in any other article.  It is in the  light
of  these  rival  contentions that we have  to  examine  the
question raised before us.
     8. Two incidental questions which, therefore, arise are
(i) whether a  monopoly   for  the  manufacture,  trade   or
business in liquor can be created in favour of the State and
(ii) whether reasonable restrictions under Article     19(6)
of the Constitution can be placed only by Act of Legislature
or by a   subordinate legislation as well.
   9.  It is contended that the State cannot carry on  trade
in liquor under  Article 47 of the Constitution. If the  law
on the subject is considered to be law under Article  19(6),
it  has  to  be  on  the basis that  a  citizen  had  got  a
fundamental  right to trade in liquor. If the law is that  a
citizen has no fundamental right, then Article 19(6)  cannot
be applied because the said   article applies only to  those
rights which a citizen possesses. What a citizen  cannot  do
under  Article  19(1),  the State cannot  do  under  Article
19(6).    Secondly,  it is submitted that assuming that  the
State has got the power to    carry   on  trade  in   liquor
dehors   Article  19(6)  and  under  Article  298   of   the
Constitution,  the power under Article 298 cannot extend  to
trade in liquor.    This is so because the Union  Government
has no executive power to trade in  a  commodity   which
under Article 47 it is enjoined to prohibit.
    10.   In   support   of   the   contention   that    the
appellants/petitioners have a      fundamental   right    to
trade in liquor, it is argued firstly, that Entry 51 of List
  11  specifically accepts the fact that the manufacture  of
alcohol can be for  human consumption. The said entry, among
others, provides as follows: "Duty of Excise on intoxicating
liquor for human consumption." Entry 8 of    List     II
specifically provides for production, manufacture,  purchase
and sale  of  intoxicating liquor. The implication  of  this
entry is that till prohibition is   introduced    by
applying Article 47, there is no prohibition on  consumption
of liquor, and hence there is no prohibition for manufacture
and sale of liquor.  Secondly,  it  is  submitted   that
there are other substances like tobacco which     are   more
harmful  to  health  than alcohol and they  are  being  sold
freely.   A  majority  of  the  States  did  not   introduce
prohibition and some States which   purported to do  it,
failed   and   reverted  to  the   earlier   pre-prohibition
condition.     On  the  other  hand, the  revenue  from  the
auction of excise, vend fees, liquor and other levies  forms
a major source of the revenue of the State.  Hence the
582
trade in liquor cannot be looked upon as an obnoxious trade.
Thirdly,  the Union Government itself has  recognised  under
its  Industrial Policy Resolution as early as in  1956  that
the  production of potable alcohol as an industry has to  be
recognised  though  regulated and the licences  have  to  be
freely  granted  for  the  manufacture  of  potable  liquor.
During the last several years, a large number of distillery,
brewery  and winery licences have been granted all over  the
country.  For all these reasons, it is submitted that  there
is  no  warrant for excluding liquor from the ambit  of  the
words  "any  occupation, trade or  business"  under  Article
19(1)(g) of the Constitution.
11.We  will  first refer to the relevant provisions  of  the
Constitution which have a bearing on the subject.
12.Article  19(1)(g) provides that all citizens  shall  have
the  right  to practise any profession or to  carry  on  any
occupation, trade or business.  This right conferred by  the
aforesaid  provision is circumscribed by the  provisions  of
clause (6) of the very article which reads as follows:
"(6).   Nothing in sub-clause (g) of the said  clause  shall
affect  the  operation  of any existing law  insofar  as  it
imposes, or prevent the State from making any law  imposing,
in   the  interests  of  the  general   public,   reasonable
restrictions  on the exercise of the right conferred by  the
said  sub-clause,  and, in particular, nothing in  the  said
sub-clause  shall affect the operation of any  existing  law
insofar  as it relates to, or prevent the State from  making
any law relating to,-
(i)  the professional or technical qualifications  necessary
for practising any profession or carrying on any occupation,
trade or business, or
(ii)the carrying on by the State, or by a corporation owned
or controlled by the State, of any trade, business, industry
or  service, whether to the exclusion, complete or  partial,
of citizens or otherwise."
Thus  Article 19(1)(g) read with Article 19(6) spells out  a
fundamental right of the citizens to practise any profession
or to carry on any occupation, trade or business so long  as
it  is  not  prohibited or is within the  framework  of  the
regulation,  if any, if such prohibition or  regulation  has
been imposed by the State by enacting a law in the interests
of  the general public.  It cannot be disputed that  certain
professions, occupations, trades or businesses which are not
in  the  interests of the general public may  be  completely
prohibited  while  others may be permitted  with  reasonable
restrictions  on  them.   For the  same  purpose,  viz.,  to
subserve  the  interests of general public,  the  reasonable
restrictions   on  the  carrying  on  of   any   profession,
occupation,  trade,  etc.,  may  provide  that  such  trade,
business etc., may be carried on exclusively by the State or
by  a  Corporation  owned or controlled by  it.   The  right
conferred  upon the citizens under Article 19(1)(g) is  thus
subject  to  the  complete  or  partial  prohibition  or  to
regulation, by the State.  However, under the provisions  of
Article  19(6) the prohibition, partial or complete, or  the
regulation,  has  to  be in the  interests  of  the  general
public.
583
13.Article 47 which is one of the Directive Principles  of
the State Policy reads as follows:
"47.  Duty of the State to raise the level of nutrition  and
the  standard of living and to improve public  health.-  The
State shall regard the raising of the level of nutrition and
the standard of living of its people and the improvement  of
public   health  as  among  its  primary  duties   and,   in
particular,  the  State  shall  endeavour  to  bring   about
prohibition of the consumption except for medicinal purposes
of  intoxicating drinks and of drugs which are injurious  to
health."
This  article enjoins upon and in turn enables the State  to
take  measures  to  raise the level  of  nutrition  and  the
standard  of living of its people and to improve the  public
health.   Towards this end, the State is required  to  bring
about prohibition of the consumption of intoxicating  drinks
and  drugs which are injurious to health.   The  prohibition
may  be  complete  or  partial and  it  would  also  include
regulation.   It cannot be disputed that liquor is one  such
drink.
14.  Article 298 of the Constitution provides as follows:
"298.  Power to carry on trade, etc.- The executive power of
the Union and of each State shall extend to the carrying  on
of any trade or business and to the acquisition, holding and
disposal  of  property and the making of contracts  for  any
purpose:
Provided that-
(a)  the said executive power of the Union shall, insofar as
such  trade  or  business or such purpose is  not  one  with
respect  to  which Parliament may make laws, be  subject  in
each State to legislation by the State; and
(b)  the  said executive power of each State shall,  insofar
as  such trade or business or such purpose is not  one  with
respect  to  which the State Legislature may make  laws,  be
subject to legislation by Parliament."
Thus  both the Union and the State Governments  have  within
their respective    spheres,  power  to carry  on  trade  or
business.
15.Article 300-A provides that no person shall be deprived
of his property save by authority of law.  It is  undisputed
that  if a citizen is carrying on the business according  to
the  provisions  of law, his business cannot be  taken  away
save  by  authority  of law, if such a  law  is  enacted  to
further the purpose whether of Article 19(6) or Article 47.
16.  Article 301 reads as:
"301.   Freedom of trade, commerce and  intercourse.-Subject
to  the other provisions of this part, trade,  commerce  and
intercourse  throughout  the  territory of  India  shall  be
free."
The  right given by this article to freely carry  on  trade,
commerce and  intercourse throughout the territory of  India
is  undisputedly subject to the same restrictions as is  the
right under Article 19(1)(g).
584
17.Apart  from  the restrictions placed on the  right  under
Article  301, by the provisions of Articles 19(6),  47,  302
and  303,  the  provisions of Article 304  also  place  such
restrictions  on  the said right.  So do the  provisions  of
Article  305, so far as they protect existing laws and  laws
creating State monopolies.  The provisions of the  aforesaid
articles, so far as they are relevant for our purpose,  read
together, therefore, make the position clear that the  right
conferred  by  Article  19(1)(g) is  not  absolute.   It  is
subject  to restrictions imposed by the other provisions  of
the   Constitution.   Those  provisions  are  contained   in
Articles 19(6), 47, 302, 303, 304 and 305.
18.We  may now refer to the relevant entries of List  11  of
the Seventh Schedule to the Constitution which give power to
the State Governments to make the laws in question.  Entry 8
reads as follows:
"8.  Intoxicating liquors, that is to say,  the  production,
manufacture,  possession,  transport, purchase and  sale  of
intoxicating liquors." Entry 51 reads as follows:
"51.   Duties of excise on the following goods  manufactured
or  produced in the State and countervailing duties  at  the
same  or  lower  rates  on  similar  goods  manufactured  or
produced elsewhere in India:
(a)  alcoholic liquors for human consumption;
(b)  opium,  Indian  hemp  and  other  narcotic  drugs   and
narcotics;
but   not  including  medicinal  and   toilet   preparations
containing  alcohol  or  any  substance  included  in   sub-
paragraph (b) of this entry."
Thus  a  State has legislative competence to  make  laws  in
respect of the above subjects.
19.  The relevant entry in List I which has a bearing on the
subject is Entry 52 which reads as follows:
"52.   Industries,  the  control of which by  the  Union  is
declared by Parliament by law to be expedient in the  public
interest."  Under  this entry, Parliament  has  enacted  the
Industries (Development and Regulation) Act, 1951 (for short
'IDR  Act') and Item 26 of Schedule I of that Act  reads  as
"Fermentation  Industries  (1) Alcohol, (2) Other  products
of Fermentation and Distillery".  Read with Section 2 of the
IDR Act, the said entry would mean that the alcohol industry
dealing  in  potable or nonpotable alcohol is  a  controlled
industry within the meaning of the said Act.  We are not  in
this  reference  concerned with the question as  to  whether
there  is  any  conflict between the relevant  Acts  of  the
respective  State Legislatures and the  Rules,  Regulations,
Notifications and Orders issued under the said Acts and  the
provisions of the IDR Act.  It cannot further be denied that
the  pith  and substance of the IDR Act is  to  provide  the
Central  Government  with the means  of  implementing  their
industrial policy which was announced in their resolution of
6-4-1948  and  approved by the  Central  Legislature.   That
brings under Central control the development and  regulation
of a number of important industries, the activities of which
affect  the country as a whole and the development of  which
must be governed by economic factors of all-India
585
import.   The  development of the industries  on  sound  and
balanced  lines is sought to be secured by the licensing  of
all  new  undertakings.  Hence the IDR Act  confers  on  the
Central Government power to make rules for the  registration
of  existing undertakings and for regulating the  production
and development of the industries mentioned in the  Schedule
and  also for consultation with the Provincial  (now  State)
Governments  in these matters.  The Act does not in any  way
denude  the  power  of the State Governments  to  make  laws
regulating  and  prohibiting  the  production,  manufacture,
possession,  transport,  purchase and sale  of  intoxicating
liquors  meant for human consumption (but not for  medicinal
or  toilet  preparations) and levying excise on  them  under
Entries  8  and 51 of List 11.  If there is  any  incidental
encroachment by the relevant State Acts on the area occupied
by  the  IDR Act, that will not invalidate the  State  Acts.
The impugned judgments of the High Courts also mention  that
the  State Acts have received the assent of  the  President.
Be that as it may.
20.We  may now refer to the relevant authorities cited  at
the  Bar.   In State of Bombay v. EN.  Balsara1 which  is  a
decision  of the Constitution Bench of five learned  Judges,
what  fell for consideration was the validity of the  Bombay
Prohibition  Act, 1949.  In that case, this Court held  that
in view of the provisions of Article 47 of the Constitution,
the total prohibition on potable liquor would be reasonable.
It does not appear that any contentions were raised there on
the  basis  of  Article  19(1)(g)  and  hence  there  is  no
discussion with reference to the said provision.
