The Bombay High Court has held that the Bombay Denatured Spirit Rules, 1959 to the extent that they regulate the possession, use, sale, import, export and transport of denatured spirit, are ultra vires and unconstitutional.
The division bench of Justice AS Oka and Justice Riyaz Chagla struck down Rules 23 to 62 of the said rules and held that under the Maharashtra Prohibition Act, no licence is required for sale, purchase, transport, possession, storage, dehydration, import and export of denatured spirit.
Under the Bombay Prohibition Act, “denatured” means subjected to a process prescribed for the purpose of rendering unfit for human consumption.
The 22-page judgment was passed in a batch of writ petitions, many of them filed by manufacturers of denatured spirit.
Apart from challenging vires of Bombay Denatured Spirit Rules in so far as they regulate the possession, use, sale, import, export and transport of denatured spirit after denaturation, the petitioners also sought directions from the Court that manufacturers of denatured spirit do not require a licence under the Maharashtra Prohibition Act to carry out their business.
Submissions and Final Judgment
Appearing for the petitioner’s DB Sawant and Veena Thadani submitted that under the said Rules manufacturers have to obtain a pass issued by Union of India under Rules 49 and 50 for the import and export of denatured alcohol and this is granted only after paying import / export fees mentioned in Rule 52 and 59 of the rules. The import of denatured spirit is governed by Rules 51 to 56 and the export is governed by Rules 57 to 62 of the said rules.
It was argued that the state government lost its power to legislate with respect to Fermentation Industries as defined under Industries (Development and Regulation) Act, 1951 amended in 1956. The definition of ‘fermentation industries’ includes alcohol and other products of fermentation industries.
DB Sawant submitted that under the Industries (Development and Regulation) Amendment Act, 2016, the state has no powers to take regulatory measures, for manufacture, sale, possession of the industrial alcohol or fermentation industry. Instead, the state only has power to levy duty or fees on alcoholic beverages for human consumption including regulating the rectified spirit, which can be diverted for potable purpose. The power of the state to regulate and control comes to an end, the moment the rectified spirit becomes denatured.
Thus, it was stated by the petitioners that under the Maharashtra Prohibition Act, denatured spirit has incorrectly been included in the definition of “liquor” and classified along with spirits, wine, beer, toddy and all liquids consisting or containing alcohol.
Government Pleader AB Vagyani submitted that denatured spirit is capable of being renatured and hence Section 21 of the Act imposes restriction on the denaturing spirit. He pointed out that there have been several casualties in the case of persons consuming denatured spirit as 'hooch' and stated that since there was no control or regulation over use and sale of denatured spirit, the State had enacted the said Rules.
After hearing submissions from all parties in the matter, the court noted that the state’s power to regulate alcoholic liquors under the Constitution of India in List II item 51, is restricted to alcoholic liquors for human consumption and under List II Item 8 power is only to regulate the production, manufacture, possession, transport, purchase and sale of 'intoxicating liquors'. Hence the State has no power to legislate in respect of denatured alcohol which is incapable of human consumption.
The court also observed that the Supreme Court has consistently held that the industrial alcohol after denaturing falls within the exclusive control of the Union. Thus, Rules 23 to 62 of Bombay Denatured Spirit Rules were held as ultra vires to the Constitution and were struck down.