Section 6

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Business of Liquor is not a fundamental Right. - In Krishna Kumar Narula v. State of Jammu and Kashmir, the question whether the right to carry on business of liquor is a funda- mental right fell directly for consideration before a Constitution Bench of five learned Judges. The facts were that the appellant was carrying on business in liquor in his hotel under an annual license issued under Section 20 of the Jammu and Kashmir Excise Act, 1958. He had applied for a fresh license for another year. Meanwhile, the Excise Department received complaints from the inhabitants of the locality objecting to the location of the bar in that local- ity. The complaints were inquired into and the appellant was informed by the Commission that the license 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: "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 im- posing 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 mor- als. 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 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 restric- tions, but cannot limit the scope of the right. So too, a Legislature can impose restric- tions 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 busi- ness? 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. The Commissioner of Excess Profits Tax, the word' 'business" connotes some real, substantial and systematic 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." The Court then referred to the decision in T. B. Ibrahim v. Regional Transport Authority, Tanjore, according to the respondent- State there, it was held in that case that dealing in liq- uor 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 carryon the business wherever he chooses and his right must be subject to any reasonable restriction imposed by the executive authority in the inter- ests 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. Nor, according to the Court, did the decision in Cooverjee B. Bharucha v. Excise Commis- sioner and the Chief Commissioner, Ajmer, 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 Crowlene v. Christensen referred to in that judgment 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 B. Bharucha v. Excise Commissioner and the Chief Commissioner, Ajmer, 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. Similarly, according to the Court the following observations of this Court in State of Assam v. A. N. Kidwai, Commissioner of Rills Division and Appeals, Shillong, 1957 SCR 295 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: "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, such control and restriction being obviously necessary for the preservation of public health and morals, and to raise revenue." 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 there could not draw any support from the decision of this Court in Nagendra Nath Bora v. Commissioner of Hills Division and Appeals, Assam, 1958 SCR 1240 because the question there was in regard to the scope of Articles 226 and 227 of the Constitution vis-a-vis 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 B. Bharucha v. Excise Commissioner and the Chief Commissioner, Ajmer, AIR 1954 SC 220 : 1954 SCR 853. = State of Assam v. A. N. Kidwai, Commissioner of Hills Division and Appeals, Shillong, 1957 SCR 295 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. The Court also found that the following observations made in the R. M. D. State of Bombay v. R.M.D. Chamarbaugwala, 1957 SCR 874 were also not helpful to the State because that decision only laid down that gambling was not business or trade: "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 inter course and to be made the subject-matter 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. To proceed further with the decisions of this Court in chronological order, we may now refer to the next decision, viz., State of Orissa and others v. Harinarayan Jaiswal and others, which is a decision of two learned Judges. The facts were that the first respondent was carrying on business of country liquor in 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 v. State of Jammu and Kashmir, 1967(3) SCR 50 : AIR 1967 SC 1368 Hedge, 1. speaking for the Court held as follows: "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 Kashmir State and others. At the same time, it was held by this Court in Cooverjee B. Bhfrucha v. The Excise Commissioner and the Chief Commissioner, Ajmer and others. that for determining reasonable restrictions within the meaning of Article 19 (6) of the Constitution the right given under clause 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 retai1." In Amar Chandra Chakraborty v. Collector of Excise, Government of Tripura and others, 2 which is a decision of Constitution Bench of five learned Judges, the challenge was to the Excise Collector's order withdrawing liquor license before expiry of time. Refering to the deci- sion in K. K. Narula v. State of Jammu and Kashmir, 1967(3) SCR 50: AIR 1967 SC 1368 the Court held there as follows: " .. .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 bad 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." 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 with- draw the license for any reason whatsoever not falling under Section 42 of that Act, were un- reasonable and violative of the appellant's fundamental right under Article 19, and held as follows: " ... It is no doubt true that in Section 43, there is no express mention of the precise grounds on which the license can be withdrawn. But in our opinion keeping in view the nature of the trade or business for which the grant of license 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 carryon lawful trade or busi- ness is subject to such reasonable conditions as may be considered essential by the ap- propriate 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 intoxi- cating drinks or 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." In Nashirwar etc. etc. v. State of Madhya Pradesh, which is a judgment of three learned Judges, while dealing with the question whether the State has power to grant liquor license by public auction and whether the said