21.In  TB.  Ibrahim v. Regional Transport Authority2  what
fell for consideration was the validity of the amendment  in
1950 to Rule 268 of the Madras Motor Vehicles Rules, 1940 to
empower  the Transport Authority to alter from time to  time
the  starting  place and termini for  motor  vehicles.   The
appellant  was  the owner of a bus-stand  in  the  municipal
limits which was being used for several years as a  starting
place  and  terminus for buses plying to and from  the  said
limits.    The  Transport  Authority  passed  a   resolution
changing the starting place and terminus for convenience  of
the  public.  The appellant challenged the  said  resolution
and consequently the amendment to Rule 268, among others, as
repugnant  to  Article  19(1)(g)  of  the  Constitution.   A
Constitution Bench of five learned Judges dealing with  this
contention held that the restrictions placed upon the use of
the bus-stand for the purpose of picking up or setting  down
passengers cannot be considered to be unreasonable.  It  may
be that the appellant by reason of the shifting of the  bus-
stand has been deprived of the income he used to enjoy  when
the  bus stand was used for outward journeys.  There  is  no
fundamental right in a citizen to carry on business wherever
he  chooses and his right must be subject to any  reasonable
restriction  imposed  by  the  executive  authority  in  the
interests  of  the  public  convenience.   The   restriction
imposed  has the effect of terminating the use to which  the
stand has been put hitherto.  The
1    1951 SCR 682 : AIR 1951 SC 318 : 52 Cri LJ 1361
2     1953 SCR 290: AIR 1953 SC 79
586
restriction cannot be regarded as being unreasonable if  the
authority imposing such restriction has the power to do  so.
Whether  the abolition of the stand was conducive to  public
convenience  or not is a matter entirely for  the  Transport
Authority  to  judge  and  it is not  up  to  the  Court  to
substitute  its opinion with that of the authority which  is
in the best position having regard to its knowledge of local
conditions, to appraise the situation.
22.In  Cooverjee B. Bharucha v. Excise Commissioner and  the
Chief Commissioner3, where the vires of Excise Regulation  I
of  1915 was under challenge on the ground of  violation  of
Article  19(1)(g),  the Constitution Bench of  five  learned
Judges, among other things, held that:
(a)In order to determine the reasonableness of restrictions,
envisaged by Article 19(6), regard must be had to the nature
of the business and the conditions prevailing in that trade.
These  factors would differ from trade to trade and no  hard
and  fast rule concerning all trades can be laid  down.   It
cannot  also  be  denied that the State  has  the  power  to
prohibit trades which are illegal or immoral or injurious to
the  health  and welfare of the  public.   Laws  prohibiting
trades in noxious or dangerous goods or trafficking in women
cannot  be held to be illegal as enacting a prohibition  and
not  a  mere  regulation.  The nature of  the  business  is,
therefore,   an   important   element   in   deciding    the
reasonableness  of  the restrictions.  The  right  of  every
citizen to pursue any lawful trade or business is  obviously
subject  to such reasonable conditions as may be  deemed  by
the  governing  authority of the country  essential  to  the
safety,  health, peace, order and morals of  the  community.
Some occupations by the noise made in their pursuit, some by
the   odours  they  engender,  and  some  by   the   dangers
accompanying  them require regulation as to the locality  in
which  they  may  be  conducted.   Some,  by  the  dangerous
character  of  the  articles  used,  manufactured  or  sold,
require also special qualification in the parties  permitted
to  use them, manufacture or sell them.  The Court  in  this
connection     referred to the observations of Field, J.  in
P.  Crowley  v.  Henry Christensen4 a part of  which  is  as
follows:
"The  sale of such liquors in this way has, therefore  been,
at  all times, by the courts of every State,  considered  as
the proper subject of legislative regulation. ... Their sale
in that form may be absolutely prohibited.  It is a question
of public expediency and public morality and not of  federal
law.   The police power of the State is fully  competent  to
regulate the business  to mitigate its evils or to suppress
it  entirely.   There is no inherent right in a  citizen  to
thus  sell  intoxicating  liquors by retail;  it  is  not  a
privilege  of a citizen of the State or of a citizen of  the
United States.  As it is a business attended with danger  to
the  community,  it  may,  as  already  said,  be   entirely
prohibited,  or be permitted under such conditions  as  will
limit  to  the  utmost  its evils. ... It  is  a  matter  of
legislative will only."
3 1954 SCR 873 : AIR 1954 SC 220
4 34 L Ed 620: 137 US 86 (1890)
587
(b)The elimination and exclusion from business is inherent
in  the  nature  of liquor business and it  will  hardly  be
proper to apply to such a business principles applicable  to
trade  which all could carry on.  The provisions of the  law
cannot  be attacked merely on the ground that they create  a
monopoly.   Properly speaking, there can be a monopoly  only
when  a  trade which could be carried on by all  persons  is
entrusted by law to one or more persons to the exclusion  of
the general public.  Such, however, is not the case with the
business of liquor.  The Court for this purpose relied  upon
the following observations of Lord Porter in Commonwealth of
Australia v. Bank of New South Wales5:
"Yet  about this, as about every other proposition  in  this
field,  a reservation must be made, for their  Lordships  do
not intend to lay it down that in no circumstances could the
exclusion  of competition so as to create a monopoly  either
in a State or Commonwealth agency, or in some other body, be
justified.   Every case must be judged on its own facts  and
its own setting of time."
(c)When the contract is thrown open to public auction,  it
cannot  be said that there is exclusion of  competition  and
thereby monopoly is created.
23.In State of Assam v. A.N. Kidwai, Commissioner of Hills
Division  and  Appeals6  which is also  a  decision  of  the
Constitution  Bench of five learned Judges, the validity  of
the notification by which the Commissioner of Hills Division
and  Appeals  was appointed the  Appellate  Authority  under
Assam  Revenue Tribunal (Transfer of Powers) Act, 1948,  was
under challenge.  The rival claimants had applied for  grant
of  licences and setting up of country spirit shops and  the
parties who were dissatisfied with the orders of the  Deputy
Commissioner and those of the Excise Commissioner in appeals
therefrom, appealed to the Appellate Authority whose  orders
were  quashed  by  the High Court on  the  ground  that  the
notification  concerned  was void.  While dealing  with  the
contentions raised therein, the Court held that a perusal of
the  Act and the Rules made it clear that no person had  any
absolute  right to sell liquor, and the purpose of  the  Act
and the Rules was to control and restrict the consumption of
intoxicating  liquors,  such control and  restriction  being
obviously  necessary for the preservation of  public  health
and morals, and to raise revenue.
24.In  State of Bombay v. R.M.D. Chamarbaugwala7 which  is
also  a  decision of a Constitution Bench  of  five  learned
Judges, the challenge was to the Bombay Lotteries and  Prize
Competition  Control  and Tax Act, 1948 as  amended  by  the
Bombay  Lotteries  and  Prize Competition  Control  and  Tax
(Amendment) Act, 1952.  After referring to the  observations
made  in the American decision in Phalen v.  Virginia8,  the
Court held as follows: (SCR p. 925)
5 1950 AC 235 :(1949) 2 All ER 755
6 1957 SCR 295 : AIR 1957 SC 414
7 1957 SCR 874: AIR 1957 SC 699
8 12 L Ed 1030: 49 US 163 (1850)
588
          "It   will  be  abundantly  clear   from   the
          foregoing  observations  that  the  activities
          which have been condemned in this country from
          ancient  times  appear to  have  been  equally
          discouraged and looked upon with disfavour  in
          England,   Scotland,  the  United  States   of
          America and in Australia in the cases referred
          to above.  We find it difficult to accept  the
          contention   that   those   activities   which
          encourage a spirit of reckless propensity  for
          making easy gain by lot or chance, which  lead
          to  the loss of the hard earned money  of  the
          undiscerning  and improvident common  man  and
          thereby lower his standard of living and drive
          him  into a chronic state of indebtedness  and
          eventually disrupt the peace and happiness  of
          his  humble  home  could  possibly  have  been
          intended  by  our Constitution  makers  to  be
          raised  to  the status of trade,  commerce  or
          intercourse and to be made the  subject-matter
          of  a fundamental right guaranteed by  Article
          19(1)(g).   We find it difficult  to  persuade
          ourselves  that gambling was ever intended  to
          form any part of this ancient country's trade,
          commerce or intercourse to be declared as free
          under Article 301.  It is not our purpose  nor
          is  it necessary for us in deciding this  case
          to  attempt  an exhaustive definition  of  the
          word  'trade', 'business',  or  'intercourse'.
          We  are,  however,  clearly  of  opinion  that
          whatever  else may or may not be  regarded  as
          falling  within  the meaning of  these  words,
          gambling  cannot certainly be taken as one  of
          them.  We are convinced and satisfied that the
                real  purpose  of Articles  19(1)(g)  and  301
          could  not possibly have been to guarantee  or
          declare  the  freedom of  gambling.   Gambling
          activities  from  their  very  nature  and  in
          essence  are  extra  commercium  although  the
          external forms, formalities and instruments of
          trade  may  be  employed  and  they  are   not
          protected   either  by  Article  19(1)(g)   or
          Article 301 of our Constitution."
The  Court  further  held, relying on  the  observations  in
United  States  v.  Kahriger9, Lewis  v.  United  States  of
America10  and  Mann v. Nash11 that the fact  of  issuing  a
licence  or  imposing a tax means nothing  except  that  the
licensee  shall be subject to no penalties under the law  if
he pays it.  The Government may tax what it also forbids and
that nobody has a constitutional right to gamble but that if
he elects to do so, though it be unlawful, he must pay  tax.
The  revenue  authorities are merely taxing  the  individual
with  reference to certain facts.  They are not partners  or
sharers in the illegality.  The crime is not a business  and
the  fact  that regulatory provisions have been  enacted  to
control  gambling by issuing licences and by imposing  taxes
does  not in any way alter the nature of gambling  which  is
inherently  vicious and pernicious.  The Court further  held
that  the  same  result can be arrived at  by  applying  the
doctrine  of  pith  and substance.   When  Article  19(1)(g)
guarantees  or  Article 301 declares the freedom  of  trade,
they  describe human activities in a specific aspect.   They
single out attributes
9 97 L Ed 754: 345 US 22 (1952)
10 99 L Ed 475 : 348 US 419 (1954)
11 (1932) 1 KB 752: 1932 All ER Rep 956: 101 LJKB 270
589
which the act or transaction may wear and make the  freedom,
which  they  confer,  depend  upon  those  attributes.   The
freedom  secured  by  the  two  articles  implies  that   no
unreasonable  restraint or burden shall be placed  upon  the
act  falling under that description because it is  trade  or
commerce or intercourse.  The Court, then held that the  Act
impugned  there did not purport directly to  interfere  with
trade, commerce or intercourse as such, for the criterion of
its  application  was the specific gambling  nature  of  the
transaction which it restricted.  The purpose of the Act was
not  to  restrict anything which  brought  the  transactions
under  the  description of trade, commerce  or  intercourse.
The  Act was in pith and substance, an Act with  respect  to
betting and gambling and to control and restrict betting and
gambling  was  not  to interfere  with  trade,  commerce  or
intercourse  as  such  but  to  keep  their  flow  free  and
unpolluted  and  to save them  from  antisocial  activities.
Hence the validity of that Act had not to be decided by  the
yardstick of reasonableness and public interest laid down in
Articles  19(6) and 304.  The appeal against the  stringency
and  harshness, if any, of the law does not lie to court  of
law.  In that view of the matter, the Court felt that it was
not necessary to consider or express any opinion with regard
to the vexed question whether restriction contemplated under
Articles  19(6) and 304(b) may extend to total  prohibition.
This  was  so  because, the Court felt  that  it  could  not
persuade itself to hold that Article 19(1)(g) or Article 301
comprises all activities undertaken with a view to profit as
'trade' within the meaning of those articles.  In this  view
of  the  matter, the Court held that the  prize  competition
which  the  respondents there were carrying on  being  of  a
gambling nature, could not be regarded as trade or  commerce
and as such, the respondents could not claim any fundamental
right under Article 19(1)(g) in respect of such competitions
nor were they entitled to the protection of Article 301.
