Supreme Court Upholds Power Of States To Regulate Industrial Alcohol Under Term 'Intoxicating Liquor'; Justice Nagarathna Dissents

A nine-judge Constitution Bench of the Supreme Court on Wednesday (October 23), held by 8:1 majority, held that the States have the power to regulate 'denatured spirit or industrial alcohol'.The majority concluded so by holding that the term "intoxicating liquor" in Entry 8 of List II (State List) of the Seventh Schedule of the Constitution will include industrial alcohol.The majority held that the term "intoxicating liquor" cannot be interpreted narrowly to include only alcohol which is fit for human consumption. It was held that liquids which contain alcohol which can be used or misused for human consumption can be included within the term "intoxicating liquor". CJI DY Chandrachud, who wrote the judgment for the majority, stated the term "intoxicating" can also be understood as poisonous. Liquor which is not colloquially or traditionally considered as alcohol may be covered as "intoxicating liquor" within the meaning of Entry 8 of List 2.The majority also took note of the public interest element of Entry 8, as it seeks to control various stages ranging from the production, manufacture, possession, transport, purchase and sale of intoxicating liquors. Hence, the meaning of the phrase "intoxicating liquor" cannot be limited to potable liquor and it signifies all alcoholic liquids which can harm public health.DissentJustice Nagarathna, in her dissent, held that 'industrial alcohol' means alcohol which is not fit for human consumption. An artificial interpretation cannot be adopted to give a different meaning to the term 'intoxicating liquor' which is contrary to the intention of the framers of the Constitution. What is required to be seen is the nature of the product which leads to the intoxicating effect in humans- it is only by the direct consumption of alcohol.Just because industrial alcohol can be diverted and misused for human consumption, the meaning of Entry 8, List 2 cannot be stretched. Industrial alcohol which is used for manufacturing purposes cannot be under the purview of intoxicating liquor under Entry 8 List II. Merely because industrial alcohol can be misused for human consumption, the States have no legislative competence to regulate it.The 9 Judge Constitution bench comprised CJI DY Chandrachud, Justices Hrishikesh Roy, Abhay S. Oka, B.V. Nagarathna, J.B. Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma And Augustine George Masih. The Court was essentially tasked to examine whether the Industries (Development and Regulation) Act, of 1951 gave complete regulatory power to the Union on the subject of industrial alcohol.The report will be updated with detailed reasons once the judgment is uploaded.Key Issue InvolvedThe present matter was referred to a nine-judge bench in 2007 and pertains to the interpretation of Section 18G of the Industries (Development and Regulation) Act, 1951(IDR Act). Section 18G allows the Central Government to ensure that certain products related to scheduled industries are distributed fairly and are available at reasonable prices. They can do this by issuing an official notification to control the supply, distribution, and trade of these products. However, as per Entry 33 of List III of the Seventh Schedule to the Constitution, the State legislature has the power to regulate trade, production, and distribution of products from industries under Union control and similar imported goods. It was argued that in Synthetics and Chemical Ltd. vs. State of U.P., a seven-judge bench had failed to address Section 18G's interference with the concurrent powers of the State. Accordingly, the Supreme Court held– "If the decision in the Synthetics and Chemicals case (supra) with regard to the interpretation of Section 18-G of the 1951 Act is allowed to stand, it would render the provisions of Entry 33 (a) of List III nugatory or otiose."The matter was then referred to a nine-judge bench. It may be noted that apart from Entry 33 List III, Entry 8 List II also provides regulation powers to the state with regards to 'Intoxicating Liquor'. As per Entry 8 List II, the state has law-making powers over - “ Intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors”Arguments Raised By StatesThe main contention of the State of Uttar Pradesh was that the term 'intoxicating liquor' should be given a wider interpretation to include 'denatured spirit/ industrial alcohol' and the latter be brought under the state's law-making powers. Relying on several other Statutory Definitions of 'liquor', it was submitted that all liquids containing alcohol come within the ambit of 'intoxicating liquor'. Since Entry 8 List II has been adopted from the GOI Act of 1935, the purposive meaning of the term ' Intoxicating Liquor' echoes the same intent with which it was initially introduced in 1935. It was further contended that when a central law (S. 18G of IDR Act) accidentally steps into areas usually controlled by state...

Supreme Court Upholds Power Of States To Regulate Industrial Alcohol Under Term 'Intoxicating Liquor'; Justice Nagarathna Dissents

Anmol Kaur Bawa

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