power violated fundamental right under Article 19 (1 )(g) of the Constitution, the Court held as follows: "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 intoxi- cating liquor. Article 47 states that the State shall endeavour to bring about prohibition of the consumption except for medicinal purpose 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 State of Bombay v. F.N. Balsara, 1951 SCR 682 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 Article 14 and 19 in Balsara's case, This Court held that absolute prohibition of manufacture or sale of liquor is per- missible and the only exception can be for medicinal preparations. The concept of in- herent 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. Chamarbaugwalla, [1957 SCR 874] said that gam- bling 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 citi- zens 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." Referring to KK Narula v. State of Jammu and Kashmir, 1967(3) SCR 50: AIR 1967 SC 1368 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 State of Bombay v. F.N. Balsara, 1951 SCR 682 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 license or lease. The Court then referred to State of Orissa v. Harinarayan Jaiswal, 1971(2) SCC 236 and stated that case had explained KK Narula v. State of Jammu and Kashmir, 1967(3) SCR 50: AIR 1967 SC 1368. The Court then observed as follows: "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 com- plete control over all aspects of intoxicants, viz., manufacture, collection, sale and con- sumption. 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 took in Bharucha's case and Jaiswal's case." The Court also held that since in Cooverjee B. Bharucha v. Excise Commissioner and the Chief Commissioner, Ajmer, in no uncertain terms this Court had repelled the citizens' con- tention of inherent right to sell intoxicating liquor and since Cooverjee's case was a Constitu- tion Bench decision, K.K. Narula's case which is also a Constitution Bench decision, cannot be said to have overruled the decision in Cooverjee's case. In Har Shankar and others etc. etc. v. The Dy. Excise and Taxation Commissioner and other, which is a decision of Constitution Bench of five learned Judges, the question whether a citizen had a fundamental right to trade in intoxicants and whether State had power to pro- hibit 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 v. State of Jammu and Kashmir, 1967(3) SCR 50: AIR 1967 SC 1368 the Court held as follows: "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 etc. v. State of Jammu and Kashmir and others…….. " 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 dear" in order to "avoid further confusion in the matter". The decisions in Cooverjee's case, Kidwai's case and Nagendra Nath's case were cited before the Court but it look 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 State of Bombay v. R.M.D. Chamarbaugwala, 1957 SCR 874 and observed as follows: "This decision was also cited before the Court in Krishna Kumar's case 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 re- flected in the Constitution Bench decisions of this Court in Balsara's case, Cooverjee's case, Kidwai's case, Nagendra nath's case, Amar Chakraborty's case and the R.M.D.C. case, as interpreted in Harinarayan Jaiswal's case and Nashirwar's case. 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 mani- festations, these rights are 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 lawful, nevertheless it is a privilege and not a right, subject to govern- mental 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. 539, 540, 541]. It was unnecessary in Krishna Kumar Narula's case 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 a commod- ity. 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 busi- ness in that commodity; but the State can make a law imposing reasonable restrictions on the said right, in public interest." It is significant that the judgment in Krishna Kumar Narula's case does not negate the right of the state to prohibit absolutely all forms 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." In Lakhanlal etc v. State of Orissa and others, which is a decision of two learned Judges, the Court after referring to the decisions in Cooverjee's case, K.K. Narula's case and Har Shankar's case 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. In Sat Pal and Co. etc. v. Lt. Governor of Delhi and others,2 which is a decision of two learned Judges, it was observed that if there is no fundamental right to carry on trade or busi- ness in liquor, there is no question of its abridgement of any restriction which can be styled as unreasonable. The Court reiterated the view taken in Har Shanker's case 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. In Southern Petroleum and Chemicals, Trichur and others v. State of Kerala and others, 3 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. In State of M.P. and others v. Nandlal laiswal and others, 4 the Bench of two learned Judges reiterated that it is well-settled by several decisions of this Court including the decision in Har Shankar's case 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 pos- session. 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. In Doongaji and Co. v. State of Madhys Pradesh and others, 5 a Bench of two learned Judges while dealing with the question whether, after the expiration of the license 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 non- cooperation 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: "It is settled law by several decisions of this Court that there is no fundamental right to a citizen to carryon 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 manu- facture, possession, import and export. No one can claim, as against the State, the right to canyon trade or business in any intoxicants, nor the State be compelled to part with its exclusive right or privilege of manufacture, sale, storage of liquor. Further when the State has decided to part with such right or privilege to the others, then State can regu- late consistent with the principles of equality enshrined under Article 14 and any infrac- tion 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."