25.In Nagendra Nath Bora v. Commissioner of Hills Division &
Appealsl2 the appeals arose out of the orders passed by  the
revenue  authorities under the provisions of Eastern  Bengal
and  Assam  Excise Act, 1910.  The dispute was  between  the
rival  claimants  who  had tendered for  the  settlement  of
country  spirit  shops.  While dealing with the  matters  in
question,  the  Constitution Bench of  five  learned  Judges
observed by referring to the State of Assam v. A.N.  Kidwai6
and  the  observations  made  therein that  no  one  had  an
inherent  right  to settlement of liquor  shops.   When  the
State by public notice invites candidates for settlement  to
make  their  tenders and in pursuance of such  a  notice,  a
number of persons make such tenders, each one makes a  claim
for  himself in opposition to the claims of the others,  and
the public authorities concerned have to choose from amongst
them.   The question whether an administrative authority  on
such  occasions  functions merely in  an  administrative  or
quasi-judicial capacity must be determined on an examination
of the statute and its rules.  The Court held
12 1958 SCR 1240: AIR 1958 SC 398
590
that   the  authorities  cannot  be  said  to  pass   purely
administrative  orders which were beyond the ambit  of  High
Court's power of supervision and control.
26.In  Narendra  Kumar  v. Union of  India13  which  is  a
decision  of the Constitution Bench of five learned  Judges,
the  question  whether  restriction  on  fundamental  rights
includes their prohibition, fell for consideration squarely.
On  different  dates prior to 3-4-1958, the  petitioners  in
that  case had entered into contracts of purchase of  copper
with importers at Bombay and Calcutta, but before they could
take delivery from the importers, the Government of India in
exercise  of  its powers under Section 3  of  the  Essential
Commodities Act, 1955, issued on 2-4-1958 Non-ferrous  Metal
Control Order, 1958.  Clause (3) of the Order provided  that
no person shall sell or purchase any non-ferrous metal at  a
price  which exceeded the amount represented by an  addition
of  3.5  per  cent  to its landed  cost,  while  clause  (4)
prohibited  any person from acquiring any non-ferrous  metal
except  under  and in accordance with the permit  issued  in
that  behalf  by  the Controller  in  accordance  with  such
principles  as the Central Government may from time to  time
specify.  No such principles were, however, published in the
Gazette nor laid before the Houses of Parliament.  The Court
held that the word 'restriction' in Article 19(5) and (6) of
the Constitution includes cases of prohibition also.   Where
the  restriction  reaches the stage of  total  restraint  of
rights,  special care has to be taken by the courts  to  see
that the test of reasonableness is satisfied by  considering
the   question   in  the  background  of   the   facts   and
circumstances  under which the Order was made,  taking  into
account  the  nature  of  the evil that  was  sought  to  be
remedied  by  such  law, the ratio of  the  harm  caused  to
individual  citizens by the proposed remedy, the  beneficial
effect reasonably expected to result to the general  public,
and  whether the restraint caused by the law was  more  than
what  was necessary in the interests of the general  public.
The  Court, in this connection referred to Chintaman Rao  v.
State  of M. p 14, cooverjee case3 and Madya Bharat3  Cotton
Assn.  Ltd. v. Union of India15.  The prohibition, according
to  the  Court,  has  to  be  treated  as  only  a  kind  of
restriction.   The Court then observed as follows: (SCR  pp.
386-87)
          "After  Article  19(1) has  conferred  on  the
          citizen  the  several rights set  out  in  its
          seven sub-clauses, action is at once taken  by
          the Constitution in clauses 2 to 6 to keep the
          way  of social control free from  unreasonable
          impediment.   The  raison d'etre  of  a  State
          being the welfare of the members of the  State
          by   suitable  legislation   and   appropriate
          administration,  the  whole  purpose  of   the
          creation  of the State would be frustrated  if
          the  conferment  of these seven  rights  would
          result  in  cessation of  legislation  in  the
          extensive  fields  where  these  seven  rights
          operate.   But without the  saving  provisions
          that would be the exact result of the  Article
          13  of  the  Constitution.  It  was  to  guard
          against this position
13 (1960) 2 SCR 375 : AIR 1960 SC 430
14 1950 SCR 759: AIR 1951 SC 11 8
15 AIR 1954 SC 634
591
that  the Constitution provided in its clauses 2 to  6  that
even  in the fields of these rights new laws might  be  made
and  old  laws would operate where this  was  necessary  for
general  welfare.  Laws imposing reasonable  restriction  on
the exercise of the rights are saved by clause 2 in  respect
of  rights under sub-clause (a) where the  restrictions  are
'in  the  interests of the security of the  State;'  and  of
other  matters mentioned therein; by clause 3 in respect  of
the   rights   conferred  by  sub-clause   (b)   where   the
restrictions are 'in the interests of the public order';  by
clauses  4,  5 and 6 in respect of the rights  conferred  by
sub-clauses  (c), (d), (e), (f) & (g) the  restrictions  are
'in the interest of the general public'  in clause 5  which
is in respect of rights conferred by sub-clauses (d), (e)  &
(f)  also where the restrictions are 'for the protection  of
the interests of any scheduled tribe'.  But for these saving
provisions such laws would have been void because of Article
13, which is in these words:
'All  laws  in force in the territory of  India  immediately
before  the  commencement of this Constitution,  insofar  as
they  are  inconsistent with the provisions  of  this  Part,
shall,  to the extent of such inconsistency be void; (2  The
State  shall not make any law which takes away  or  abridges
the  rights  conferred  by this Part and  any  law  made  in
contravention  of  this clause shall, to the extent  of  the
contravention, be void
As it was to remedy the harm that would otherwise be  caused
by   the  provisions  of  Article  13,  that  these   saving
provisions were made, it is proper to remember the words  of
Article   13   in  interpreting  the  words   `   reasonable
restrictions' on the exercise of the right as used in clause
(2).   It  is  reasonable to think that the  makers  of  the
Constitution   considered  the  word  'restriction'  to   be
sufficiently  wide to save laws 'Inconsistent' with  Article
19(1), or 'taking away the rights' conferred by the article,
provided this inconsistency or taking away was reasonable in
the  interests  of the different matters  mentioned  in  the
clause.  There can be no doubt therefore that they  intended
the  word  'restriction' to include cases  of  'prohibition'
also.  The contention that a law prohibiting the exercise of
a fundamental right is in no case saved, cannot therefore be
accepted."
27.  In  A.B.  Abdulkadir v. State of Keralal6, which  is  a
decision  of Constitution Bench of five learned Judges,  the
Court observed that the system of auctioning of the right to
possess  excisable  goods like country  liquor,  ganja,  and
bhang  was only a method of realising duty through grant  of
licences  to those who made the highest bid at the  auctions
and  thus  to raise revenue.  In that case, what  was  under
challenge  was  the  system of  auctions  under  the  Cochin
Tobacco Act, 1084 (M.E.) with the object of controlling  the
cultivation,  production, manufacture, storage and  sale  of
tobacco.   By  majority,  the Court  held  that  the  income
realised from such auction was in the nature of excise duty.
16 1962 Supp (2) SCR 741 : AIR 1962 SC 922
592
28.  In  Krishna  Kumar  Narula v. State of  J  &  K17,  the
question whether the right to carry on business of liquor is
a fundamental right fell directly for consideration before a
Constitution Bench of five learned Judges.
29.  Since  heavy  reliance  is  placed  on  behalf  of  the
appellants/petitioners  on  this case to  contend  that  the
right  to carry on business in liquor is fundamental, it  is
necessary to examine this case a little more in detail.
30.  The  facts  were  that the appellant  was  carrying  on
business  in  liquor in his hotel under  an  annual  licence
issued  under Section 20 of the Jammu & Kashmir Excise  Act,
1958.  He had applied for a fresh licence for another  year.
Meanwhile,  the Excise Department received  complaints  from
the inhabitants of the locality objecting to the location of
the bar in that locality.  The complaints were inquired into
and  the appellant was informed by the Commission  that  the
licence will not be issued unless he shifted the premises to
some  other approved locality.  Writ Petition filed  by  the
appellant  for  quashing the order of the  Commissioner  was
dismissed by the High Court.  While dealing with the  appeal
against the High Court's order, this Court commenting on the
combined  reading  of  clauses (1) and  (6)  of  Article  19
observed as follows: (SCR pp. 53-54)
          "A combined reading of clauses (1) and (6)  of
          Article 19 makes it clear that a citizen has a
          fundamental  right  to carry on any  trade  or
          business,  and  the  State  can  make  a   law
          imposing  reasonable restrictions on the  said
          right in the interests of the general  public.
          It is, therefore, obvious that unless  dealing
          in liquor is not trade or business, a  citizen
          has  a  fundamental  right  to  deal  in  that
          commodity.    The  learned  Advocate   General
          contended  that  dealing  in  liquor  was  not
          business  or trade, as the dealing in  noxious
          and dangerous goods like liquor was  dangerous
          to the community and subversive of its morals.
          The acceptance of this broad argument involves
          the   position   that  the  meaning   of   the
          expression  'trade or business'  depends  upon
          and varies with the general acceptance of  the
          standards   of   morality   obtaining   at   a
          particular point of time in our country.  Such
          an  approach leads to incoherence  in  thought
          and  expression.   Standards of  morality  can
          afford a guidance to impose restrictions,  but
          cannot limit the scope of the right.  So  too,
          a  legislature can impose restrictions on,  or
          even prohibit the carrying on of a  particular
          trade or business and the Court, having regard
          to the circumstances obtaining at a particular
          time  or  place may hold the  restrictions  or
          prohibition    reasonable.    The    question,
          therefore,  is,  what is  trade  or  business?
          Though the word 'business' is ordinarily  more
          comprehensive  than the word 'trade',  one  is
          used as synonymous with the other.  It is  not
          necessary  to  bring out the finer  points  of
          distinction  between the said two concepts  in
          this  case.  In the words of S.R. Das, J.,  as
          he then was, in Narain Swadeshi Weaving  Mills
          v. Commissioner of Excess Profits Tax' 8,  the
          word    'business'   connotes    some    real,
          substantial and systematic
17 (1967) 3 SCR 50 : AIR 1967 SC 1368
18 1955 SCR 952, 961 : AIR 1955 SC 176, 181
593
or  organised  course  of activity or  conduct  with  a  set
purpose.   Even  accepting this test, if the activity  of  a
dealer, say, in ghee is business; then how does it cease  to
be business if it is in liquor?  Liquor can be manufactured,
brought  or sold like any other commodity.  It  is  consumed
throughout  the  world, though some  countries  restrict  or
prohibit  the  same  on  economic  or  moral  grounds.   The
morality or otherwise of a deal does not affect the  quality
of  the  activity though it may be a ground for  imposing  a
restriction  on  the said activity.  The  illegality  of  an
activity  does not affect the character of the activity  but
operates as a restriction on it.  If a law prohibits dealing
in  liquor, the dealing does not cease to be  business,  but
the said law imposes a restriction on the said dealing."
31.The  Court then referred to the decision in TB.   Ibrahim
case2.  According to the respondent-State there, it was held
in  that case that dealing in liquor was not a  business  or
trade  within the meaning of Article 19 of the  Constitution
and  there is no fundamental right in a citizen to carry  on
the  business  wherever  he chooses and his  right  must  be
subject  to  any  reasonable  restriction  imposed  by   the
executive authority in the interests of public  convenience.
The Court observed that in that case this Court did not  say
that there was no fundamental right to do business but  only
held  that  a citizen could not claim that  his  fundamental
right could not be restricted in public interests.
32.Nor,  according  to  the  Court,  did  the  decision   in
Cooverjee case3 lay down any such proposition.  According to
the  Court, in that case this Court held that  the  impugned
regulation  was a reasonable restriction within the  meaning
of  Article  19(6).   Referring  to  the  extract  from  the
judgment of Field, J. in Crowley v. Christensen4 referred to
in  that judgment (which we have already quoted  above)  and
the  concurrence expressed by the Court there with the  said
observations, the Court observed that the said passage  from
the  judgment  of  Field,  J. had nothing  to  do  with  the
construction  of  Article  19(1)(g)  of  the   Constitution.
