Case Note & Summary
The dispute arose from the Andhra Pradesh Prohibition Act, 1995, which was enacted following widespread agitation by women in Andhra Pradesh. The Act, replacing an Ordinance issued on 27 December 1994, prohibited the sale, buying, possession and consumption of intoxicating liquors except in accordance with the Act or the Andhra Pradesh Excise Act, 1968. The Act defined liquor broadly but excluded toddy, denatured spirits, methylated spirits and rectified spirits after amendment. Several industries engaged in manufacturing liquor held D-2 and B-2 licences; the State Government refused to renew these licences in light of the prohibition policy. The manufacturers filed writ petitions in the Andhra Pradesh High Court seeking a declaration that Section 7 did not prohibit manufacture, though it prohibited consumption, sale and possession. The Full Bench of the High Court, by judgment dated 28 April 1995, agreed and held that Section 7 only prohibited possession for consumption, selling and buying within the State and did not affect manufacture. It quashed the orders rejecting renewal applications and directed the State to consider them without reference to the prohibition policy or the Act. The State of Andhra Pradesh preferred special leave petitions before the Supreme Court. On 21 July 1995, the Supreme Court granted leave, issued notice, and directed maintenance of status quo as on that date, permitting manufacturers to use existing stocks up to 16 August 1995 and allowing the Governor to amend the Act. Thereafter, on 18 July 1995, the Governor issued Ordinance No.12 of 1995 amending the Act, with certain provisions given effect from 16 January 1995. The amendment altered the long title and preamble to include manufacture, amended the definition of liquor, and inserted Section 7A, which expressly prohibited manufacturing of liquor. Subsequently, on 12 October 1995, the Andhra Pradesh Legislature enacted the Andhra Pradesh Prohibition (Amendment) Act, 1995 in terms of the Ordinance. Liquor manufacturers then filed writ petitions under Article 32 challenging the constitutional validity of the amending Act. The principal legal issues were whether the amending Act, insofar as it prohibited manufacture, was beyond the legislative competence of the State Legislature in view of the Industries (Development and Regulation) Act, 1951 and the inclusion of fermentation industries in the First Schedule, whether it violated Article 14 due to discriminatory treatment of local manufacturers compared with exempted categories, and whether the right to trade in intoxicating liquors is protected under Article 19(1)(g). The petitioners argued that after the 1956 amendment to the IDR Act, control of alcohol industries vested exclusively in the Union, relying on Synthetics and Chemicals Limited v. State of Uttar Pradesh; that the existence of exempted categories under Section 15(1) required imports, making closure of local industries discriminatory; and that Khoday Distilleries v. State of Karnataka did not altogether rule out Article 19(1)(g) protection. The State defended the Act as implementing Article 47 and within its legislative power. The final holding of the Supreme Court is not included in the provided excerpt; the text ends with the arguments of counsel.
Headnote
A) Constitutional Law - Legislative Competence - State Legislature's Power to Prohibit Manufacture of Liquor - Industries (Development and Regulation) Act, 1951, First Schedule Item 26; Andhra Pradesh Prohibition Act, 1995, Sections 2(7), 7, 7A - The Andhra Pradesh High Court Full Bench held that Section 7 of the original Act prohibited only sale, buying, possession, and consumption, not manufacture, and directed consideration of licence renewals without reference to prohibition policy. The State then amended the Act to insert Section 7A expressly prohibiting manufacture. Petitioners argued that after the 1956 amendment to the IDR Act including fermentation industries as Item 26, control of alcohol industries vested exclusively in the Union, thereby denuding State legislative competence. Held that the challenge to legislative competence was to be examined by the Supreme Court in light of the IDR Act and Article 246. (Paras Not mentioned) B) Constitutional Law - Right to Trade and Commerce - Article 19(1)(g) Protection for Trade in Intoxicating Liquors - Constitution of India, 1950, Article 19(1)(g); Andhra Pradesh Prohibition Act, 1995, Section 7A - Petitioners contended that the right to trade in intoxicating liquors falls within Article 19(1)(g) and that prohibition of manufacture infringes this right. Reliance was placed on Khoday Distilleries v. State of Karnataka to argue that such right is not altogether ruled out. The Supreme Court was to consider whether trade in liquor is res extra commercium and whether prohibition is a reasonable restriction. (Paras Not mentioned) C) Constitutional Law - Equality and Non-Discrimination - Article 14 and Exemptions Under Section 15(1) - Constitution of India, 1950, Article 14; Andhra Pradesh Prohibition Act, 1995, Section 15(1) - The amending Act prohibited manufacture of liquor even for limited local consumption while Section 15(1) exempted categories such as foreigners, non-resident Indians, tourists, armed forces, medical emergencies, and sacramental wine. Petitioners argued that requiring exempted categories' requirements to be met by imports while closing local industries was discriminatory. The court was to examine whether the classification was reasonable and had nexus with the object of prohibition. (Paras Not mentioned) D) Statutory Interpretation - Prohibition of Manufacture - Section 7 and Section 7A of Andhra Pradesh Prohibition Act, 1995 - The Full Bench interpreted Section 7 as not prohibiting manufacture, quashing rejection of renewal applications. The Governor issued Ordinance No.12 of 1995 amending the Act and inserting Section 7A, which explicitly prohibited manufacture. This legislative response formed the backdrop for the constitutional challenge under Article 32. (Paras Not mentioned)
Issue of Consideration
Whether Andhra Pradesh Prohibition (Amendment) Act, 1995 prohibiting manufacture of liquor is beyond State legislative competence due to Industries (Development and Regulation) Act, 1951; whether it violates Article 14 by allowing exemptions; whether right to trade in liquor under Article 19(1)(g) is available
Final Decision
The Supreme Court granted leave in the special leave petitions and issued interim directions maintaining status quo as on 21 July 1995, permitting manufacture with existing stocks until 16 August 1995, and clarifying that the Governor could amend the Act. The final decision on the constitutional validity of the amending Act is not included in the provided judgment excerpt.
Law Points
- Article 47 requires State to prohibit intoxicating drinks injurious to health
- state legislature can enact prohibition laws
- Industries (Development and Regulation) Act
- 1951 First Schedule Item 26 may occupy field of alcohol industries
- Article 14 prohibits discriminatory classification
- Article 19(1)(g) right to trade not absolute for intoxicating liquors
- Article 246 distributes legislative powers subject to Parliament's occupied field
- Andhra Pradesh Prohibition Act
- 1995 Section 7 prohibits sale and consumption but not manufacture as per High Court
- Section 7A prohibits manufacture