According  to  the  Court,  there  the  learned  Judge   was
considering  the  scope of the "police power" and  the  said
observations   were   made  in  that   context   and   those
observations  were applied by this Court in Cooverjee  case3
in  considering  the  reasonableness  of  the   restrictions
imposed  upon  the  fundamental rights.   According  to  the
Court,  the  perusal of the entire judgment shows  that  the
Court  had  indeed conceded the fundamental right  but  held
that the said regulation operated as reasonable  restriction
on the said rights.
33.Similarly,   according   to  the  Court   the   following
observations  of  this  Court in A.N. Kidwai  case6  had  no
relevance  to  the  inquiry,  viz.,  whether  there  was   a
fundamental right to carry on business in liquor.  The  said
observations are as follows: (SCR p. 30 1)
"A  perusal of the Act and rules will make it clear that  no
person  has any absolute right to sell liquor and  that  the
purpose of the Act and the rules is to control and  restrict
the consumption of intoxicating liquors,
594
such  control and restriction being obviously necessary  for
the  preservation of public health and morals, and to  raise
revenue."
34.According to the Court, the said observations only mean
that  no  absolute  right to sell liquor was  given  to  any
person under the Act and that the said right was  controlled
by  the provisions of the said Act.  The Court further  held
that  the respondent State could not draw any  support  from
the  decision of this Court in Nagendra Nath case12  because
the  question there was in regard to the scope  of  Articles
226  and 227 of the Constitution vis-avis the orders  passed
by the appropriate authorities under the Eastern Bengal  and
Assam  Excise Act, 1910 although in that case two  decisions
of  this Court, viz., Cooverjee case3 and A.N. Kidwai  case6
were noticed, and it was observed that there was no inherent
right  to the settlement of liquor shops.  According to  the
Court  no question of fundamental right under Article  19(1)
arose  in  that case and hence the  said  observations  were
unhelpful to the State.
35.The  Court also found that the  following  observations
made  in  the  R.M.D. Chamarbaugwala  case7  were  also  not
helpful  to the State because that decision only  laid  down
that gambling was not business or trade: (SCR p. 925)
"We  find it difficult to accept the contention  that  those
activities  which encourage a spirit of reckless  propensity
for  making  easy gain by lot or chance, which lead  to  the
loss  of  the  hard earned money  of  the  undiscerning  and
improvident  common  man and thereby lower his  standard  of
living  and drive him into a chronic state  of  indebtedness
and eventually disrupt the peace and happiness of his humble
home could possibly have been intended by our  Constitution-
makers  to  be raised to the status of  trade,  commerce  or
intercourse   and  to  be  made  the  subjectmatter   of   a
fundamental right guaranteed by Article 19(1)(g)."
Since  the Court was not concerned with gambling,  the  said
observations  were not relevant.  The Court  then  concluded
with  the  scrutiny of the earlier decisions of  this  Court
referred to above, that they did not support the  contention
that dealing in liquor was not business or trade.  According
to  the  Court,  in  those decisions  this  Court  was  only
considering  the  provisions  of  the  various  Acts   which
conferred  a  restricted  right to business.   None  of  the
decisions held that a right to do business in liquor was not
a  fundamental  right.   The  Court,  therefore,  held  that
dealing in liquor was business and a citizen has a right  to
do  business in that commodity; but a State can make  a  law
imposing reasonable restrictions on the said right in public
interest.  We will have an occasion to deal with the Court's
observations and conclusions in this case at the appropriate
stage hereinafter.
36.To proceed further with the decisions of this Court  in
chronological order, we may now refer to the next  decision,
viz.,  State of Orissa v. Harinarayan Jaiswal19 which  is  a
decision  of  two learned Judges.  The facts were  that  the
first respondent was carrying on business of country  liquor
in
19 (1972) 2 SCC 36: (1972) 3 SCR 784
595
exercise  of  the powers conferred by Section 29(2)  of  the
Bihar  and  Orissa Excise Act, 1915.   The  appellant  State
issued  an order and in pursuance of that order a  date  was
notified  for  selling  by  public  auction  the   exclusive
privilege  of  selling by retail, country  liquor  in  eight
shops.   The respondent was the highest bidder-but  his  bid
was  rejected  because the Government was of the  view  that
inadequate prices had been offered as a, result of collusion
between  the bidders.  Thereafter, tenders were  called  for
and the appellant accepted the tender in respect of one shop
and rejected the others as it was again of the opinion  that
price  offered  was inadequate.  Thereafter,  the  remaining
seven   shops   were  sold  by  private   negotiations   for
substantially higher prices.  The High Court had allowed the
writ  petition  filed by the respondent and in  appeal  this
Court  referred to the decisions which we have  cited  above
including  the decision in K.K. Narula case 17.   Hegde,  J.
speaking for the Court held as follows: (SCC p. 43, para 12)
          "It is true that this Court has ruled that the
          right to trade in intoxicating drugs is also a
          right to carry on any trade or business within
          the meaning of Article 19(1)(g)  see  Krishna
          Kumar Narula v. Jammu and Kashmir State17.  At
          the  same time, it was held by this  Court  in
          Cooverjee  B. Bharucha v. Excise  Commissioner
          and   the   Chief   Commissioner3   that   for
          determining reasonable restrictions within the
          meaning  of Article 19(6) of the  Constitution
          on  the  right given under  Article  19(1)(g),
          regard  must  be  had to  the  nature  of  the
          business  and the conditions prevailing  in  a
          particular trade; State has power to  prohibit
          trades   which  are  illegal  or  immoral   or
          injurious  to  the health and welfare  of  the
          public  and  there is no inherent right  in  a
          citizen   to  sell  intoxicating  liquors   by
          retail."
          37.In Amar Chandra Chakraborty v. Collector
          of   Excise2O   which   is   a   decision   of
          Constitution Bench of five learned Judges, the
          challenge was to the Excise Collector's  order
          withdrawing  liquor licence before  expiry  of
          time.   Referring  to  the  decision  in  K.K.
          Narula   case17,  the  Court  held  there   as
          follows: (SCC p. 449, para 13)
          "It  is no doubt true that this Court  in  the
          case  cited  held that dealing  in  liquor  is
          business  and  a  citizen has a  right  to  do
          business  in that commodity but it  was  added
          that  the  State  can  make  a  law   imposing
          reasonable  restrictions on the said right  in
          public  interest.  In dealing with  reasonable
          restrictions  no abstract standard or  general
          pattern  is  possible to lay  down.   In  each
          case,  regard has to be had to the  nature  of
          trade  or business, the conditions  prevailing
          in  such trade or business, the nature of  the
          infringement   alleged,  and  the   underlying
          purpose of the restriction, the imposition  of
          which    is   alleged   to    constitute    an
          infringement."
38.The Court then referred to the contention on behalf  of
the  appellant  that  the provisions of Section  43  of  the
Bengal  Excise  Act,  1909  which  empowered  the  licensing
authority to withdraw the licence for any reason
20 (1972) 2 SCC 442: (1973) 1 SCR 533
596
whatsoever  not falling under Section 42 of that  Act,  were
unreasonable  and violative of the  appellant's  fundamental
right  under Article 19, and held as follows: (SCC pp.  449-
50, para 15)
.lm15
"It is no doubt true that in Section 43, there is no express
mention  of the precise grounds on which the licence can  be
withdrawn.  But in our opinion keeping in view the nature of
the  trade or business for which the grant of licence  under
the  Act  is provided the cause contemplated by  Section  43
must be such as may have reasonable nexus with the object of
regulating this trade or business in the general interest of
the  public.   In  the determination  of  reasonableness  of
restrictions on trade or business regard must be had to  its
nature,  the conditions prevailing in it and its  impact  on
the  society  as  a whole.  These  factors  must  inevitably
differ from trade to trade and no general rule governing all
trades or businesses is possible to lay down.  The right  to
carry  on  lawful  trade  or business  is  subject  to  such
reasonable conditions as may be considered essential by  the
appropriate  authority for the safety, health, peace,  order
and  morals of the society.  Article 47 of our  Constitution
directs  the State to endeavour to prohibit  consumption  of
intoxicating  drinks  and of drugs which  are  injurious  to
health  except  for  medicinal purposes.   In  the  case  of
country  liquor,  therefore,  the  question  of  determining
reasonableness  of  the  restriction  may  appropriately  be
considered  by giving due weight to the increasing evils  of
excessive consumption of country liquor in the interests  of
health and social welfare.  Principles applicable to  trades
which all persons carry on free from regulatory controls  do
not apply to trade or business in country liquor: this is so
because  of the impact of this trade on society due  to  its
inherent nature."
39.In  Nashirwar v. State of M. p.21 which is a judgment  of
three learned Judges,while dealing with the question whether
the State has power to grant liquorlicence by public auction
and whether the said power violated fundamental right  under
Article  19(1)(g)  of the Constitution, the  Court  held  as
follows: (SCC pp. 36-37, paras 23-25)
"There are three principal reasons to hold that there is  no
fundamental  right  of citizens to carry on trade or  to  do
business in liquor.  First, there is the police power of the
State  to  enforce  public morality to  prohibit  trades  in
noxious  or dangerous goods.  Second, there is power of  the
State  to enforce an absolute prohibition of manufacture  or
sale  of  Intoxicating liquor.  Article 47 states  that  the
State  shall  endeavour to bring about  prohibition  of  the
consumption  except for medicinal purposes  of  intoxicating
drinks  and of drugs which are injurious to health.   Third,
the  history  of excise laws shows that the  State  has  the
exclusive  right  or  privilege of manufacture  or  sale  of
liquor.
In Balsara case' this Court referred to Article 47 and  said
that  the  idea  of prohibition was  connected  with  public
health.   The  challenge  to a  prohibition  law  under  our
Constitution was made under Articles 14 and
21 (1975) 1 SCC 29 :(1975) 2 SCR 861
597
19  in  Balsara  case1.   This  Court  held  that   absolute
prohibition of manufacture or sale of liquor is  permissible
and  the only exception can be for  medicinal  preparations.
The concept of inherent right of citizens to do business  in
liquor is antithetical to the power of the State to  enforce
prohibition laws in respect of liquor.
Das, C.J. in State of Bombay v. R.M.D. Chamarbaugwala7  said
that  gambling  could not be regarded as trade  or  business
within  the meaning of Article 19(1)(f) and (g) and  Article
301.   Inherently  vicious activities cannot be  treated  as
entitling   citizens  to  do  business  or  trade  in   such
activities.   No  one  can  deal  in  counterfeit  coins  or
currency  notes.  Das, C.J. held that activities  which  are
criminal,  or  dealing in articles or goods  which  are  res
extra  commercium  could  not  have  been  intended  to   be
permitted   by   Article  19(1)(f)  and  (g)   relating   to
fundamental rights to trade or business."
40.Referring to K.K. Narula case17 the Court held that  it
was not correct to read the said decision to mean that there
was a fundamental right to do business in liquor.  According
to  the Court, the said decision was that dealing in  liquor
is business and a citizen had a right to do business in that
commodity and the State could impose reasonable restrictions
on  that  right  in public interest.   If  the  State  could
prohibit  business  in liquor as held in EN.  Balsara  case1
that  established  that  the State had  exclusive  right  or
privilege  to  manufacture, possess,  or  sell  intoxicating
liquor  and,  therefore,  the  State  granted  a  right   or
privilege to persons in the shape of licence or lease.   The
Court then referred to Harinarayan Jaiswal case19 and stated
that that case had explained K.K. Narula case17.  The  Court
then observed as follows: (SCC p. 39, para 35)
"Trade  in  liquor  has historically stood  on  a  different
footing  from  other  trades.  Restrictions  which  are  not
permissible  with other trades are lawful and reasonable  so
far  as the trade in liquor is concerned.  That is why  even
prohibition  of the trade in liquor is not only  permissible
but  is also reasonable.  The reasons are  public  morality,
public  interest and harmful and dangerous character of  the
liquor.   The State possesses the right of complete  control
over   all  aspects  of  intoxicants,   viz.,   manufacture,
collection,  sale and consumption.  The State has  exclusive
right  to manufacture and sell liquor and to sell  the  said
right  in order to raise revenue.  That is the view of  this
Court in Bharucha case3 and Jaiswal case19
The  Court  also held that since in Cooverjee case3,  in  no
uncertain  terms  this  Court  had  repelled  the  citizens'
contention of inherent right to sell intoxicating liquor and
since  Cooverjee  case3 was a Constitution  Bench  decision,
K.K.  Narula  case17  which is  also  a  Constitution  Bench
decision,  cannot be said to have overruled the decision  in
Cooverjee case3.
41.In  Har  Shankar v. Dy.  Excise  and  Taxation  Commr22
which  is a decision of Constitution Bench of  five  learned
Judges, the question whether
22 (1975) 1 SCC 737 : (1975) 3 SCR 254
598
a  citizen had a fundamental right to trade  in  intoxicants
and  whether  State had power to prohibit  absolutely  every
form of activity relating to intoxicants, fell directly  for
consideration.   While dealing with it, after  referring  to
all  the  earlier decisions including the decision  in  K.K.
Narula  case17, the Court held as follows: (SCC pp.  755-56,
paras 47-48)
          "These    unanimous    decisions    of    five
          Constitution   Benches  uniformly   emphasised
          after  a careful consideration of the  problem
          involved  that  the  State has  the  power  to
          prohibit  trades  which are injurious  to  the
          health   and  welfare  of  the  public,   that
          elimination and exclusion from the business is
          inherent  in  the nature of  liquor  business,
          that  no person has an absolute right to  deal
          in  liquor and that all forms of  dealings  in
          liquor have, from their inherent nature,  been
          treated  as  a  class  by  themselves  by  all
          civilised  communities.  The  contention  that
          the   citizen  had  either  a  natural  or   a
          fundamental   right  to  carry  on  trade   or
          business in liquor thus stood rejected.
          But, in spite of the weight of this authority,
          a  Constitution Bench struck a different  note
          in  Krishna  Kumar  Narula v.  State  of  J  &
          K17....  It  would, however, appear  that  the
          learned Judges of the High Court had  differed
          on  the question whether the appellant  had  a
          fundamental right to do business in liquor and
          this  Court  desired  'to  make  the  position
          clear' in order to 'avoid further confusion in
          the  matter'.   The  decisions  in   Cooverjee
          case3,  Kidwai case6 and Nagendra Nath  case12
          were  cited before the Court but it  took  the
          view that they did not support the  contention
          that  dealing  in liquor was not  business  or
          trade or that a right to do business in liquor
          was not a fundamental right."
          The  Court  then referred to the  decision  in
          R.M.D.  Chamarbaugwala case7 and  observed  as
          follows: (SCC pp. 757-759, paras 50, 53 & 54)
          "This decision was also cited before the Court
          in  Krishna  Kumar case17 but it  said:  'This
          decision  only lays down that gambling is  not
          business  or trade.  We are not  concerned  in
          this case with gambling.' With great  respect,
          the reasons mentioned by Das, C.J. for holding
          that  there can be no fundamental right to  do
          trade or business in an activity like gambling
          apply with equal force to the alleged right to
          trade  in liquor and those reasons may not  be
          brushed aside by restricting them to  gambling
          operations.
          In  our opinion, the true  position  governing
          dealings  in  intoxicants  is  as  stated  and
          reflected in the Constitution Bench  decisions
          of  this  Court in  Balsara  case1,  Cooverjee
          case3,  Kidwai  case6, Nagendra  Nath  case12,
          Amar  Chakraborty  case2O  and  the   R.M.D.C.
          case7,  as interpreted in Harinarayan  Jaiswal
          case19  and  Nashirwar case21.   There  is  no
          fundamental  right to do trade or business  in
          intoxicants.  The State, under its  regulatory
          powers,  has the right to prohibit  absolutely
          every   form  of  activity  in   relation   to
          intoxicants   its   manufacture,   storage,
          export,  import, sale and possession.  In  all
          their manifestations, these rights are
          599
          vested  in the State and indeed  without  such
          vesting  there can be no effective  regulation
          of various forms of activities in relation  to
          intoxicants.    In   American   Jurisprudence,
          Volume 30 it is stated that while engaging  in
          liquor  traffic  is not  inherently  unlawful,
          nevertheless  it  is  a privilege  and  not  a
          right,  subject to governmental control  (page
          538).  This power of control is an incident of
          the society's right to self protection and  it
          rests upon the right of the State to care  for
          the health, morals and welfare of the  people.
          Liquor  traffic is a source of  pauperism  and
          crime (pp. 5 39, 540, 54 1).
          It  was  unnecessary in Krishna  Kumar  Narula
          case17  to  examine  the  question  from  this
          broader point of view, as the only  contention
          bearing on the constitutional validity of  the
          provision  impugned therein was not  permitted
          to be raised as it was not argued in the  High
          Court.  The discussion of the question whether
          a citizen has a fundamental right to do  trade
          or business in liquor proceeded in that  case,
          avowedly, from a desire to clear the confusion
          arising  from the 'different views'  expressed
          by the two Judges of the High Court.  This may
          explain  why  the Court restricted  its  final
          conclusion  to holding that dealing in  liquor
          is business and the citizen has a right to  do
          business in that commodity.  The Court did not
          say, though such an implication may arise from
          its   conclusion,  that  the  citizen  has   a
          fundamental  right to do trade or business  in
          liquor.   If  we may repeat, Subba  Rao,  C.J.
          said:
          'We, therefore, hold that dealing in liquor is
          business  and  a  citizen has a  right  to  do
          business in that commodity; but the State  can
          make a law imposing reasonable restrictions on
          the said right, in public interests.'
          It is significant that the judgment in Krishna
          Kumar Narula case17 does not negate the  right
                of  the State to prohibit absolutely all  form
s
          of activities in relation to intoxicants.  The
          wider  right  to  prohibit  absolutely   would
          include  the narrower right to permit  dealing
          in  intoxicants  on  such  terms  of   general
          application as the State deems expedient."
42.In Lakhanlal v. State of Orissa23 which is a decision  of
two   learned  Judges,the  Court  after  referring  to   the
decisions  in  Cooverjee case3, K.K.  Narulacase17  and  Har
Shankar  case22  reiterated that there  was  no  fundamental
right  to trade or business in intoxicants and that  in  all
their  manifestations these rights were vested in the  State
and indeed without such vesting there could be no  effective
regulation  of  various forms of activities in  relation  to
intoxicants.
43.In Sat Pal and Co. v. Lt.  Governor of Delhi24 which is
a  decision of two learned Judges, it was observed  that  if
there is no fundamental right to carry on trade or  business
in  liquor, there is no question of its abridgement  of  any
restriction which can be styled as unreasonable.  The  Court
reiterated the
23 (1976) 4 SCC 660: (1977) 1 SCR 811
24 (1979) 4 SCC 232: 1979 SCC (Tax) 322: (1979) 3 SCR 651
600
view  taken in Har Shankar case22 that the State  under  its
regulatory power has a right to control or even to  prohibit
absolutely every form of activity in relation to intoxicants
apart  from  anything else, its import too.  This  power  of
control is a question of society's right to  self-protection
and  it  rests upon the right of the State to  act  for  the
health, moral and welfare of the people.  Liquor traffic  is
a source of pauperism and crime.
44.In  Southern Pharmaceuticals and Chemicals v. State  of
Kerala25  which is a decision of three learned  Judges,  the
Court  held  that  no  citizen  has  any  fundamental  right
guaranteed  under  Article 19(1)(g) of the  Constitution  to
carry  on  trade  in any noxious and  dangerous  goods  like
intoxicating drugs or intoxicating liquors.
45.In  State of M.R v. Nandlal Jaiswal26 the Bench of  two
learned Judges reiterated that it is well settled by several
decisions  of  this  Court including  the  decision  in  Har
Shankar  case22  that  there is no fundamental  right  in  a
citizen to carry on trade or business in liquor.  The  State
under  its  regulatory  power  has  the  power  to  prohibit
absolutely every form of activity in relation to intoxicants
and  its  manufacture,  storage, export,  import,  sale  and
possession.  No one can claim as against the State the right
to carry on trade or business in liquor and the State cannot
be  compelled to part with its exclusive right or  privilege
of manufacturing and selling liquor.
46.  In Doongaji & Co. (1) v. State of M.p27 a Bench of  two
learned  Judges  while dealing with  the  question  whether,
after the expiration of the licence given to the  appellant,
fixation  of  the prices of the plant and machinery  of  the
distillery  and the attached warehouses  and  stock-in-trade
and  payment  thereof  to the  appellant,  was  a  condition
precedent  to taking possession thereof and giving  delivery
to  the  new licensee which was  a  State-owned  Corporation
found   on  facts  that  the  appellant  had  no   exclusive
possession of the distillery which always remained with  the
Excise Department and the appellant was only working out the
contract of manufacturing rectified spirit in the distillery
and  wholesale  supply  of the same to  the  retail  vendors
within  the area attached to it.  Due to  noncooperation  of
the  appellant,  possession was taken and delivered  to  the
incoming licensee as per the Rules and the appellant was not
entitled  to  restitution.  In that  connection,  the  Court
observed as follows: (SCC p. 320, para 15)
          "It  is  settled law by several  decisions  of
          this Court that there is no fundamental  right
          to a citizen to carry on trade or business  in
          liquor.  The State under its regulatory power,
          has  power to prohibit absolutely any form  of
          activity  in  relation to an  intoxicant,  its
          manufacture,  possession, import  and  export.
          No  one can claim, as against the  State,  the
          right  to  carry on trade or business  in  any
          intoxicants,  nor  the State be  compelled  to
          part with its exclusive right or privilege  of
          manufacture, sale, storage
25 (1981) 4 SCC 391 : 1981 SCC (Tax) 320
26 (1986) 4 SCC 566
27 1991 Supp (2) SCC 313 AIR 1991 SC 1947
601
          of liquor.  Further when the State has decided
          to  part with such right or privilege  to  the
          others,  then  State can  regulate  consistent
          with  the  principles  of  equality  enshrined
          under  Article 14 and any infraction  in  this
          behalf at its pleasure is arbitrary  violating
          Article 14.  Therefore, the exclusive right or
          privilege   of  manufacture,  storage,   sale,
          import  and export of the liquor  through  any
          agency  other than the State would be  subject
          to rigour of Article 14."
47.  We may now deal with the decisions relating to trade or
business in industrial alcohol.
48.  In Indian Mica Micanite Industries v. State of Bihar28,
a  Constitution Bench of five learned Judges  was  concerned
only with the question whether the fee levied under Rule III
of  the  Bihar and Orissa Excise Rules on  denatured  spirit
used and possessed by the appellant had sufficient quid  pro
quo  for that levy.  The question whether the citizen had  a
fundamental   right  to  carry  on  trade  or  business   in
industrial alcohol was neither raised nor answered.  Dealing
with  the question raised before it, the Court  held,  among
other things, that before a levy can be upheld as a fee,  it
must be shown that the levy has a reasonable correlationship
with   the  services  rendered  by  the   Government.    The
correlationship  is essentially a question of fact.  On  the
facts  of that case, the Court found that the  only  service
rendered  by  the Government to the appellant and  to  other
similar  licensees  was that the Excise  Department  had  to
maintain  an  elaborate staff not only for the  purposes  of
ensuring   that   denaturing  is  done   properly   by   the
manufacturer but also to see that the subsequent  possession
of  denatured  spirit  in the hands either  of  a  wholesale
dealer  or  retail seller or any other licensee  or  permit-
holder  was not misused by converting the  denatured  spirit
into alcohol fit for human consumption.  Since the State  in
that  case,  had not chosen to place before  the  Court  the
material  in its possession from which  the  correlationship
between  the  levy  and  the  services  rendered  could   be
established  at least in a general way, the Court held  that
the levy under the impugned rule could not be justified.
49.  In  State  of U.P v. Synthetics  and  Chemicals  Ltd.29
which is a decision of two learned Judges of this Court, the
facts  were that the State legislature had enacted  the  U.P
Excise   (Amendment,   Act  1972  (30   of   1972).    Under
notification dated 3-11-1972, the Government was  authorised
to sell by auction the right of retail or wholesale vend  of
foreign liquor.  The new rules were accordingly framed,  the
effect  of  which was that a vend-fee of Rs 1. IO  per  bulk
litre was imposed.  The Allahabad High Court, however,  held
the  notification  to be ultra vires.   However,  after  the
decision  of this court in Nashirvar case21 and Har  Shankar
case22 where the State's power to auction the right to vend,
by retail or wholesale, foreign liquor was upheld, the State
Legislature enacted the U.P. Excise (Amendment) Act, 1972 by
U.P  Excise (Amendment) (Re-enactment and  Validation)  Act,
1976
28 (1971) 2 SCC 236
29 (1980) 2 SCC 441
602
(5 of 1976).  Thereafter the High Court upheld the  validity
of  the  re-enacted  Act  and  against  that  appeals   were
preferred here.  The vend fee was made payable in advance on
denatured  spirit issued for industrial purposes.   In  that
case,  the  Court  held that  the  expression  "intoxicating
liquor"  in  Entry 8 of List 11 of Seventh Schedule  of  the
Constitution  is  not confined to potable liquor  alone  but
would  include  all kinds of liquor which  contain  alcohol.
Hence  the expression covered alcohol manufactured  for  the
purpose of industries such as industrial alcohol.  The Court
also held that the words "foreign liquor" in Section 24-A of
the  State  Act included the denatured spirit and  the  said
words  could not be given a restricted meaning for the  word
'consumption' cannot be confined to consumption of beverages
alone.   When  the  liquor  is  put  to  any  use  such   as
manufacture  of  any  articles,  liquor  is  all  the   same
consumed.   Further, Section 4(2) of the Act  provides  that
the  State  may declare what shall be deemed to  be  country
liquor  or foreign liquor and the State had under the  rules
issued the notification defining "foreign liquor" as meaning
all  rectified,  perfumed, medicated  and  denatured  spirit
wherever  made.   The  Court further  held  that  "specially
denatured  spirit" for industrial purposes is not  different
from  denatured spirit.  The denatured spirit  mentioned  in
the  rules in question was treated as  including  "specially
denatured  spirit" for industrial purposes.   The  denatured
spirit  has ethyl alcohol as one of its  constituents.   The
specially  denatured  spirit  for  industrial  purposes   is
different   from  denatured  spirit  only  because  of   the
difference  in the quality and quantity of the  denaturants.
Specially  denatured spirit and ordinary  denatured  spirits
are  classified  according to the use  and  the  denaturants
used.   Hence  the definition of 'alcohol' in the  rules  in
question  included  both  ordinary  as  well  as   specially
denatured spirit.
50.  The  Court further held that although it was true  that
the  stand  taken  by the State Government  in  the  earlier
proceedings  in the High Court was that the levy was in  the
nature  of  excise duty or a fee and the present  stand  was
that it was neither a duty nor a fee but only a levy for the
conferment  of the exclusive privilege, that would not  make
any  difference so long as the Government has the  right  to
impose  the  levy.   The levy  was  imposed  for  permission
granted  in favour of the licensees and allotment orders  of
denatured   spirits   issued  to  them  from   the   various
distilleries.   The parties having paid the fee,  had  taken
possession of denatured spirit from the distilleries and the
re-enacted  legislation,  viz.,  Act  5  of  1976  had  only
restored  the status quo enabling the State to  collect  the
levy validly made under the earlier Act 30 of 1972 which was
found to be illegal by the High Court.
51.  Since  the State had exclusive right  of  manufacturing
and selling of intoxicating liquors, the imposition of  vend
fee  on  denatured  spirit  and the  grant  of  licences  to
wholesale   vend   of  denatured  spirit  was   within   the
legislative  competence of the State under Entry 8  of  List
II.   The Court further held that the Ethyl  Alcohol  (Price
Control) Order issued by the Central Government in  exercise
of power conferred under Section 18-G of the IDR Act did not
explicitly or impliedly take away the power of the State
603
Government  to  regulate the  distribution  of  intoxicating
liquor  by  collecting  a levy for  parting  away  with  its
exclusive rights.  The power of the State under Entry 24  of
List II is subject to the provisions of Entry 52 of List  I.
Therefore, the power of Parliament and the State Legislature
were confined to Entry 52 of List I and Entry 24 of List  II
respectively.  Parliament would have had exclusive power  to
legislate in respect of industry notified by Parliament  but
the  provisions of Entry 26 of List 11 and Entry 33 of  List
III would also have to be taken into account for determining
the scope of legislative power of Parliament and the  State.
Entry 33 of List III enables a law to be made regarding  the
production,  supply  and  distribution  of  products  of   a
notified  industry.   Thus a fair scrutiny of  the  relevant
entries  made it clear that the power to  regulate  notified
industries  is  not exclusively within the  jurisdiction  of
Parliament.   Hence,  it  cannot  be  contended  that  after
passing of the Industries (Development and Regulation)  Act,
195 1, the claim by the State to monopoly with regard to the
production  and  manufacture and the sale of  the  denatured
spirit or the industrial alcohol was unsustainable.
52.In Synthetics and Chemicals Ltd. v. State of U.p3O  which
is a decision of Constitution Bench of seven learned Judges,
the  question  was with regard to the validity  of  levy  on
industrial alcohol.  The Court held that it must accept  the
decision that the States have the power to regulate the  use
of  alcohol  and  that  power must  include  power  to  make
provisions to prevent and/or check industrial alcohol  being
used  as intoxicating or drinkable alcohol.   The  question,
according  to  the  Court,  was  whether  in  the  garb   of
regulations, the legislation which is in pith and  substance
fee  or  levy  which  has no connection  with  the  cost  or
expenses administering the regulations can be imposed purely
as  a regulatory measure.  Judged by the pith and  substance
of the impugned legislation, the Court held that the  levies
in  question  could  not be treated as  part  of  regulatory
measures.   The Court further held that the State had  power
to  regulate though not as emanation of police power but  as
an expression of the sovereign power of the State.  But that
power  has  its limitations.  The Court then  observed  that
only  in  two cases the question of industrial  alcohol  had
come  up  for  consideration  before  this  Court.   One  in
Synthetics and Chemicals Ltd. case29 and the other in Indian
Mica  and Micanite Industries28.  The latter cases  starting
with  EN.  Balsara case1 are of potable liquor.   The  Court
then  referred  to  K.K.  Narula case  17  and  observed  as
follows: (SCC pp. 155-56, para 76)
          "... there was no right to do business even in
          potable  liquor.  It is not necessary  to  say
          whether  it  is a good law or not.   But  this
          must be held that the reasoning therein  would
          apply   with  greater  force   to   industrial
                alcohol.  "
The  Court then observed in paragraphs 77, and 80 to  85  as
under: (SCC pp. 156-158)
          "77.   Article 47 of the Constitution  imposes
          upon the State the duty to endeavour to  bring
          about  prohibition of the  consumption  except
          for
          30 (1990) 1 SCC 109
          604
          medicinal  purpose of intoxicating drinks  and
          products which are injurious to health, If the
          meaning   of  the   expression   'intoxicating
          liquor' is taken in the wide sense adopted  in
          Balsara  case1, it would lead to an  anomalous
          result.   Does Article 47 oblige the State  to
          prohibit even such industries as are  licensed
          under  the  IDR  Act  but  which   manufacture
          industrial  alcohol?  This was never  intended
          by  the above judgments or  the  Constitution.
          It  appears  to us that the  decision  in  the
          Synthetics  and Chemicals Ltd. case30 was  not
          correct on this aspect.
          *           *           *
          80.   It  was submitted that the  activity  in
          potable  liquor  which was regarded  safe  and
          exclusive  right of the State in  the  earlier
          judgments dealing with the potable liquor were
          sought  to  be justifiable  under  the  police
          power  of  the State, that is,  the  power  to
          preserve  public  health, morals,  etc.   This
          reasoning   can  never  apply  to   industrial
          alcohol  manufactured by industries which  are
          to  be  developed in the public  interest  and
          which are being encouraged by the State.  In a
          situation  of this nature, it is essential  to
          strike a balance and in striking the  balance,
          it is difficult to find any justification  for
          any  theory of any exclusive right of a  State
          to deal with industrial alcohol.   Restriction
          valid   under  one  circumstance  may   become
          invalid in changing circumstances. ...
          81.   It  is not necessary for us here to  say
          anything on the imposts on potable alcohol  as
          commonly  understood.  These are justified  by
          the lists of our legislature practised in this
          country    -   see   the    observations    of
          Hidayatullah,  J., as the Chief  Justice  then
          was, in Guruswamy v. State Of Mysore31 (at pp.
          573-574)   and   other   decisions   mentioned
          hereinbefore.
          82.   In  that view of the matter, it  appears
          to us that the relevant provisions of the  U.P
          Act,   A.P.  Act,  Tamil  Nadu   Act,   Bombay
          Prohibition  Act, as  mentioned  hereinbefore,
          are unconstitutional insofar as these  purport
                to   levy  a  tax  or  charge   imposts   upon
          industrial  alcohol, namely alcohol  used  and
          usable for industrial purposes.
          83.   Having  regard  to  the  principles   of
          interpretation    and    the    constitutional
          provisions, in the light of the language  used
          and  having  considered  the  impost  and  the
          composition  of  industrial alcohol,  and  the
          legislative  practice of this country, we  are
          of  the  opinion that the impost  in  question
          cannot be justified as State imposts as  these
          have   been  done.   We  have   examined   the
          different  provisions.  These are  not  merely
          regulatory.   These are much more  than  that.
          These  seek to levy imposition in  their  pith
          and  substance not as incidental or as  merely
          disincentives but as attempts to raise revenue
          for  States'  purposes.  There  is  no  taxing
          provision permitting these in the lists in the
          field  of industrial alcohol for the State  to
          legislate.
          84.   Furthermore,  in view of the  occupation
          of  the  field  by the IDR  Act,  it  was  not
          possible to levy this impost.
          31  Guruswamy  & Co. v. State of  Mysore,  AIR
          1967 SC 1512 : (1967) 1 SCR 548
          605
          85.   After the 1956 amendment to the IDR  Act
          bringing     alcohol     industries     (under
          fermentation  industries)  as Item 26  of  the
          First Schedule to IDR Act the control of  this
          industry has vested exclusively in the  Union.
          Thereafter,   licences  to  manufacture   both
          potable  and nonpotable alcohol is  vested  in
          the  Central  Government.   Distilleries   are
          manufacturing   alcohol  under   the   central
          licences  under  IDR Act.   No  privilege  for
          manufacture  even  if one  existed,  has  been
          transferred to the distilleries by the  State.
          The State cannot itself manufacture industrial
          alcohol without the permission of the  Central
          Government.  The States cannot claim to pass a
          right which they do not possess.  Nor can  the
          State  claim  exclusive right to  produce  and
          manufacture   industrial  alcohol  which   are
          manufactured  under the grant of licence  from
          the  Central Government.   Industrial  alcohol
          cannot  upon coming into existence under  such
          grant   be  amenable  to  States'   claim   of
          exclusive possession of privilege."
53.  The  aforesaid  decisions pertaining to  the  trade  or
business in denatured spirit or industrial alcohol, not only
do  not  take the view that the citizen  has  a  fundamental
right  to carry on trade or business in potable alcohol  but
on  the contrary, hold that he has no such right.   This  is
reiterated in the two Synthetics & Chemicals cases29 and 30.
54.  It  will thus be obvious that all the decisions  except
the decision in K.K. Narula case17 have unanimously held  as
shown  above that there is no fundamental right to carry  on
trade or business in potable liquor sold as a beverage.   As
pointed out above, the proposition of law which is put in  a
different language in K.K. Narula case17 has been  explained
by the subsequent decisions of this Court including those of
the Constitution Benches.  The proposition of law laid  down
there has to be read in conformity with the proposition laid
down  in that respect by the other decisions of  this  Court
not only to bring comity in the judicial decisions but  also
to  bring the law in conformity with the provisions  of  the
Constitution.   The  fundamental  rights  conferred  by  our
Constitution are not absolute.  Article 19 has to be read as
a  whole.  The fundamental rights enumerated  under  Article
19(1)  are subject to the restrictions mentioned in  clauses
(2)  to (6) of the said article.  Hence, the correct way  to
describe  the fundamental rights under Article 19(1)  is  to
call  them  qualified fundamental rights.  To  explain  this
position  in  law, we may take the same illustration  as  is
given in K. K. Narula case 17. The citizen has undoubtedly a
fundamental right to carry on business in ghee.  But he  has
no fundamental right to do business in adulterated ghee.  To
expound  the  theme  further,  a citizen  has  no  right  to
trafficking in women or in slaves or in counterfeit coins or
to   carry   on  business  of  exhibiting   and   publishing
pornographic   or   obscene  films  and   literature.    The
illustrations  can be multiplied.  This is so because  there
are  certain  activities which are  inherently  vicious  and
pernicious  and are condemned by all civilised  communities.
So  also, there are goods, articles and services  which  are
obnoxious  and injurious to the health, morals,  safety  and
welfare  of  the  general public.  To  contend  that  merely
because some
606
activities and trafficking in some goods can be organised as
a trade or business, right to carry on trade or business  in
the same should be considered a fundamental right is to  beg
the  question.  The correct interpretation to be  placed  on
the expression "the right to practise any profession, or  to
carry on any occupation, trade or business" is to  interpret
it to mean the right to practise any profession or to  carry
on   any  occupation,  trade  or  business  which   can   be
legitimately  pursued  in  a  civilised  society  being  not
abhorrent  to  the  generally  accepted  standards  of   its
morality.   Human perversity knows no limits and it  is  not
possible  to enumerate all professions, occupations,  trades
and  businesses which may be obnoxious to  decency,  morals,
health,  safety and welfare of the society.  This  is  apart
from  the  fact  that under  our  Constitution  the  implied
restrictions  on the right to practise any profession or  to
carry on any occupation, trade or business are made explicit
in clauses (2) to (6) of Article 19 of the Constitution  and
the  State  is permitted to make law for imposing  the  said
restrictions.  In the present case, it will be clause (6) of
Article  19  which places restrictions  on  the  fundamental
right   to  do  business  under  Article  19(1)(g).    These
restrictions  and  limitations  on  fundamental  right   are
implicit  and inherent even in the fundamental rights  spelt
out  in  the American Constitution, although  they  are  not
explicitly  stated as in our Constitution by clauses (2)  to
(6)  of Article 19.  That is how the American Supreme  Court
has  read  and  interpreted  the  rights  in  the   American
Constitution  as pointed out above by the excerpts from  the
relevant  decisions.   It will have, therefore, to  be  held
that  even  under  the American Constitution,  there  is  no
absolute  fundamental right to do business or trade  in  any
commodity  or service.  The correct way, therefore, to  read
the fundamental rights enumerated under Article 19(1) of our
Constitution is to hold that the citizens do not possess the
said  rights  absolutely.   They have  the  said  rights  as
qualified  by the respective clauses (2) to (6)  of  Article
19.   That  is apart from the fact that Article  47  of  the
Constitution enjoins upon the State to prohibit  consumption
of   intoxicating  drink  like  liquor,  which   falls   for
consideration in the present case and, therefore, the  right
to  trade or business in potable liquor is subject  also  to
the  provisions of the said article.  Whether one states  as
in  K.K.  Narula case17 that the citizen has  a  fundamental
right  to do business but subject to the State's  powers  to
impose valid restrictions under clause (6) of Article 19  or
one  takes the view that a citizen has no fundamental  right
to do business but he has only a qualified fundamental right
to  do  business, the practical consequence is the  same  so
long as the former view does not deny the State the power to
completely  prohibit,  trade  or business  in  articles  and
products  like liquor as a beverage, or such trafficking  as
in  women and slaves.  This Court in K.K. Narula case17  has
not taken such view.
55.  The  contention  that if a citizen has  no  fundamental
right  to carry on trade or business in potable liquor,  the
State  is  also  injucted  from  carrying  on  such   trade,
particularly in view of the provisions of Article 47, though
apparently attractive, is fallacious.  The State's power  to
regulate  and  to restrict the business  in  potable  liquor
impliedly includes the power to carry
607
on  such trade to the exclusion of others.   Prohibition  is
not the only way to restrict and regulate the consumption of
intoxicating liquor.  The abuse of drinking intoxicants  can
be   prevented   also  by  limiting  and   controlling   its
production,  supply  and consumption.  The State can  do  so
also  by creating in itself the monopoly of  the  production
and  supply of the liquor.  When the state does so, it  does
not  carry on business in illegal products.  It  carries  on
business  in  products  which are not  declared  illegal  by
completely  prohibiting heir production but in products  the
manufacture, possession and supply of which is regulated  in
the  interests  of  the health, morals and  welfare  of  the
people.   It  does so also in the interests of  the  general
public under Article 19(6) of the Constitution.
56.  The   contention  further  that  till  prohibition   is
introduced,  a citizen has a fundamental right to  carry  on
trade or business in potable liquor has also no merit.   All
that  the citizen can claim in such a situation is an  equal
right  to  carry on trade or business in potable  liquor  as
against the other citizens.  He cannot claim equal right  to
carry  on  the  business against the State  when  the  State
reserves  to  itself the exclusive right to  carry  on  such
trade  or  business.  When the State neither  prohibits  nor
monopolises  the  said  business,  the  citizens  cannot  be
discriminated  against while granting licences to  carry  on
such business.  But the said equal right cannot be  elevated
to the status of a fundamental right.
57.  It is no answer against complete or partial prohibition
of the production, possession, sale and consumption etc.  of
potable liquor to contend that the prohibition where it  was
introduced earlier and where it is in operation at  present,
has  failed.  The failure of measures permitted by law  does
not  detract from the power of the State to  introduce  such
measures and implement them as best as they can.
58.  We also do not see any merit in the argument that there
are more harmful substances like tobacco, the consumption of
which is not prohibited and hence there is no  justification
for  prohibiting  the  business in  potable  alcohol.   What
articles  and  goods  should  be  allowed  to  be  produced,
possessed,  sold and consumed is to be left to the  judgment
of  the legislative and the executive wisdom.  Things  which
are  not  considered  harmful today, may  be  considered  so
tomorrow  in  the light of the fresh medical  evidence.   It
requires  research and education to convince the society  of
the  harmful effects of the products before a  consensus  is
reached to ban its consumption.  Alcohol has since long been
known all over the world to have had harmful effects on  the
health  of  the individual and the welfare of  the  society.
Even long before the Constitution was framed, it was one  of
the  major items on the agenda of the society to ban  or  at
least  to regulate, its consumption.  That is why  it  found
place  in  Article 47 of the Constitution.  It  is  only  in
recent  years that medical research has brought to the  fore
the  fatal link between smoking and consumption  of  tobacco
and   cancer,   cardiac  diseases  and   deterioration   and
tuberculosis.   There  is a sizeable movement all  over  the
world including in this country to educate people about  the
dangerous  effect  of tobacco on individual's  health.   The
society may, in course of time, think
608
of prohibiting its production and consumption as in the case
of alcohol.  There may be more such dangerous products,  the
harmful  effects  of which are today  unknown.   But  merely
because  their  production  and  consumption  is  not  today
banned,  does not mean that products like alcohol which  are
proved harmful, should not be banned.
59.The  1956 Resolution of Industrial Policy adopted by  the
Central    Government    also    does    not    help     the
petitioners/appellants   in   their  contention   that   the
production  of industrial alcohol as an industry has  to  be
recognised and all that can be done is to regulate the  said
production but not to prohibit it. Apart from the fact  that
the  said resolution has no legal efficacy, and cannot  have
the  effect of limiting the powers of the State to  prohibit
or   restrict  the  production  of  potable   alcohol,   the
resolution itself nowhere speaks against such prohibition or
limitation.   The  licences  granted  to  the  distilleries,
breweries  and wineries of potable liquor are valid only  so
long  as  their  production,  possession,  transport,  sale,
consumption etc. are not completely prohibited in the States
concerned.
60.We  may  now summarise the law on the subject  as  culled
from the aforesaid decisions.
          (a)   The  rights protected by  Article  19(1)
          are   not   absolute   but   qualified.    The
          qualifications  are stated in clauses  (2)  to
          (6)  of  Article 19.  The  fundamental  rights
          guaranteed  in  Article 19(1)(a) to  (g)  are,
          therefore,  to  be read along  with  the  said
          qualifications.   Even the  rights  guaranteed
          under the Constitutions of the other civilized
          countries  are  not  absolute  but  are   read
          subject  to the implied limitations  on  them.
          Those implied limitations are made explicit by
          clauses  (2)  to  (6) of  Article  19  of  our
          Constitution.
          (b)   The right to practise any profession  or
          to carry on any occupation, trade or  business
          does not extend to practising a profession  or
          carrying  on an occupation, trade or  business
          which  is inherently vicious  and  pernicious,
          and  is condemned by all civilised  societies.
          It does not entitle citizens to carry on trade
          or  business in activities which  are  immoral
          and  criminal and in articles or  goods  which
          are obnoxious and injurious to health,  safety
          and  welfare of the general public, i.e.,  res
          extra  commercium, (outside commerce).   There
          cannot be business in crime.
          (c)   Potable  liquor  as  a  beverage  is  an
          intoxicating  and  depressant drink  which  is
          dangerous  and  injurious to  health  and  is,
          therefore,  an  article  which  is  res  extra
          commerce being inherently harmful.  A  citizen
          has,  therefore,  no fundamental right  to  do
          trade or business in liquor.  Hence the  trade
          or  business  in  liquor  can  be   completely
          prohibited.
          (d)   Article 47 of the Constitution considers
          intoxicating drinks and drugs as injurious  to
          health  and impeding the raising of  level  of
          nutrition  and the standard of living  of  the
          people  and improvement of the public  health.
          It,  therefore,  ordains the  State  to  bring
          about
          609
          prohibition of the consumption of intoxicating
          drinks which obviously include liquor,  except
          for medicinal purposes.  Article 47 is one  of
          the directive principles which is  fundamental
          in  the governance of the country.  The  State
          has,   therefore,  the  power  to   completely
          prohibit  the manufacture,  sale,  possession,
          distribution and consumption of potable liquor
          as a beverage, both because it is inherently a
          dangerous  article  of  consumption  and  also
          because  of the directive principle  contained
          in  Article  47, except when it  is  used  and
          consumed for medicinal purposes.
          (e)   For  the  same  reason,  the  State  can
                create  a monopoly either in itself or in  the
          agency  created  by it  for  the  manufacture,
          possession,  sale  and  distribution  of   the
          liquor  as  a  beverage  and  also  sell   the
          licences to the citizens for the said  purpose
          by  charging  fees.  This can  be  done  under
          Article 19(6) or even otherwise.
          (f)For  the same reason, again, the State  can
          impose  limitations  and restrictions  on  the
          trade  or  business  in potable  liquor  as  a
          beverage  which  restrictions  are  in  nature
          different  from those imposed on the trade  or
          business  in legitimate activities  and  goods
          and  articles which are res  commercium.   The
          restrictions  and limitations on the trade  or
          business in potable liquor can again be  both.
          under   Article  19(6)  or   otherwise.    The
          restrictions and limitations can extend to the
          State carrying on the trade or business itself
          to the exclusion of and elimination of  others
          and/or  to preserving to itself the right  to.
          sell  licences to do trade or business in  the
          same, to others.
          (g)   When the State permits trade or business
          in   the  potable  liquor  with   or   without
          limitation, the citizen has the right to carry
          on   trade   or  business   subject   to   the
          limitations, if any, and the State cannot make
          discrimination  between the citizens  who  are
          qualified to carry on the trade or business.
          (h)   The State can adopt any mode of  selling
          the licences for trade or business with a view
          to maximise its revenue so long as the  method
          adopted is not discriminatory.
          (i)   The   State  can  carry  on   trade   or
          business  in  potable  liquor  notwithstanding
          that  it is an intoxicating drink and  Article
          47  enjoins  it to prohibit  its  consumption.
          When  the State carries on such  business,  it
          does  so to restrict and regulate  production,
          supply and consumption of liquor which is also
          an  aspect  of reasonable restriction  in  the
          interest of general public.  The State  cannot
          on  that account be said to be carrying on  an
          illegitimate business.
          (j)The  mere fact that the State levies  taxes
          or  fees  on the production, sale  and  income
          derived   from  potable  liquor  whether   the
          production,  sale or income is  legitimate  or
          illegitimate, does not make the State a  party
          to  the  said activities.  The  power  of  the
          State  to raise revenue by levying  taxes  and
          fees should not be confused
          610
          with  the  power of the State to  prohibit  or
          regulate  the trade or business  in  question.
          The  State exercises its two different  powers
                on  such occasions.  Hence the mere fact  that
          the  State levies taxes and fees on  trade  or
          business in liquor or income derived from  it,
          does  not make the right to carry on trade  or
          business  in  liquor a fundamental  right,  or
          even a legal right when such trade or business
          is completely prohibited.
          (k)   The  State  cannot  prohibit  trade   or
          business in medicinal and toilet  preparations
          containing liquor or alcohol.  The State  can,
          however, under Article 19(6) place  reasonable
          restrictions on the right to trade or business
          in  the  same  in  the  interests  of  general
          public.
          (l)   Likewise,  the  State  cannot   prohibit
          trade or business in industrial alcohol  which
          is   not   used  as  a   beverage   but   used
          legitimately  for  industrial  purposes.   The
          State,    however,   can   place    reasonable
          restrictions on the said trade or business  in
          the  interests  of the  general  public  under
          Article 19(6) of the Constitution.
          (m)   The restrictions placed on the trade  or
          business in industrial alcohol or in medicinal
          and  toilet preparations containing liquor  or
          alcohol  may  also  be  for  the  purposes  of
          preventing their abuse or diversion for use as
          or in beverage.
61.  This  Court  neither in K.K. Narula case17 nor  in  the
second  Synthetics and Chemicals Ltd. case30 has  held  that
the  State  cannot  prohibit trade or  business  in  potable
liquor.  The observations made in K.K. Narula case17 that  a
citizen  has  a fundamental right to trade  or  business  in
liquor  are  to be understood, as explained above,  to  mean
only  that  when the State does not prohibit  the  trade  or
business  in liquor, a citizen has the right to do  business
in  it  subject to the restrictions and  limitations  placed
upon  it.  Those observations cannot be read to mean that  a
citizen has an unqualified and an absolute right to trade or
business  in  potable  liquor.   This  position  in  law  is
explained  by  this Court also in Har Shankar  case22.   The
decision in the second Synthetics and Chemicals Ltd.  case30
also cannot be read to mean that the Court in that case  has
taken  the  view  that a citizen has a  right  to  trade  or
business  in potable liquor.  That decision is  confined  to
trade   or   business  in  industrial   alcohol   which   is
legitimately  used  for  industrial  purpose  and  not   for
consumption  as an intoxicating drink.  The Court  has  also
there  not taken any exception to the right of the State  to
place reasonable restrictions on the trade or business  even
of  industrial alcohol to prevent its diversion for the  use
In or as intoxicating beverage.
62.  We,  therefore, hold that a citizen has no  fundamental
right to trade or business in liquor as beverage.  The State
can  prohibit  completely the trade or business  in  potable
liquor  since  liquor as beverage is res  extra  commercium.
The State may also create a monopoly in itself for trade  or
business  in  such  liquor.  The  State  can  further  place
restrictions and limitations on such trade or business which
may be in nature different from those on trade or business
611
in articles res commercium. The view taken by this Court  in
K.K.  Narula case17 as well as in the second Synthetics  and
Chemicals Ltd. case30 is not contrary to the aforesaid  view
which has been consistently taken by this Court so far.
63.  One  of the incidental contentions, viz.,  whether  the
State  can create monopoly in trade or business  in  potable
liquor  is already answered above.  This is apart  from  the
fact that Article 19(6) provides for such monopoly in favour
of  the  State  even  in trades  and  businesses  which  are
legitimate.  It is not, therefore, necessary to dilate  upon
this aspect any further.
64.  The  last  contention  in these groups  of  matters  is
whether  the State, can place restrictions  and  limitations
under  Article  19(6) by subordinate  legislation.   Article
13(3)(a)  of the Constitution states that law includes  "any
ordinance,  order, bye-law, rule, regulation,  notification,
custom  or usage having in the territory of India the  force
of  law".   Clauses  (2)  to (6)  of  Article,  19  make  no
distinction between the law made by the legislature and  the
subordinate  legislation  for  the purpose  of  placing  the
restrictions  on the exercise of the respective  fundamental
rights  mentioned  in  Article  19(1)(a)  to  (g).   We  are
concerned in the present case with clause (6) of Article 19.
It will be apparent from the said clause that it only speaks
of "operation of any existing law insofar as it imposes ..."
"from  making any law imposing" reasonable  restrictions  on
the  exercise of the rights conferred by  Article  19(1)(g).
There is nothing in this provision which makes it imperative
to impose the restrictions in question only by a law enacted
by the legislature.  Hence the restrictions in question  can
also  be imposed by any subordinate legislation so  long  as
such  legislation Is not violative of any provisions of  the
Constitution.  This is apart from the fact that the trade or
business  in  potable liquor is a trade or business  in  res
extra  commercium and hence can be regulated and  restricted
even  by  executive  order  provided it  is  issued  by  the
Governor  of the State.  We, therefore, answer the  question
accordingly.
65.  In  the view that we have taken, the  appeals,  special
leave petitions and writ petitions will now be placed before
an appropriate Bench for decision in accordance with the law
laid down above.
SLP Nos. 9422-24 of 1994
66.  In  these petitions, the contention raised is that  the
A.P. (Regulation of Wholesale Trade, Distribution and Retail
Trade  in Indian Liquor and Foreign Liquor, Wine  and  Beer)
Act,  1993 (Act No. 15 of 1993) (hereinafter referred to  as
the  'Act') deals with taking over only of 'trade'  and  not
'business' in liquor and, therefore, the petitioners  cannot
be  prevented from carrying on the 'business'  of  wholesale
dealing  in  Indian Made Foreign Liquor  (IMFL)  during  the
period  of  the validity of their FL-15 licences  issued  to
them.  It is not disputed that the petitioners are wholesale
traders  in Indian Made Foreign Liquor (IMFL) and have  been
carrying  on  the said trade under FL-15 licence  issued  to
them.  The licence permits them to sell IMFL in the premises
indicated in the licence.
612
67.As the preamble of the Act shows, it has been enacted  to
take  over  the wholesale trade and distribution  in  Indian
Liquor/Foreign Liquor, Wine and Beer from the private sector
in  order  to have an effective control over  the  wholesale
supply and distribution of the liquor.  The State Government
had  taken  a policy decision that in public  interest,  the
exclusive  privilege  of supplying in wholesale  the  Indian
Liquor/Foreign  Liquor,  Wine and Beer in the whole  of  the
State of Andhra Pradesh shall be vested in the A.P. Beverage
Corporation   Limited  and  for  terminating  all   existing
licences for wholesale trade and distribution of the  Indian
Liquor/Foreign Liquor, Wine and Beer.  The title of the  Act
also shows that it is for regulation of wholesale  trade-and
distribution  and  retail  trade  in  Indian  Liquor/Foreign
Liquor,  Wine and Beer.  Section 3 of the Act further  makes
it   clear   that  any  licence  issued   to   sell   Indian
Liquor/Foreign  Liquor,  Wine  and  Beer  in  wholesale  and
remaining  in  force  on  the  appointed  day,  shall  stand
terminated with effect from that day.  As stated above,  the
licence  issued  to the petitioners, viz., FL15 Is  also  to
sell  the liquor in the premises and to do no  more.   When,
therefore,  the  Act  terminated the  said  licence  of  the
petitioners with effect from the appointed day, the whole of
the  trade  or business of the petitioners for sale  of  the
liquor  came  to  an end.  It is,  therefore,  difficult  to
understand  the  logic of the petitioners'  contention  that
what was extinguished was only the trade of sale and not the
business  of sale.  However, we will examine even  the  said
contention for what it is worth.
68.There  is  no  doubt that the  word  'business'  is  more
comprehensive  than the word 'trade' since it  will  include
manufacture  which  the  word  'trade'  may  not  ordinarily
include.   The  primary meaning of the word 'trade'  is  the
exchange  of goods for goods or goods for  money.   However,
the word 'trade' has also secondary meaning, viz.,  business
carried  on  with  a view to profit.   In  fact,  the  words
'trade'  and 'industry' are also used  interchangeably  many
times.   It all depends upon the context in which the  words
occur.   In  Words and Phrases Legally  Defined,  3rd  Edn.,
(Vol.  4;  R-Z)  by John B. Saunders, the  word  'trade'  is
explained as:
          "  'Trade'  in  its  primary  meaning  is  the
          exchange of goods for goods or goods for money
          and in a secondary meaning it is any  business
          carried  on  with a view to  profit,,  whether
          manual  or mercantile, as  distinguished  from
          the  liberal arts, or learned professions  and
          from  agriculture.   However, the word  is  of
          very  general application, and must always  be
          considered in the context in which it is used.
          As  used in various revenue Acts,  'trade'  is
          not  limited  to buying and selling,  but  may
          include   manufacture.   In   the   expression
          'restraint  of trade' the word is used in  its
          loosest  sense to cover every kind  of  trade,
          business,profession or occupation.*"
                    (emphasis supplied)
          *  Halsbury's Laws of England, 4th Edn.,  Vol.
          47, para 1
          613
69.  In Skinner v. Jack Breach Ltd.32, Lord Hewart, C.J. has
observed:  "No  doubt  in a great  many  contexts  the  word
'trade' indicates a process of buying and selling, but  that
is by no means an exhaustive definition of its meaning.   It
may  also  mean a calling or industry or  class  of  skilled
labour."
70.  While  interpreting  the provisions of  the  Industrial
Courts  Act,  1919 Lord Wright in National  Assn.  of  Local
Government Officers v. Bolton Corpn.33 has observed thus:
          "Section  11  of the Act of  1919  shows  that
          'trade'   is  used  as  including   'industry'
          because  it refers to a trade dispute  in  the
          industry   of  agriculture.  ...  Trade.   and
          industry  are thus treated as  interchangeable
          terms.   Indeed,  'trade' is not only  in  the
          etymological or dictionary sense, but in legal
          usage,  a  term of the widest  scope.   It  is
          connected originally with the word 'tread' and
          indicates a way of life or an occupation.   In
          ordinary usage it may mean the occupation of a
          small  shopkeeper  equally  with  that  of   a
          commercial magnate; it may also mean a skilled
          craft."
71.  In Aviation and Shipping Co. Ltd. v. Murray  (Inspector
of Taxes)34, Lord Donovan has observed:
          "A   trade  is  an  organised  seeking   after
          profits,  as a rule with the aid  of  physical
          assets."
72.  Thus  it is apparent that the word 'trade' may  include
all  the  connotations of the word 'business'.  As  held  in
K.K. Narula case17 in Article 19(1)(g) of our  Constitution,
the  words  'trade' and 'business'  are  used  synonymously.
Hence,  we  reject the contention and hold  that  after  the
taking-over  of the trade, viz., the activity of buying  and
selling liquor, no activity was left with the petitioners to
carry on under the licence held by them.
73.  The  special  leave  petitions are  frivolous  and  are
dismissed, with costs.
32 (1927) 2 KB 220, 225-227 : 96 LJKB 834: 136 LT 726, DC
33 1943 AC 166,184 & 185: (1942) 2 All ER 425: 111 UKB 674
34 (1961) 2 All ER 805: (1961) 1 WLR 974, CA
615



 

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