SC upholds states’ right to regulate industrial alcohol; says ‘Centre lacks regulatory power’

The Supreme Court on Wednesday (October 23) ruled that the Centre lacks regulatory power over production of industrial alcohol, overturning a verdict of a 7-judge bench.

Pronouncing an 8:1 majority verdict on the issue of overlapping powers of the Centre and states over the production, manufacture, supply and regulation of industrial alcohol, a nine-judge Constitution bench headed by Chief Justice of India DY Chandrachud said that the state's power to make laws on industrial alcohol cannot be taken away.

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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 judges 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”.

Chief Justice DY Chandrachud, who wrote the latest judgement for himself and seven other judges, said the Centre lacks the regulatory power. He also stated that the term “intoxicating” can also be understood as poisonous.

Dissenting opinion

Justice BV Nagarathna on the nine-judge SC bench dissented with the majority verdict. She 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, she said.

Industrial alcohol is not meant for human consumption.

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While Entry 8 in the State List under the 7th Schedule of the Constitution gives the states the power to legislate on the manufacture, possession, transport, purchase and sale of "intoxicating liquors", Entry 52 of the Union List and Entry 33 of the Concurrent List mention industries whose control was "declared by Parliament by law to be expedient in public interest".

While both Parliament and state legislatures can enact laws on the subjects mentioned in the Concurrent List, a central law will have primacy over the state law.

Nine-judge bench

The nine-judge Constitution bench was hearing a batch of petitions after a seven-judge Constitution bench ruled against the state governments.

The 9-judge Constitution bench comprised CJI DY Chandrachud, Justices Hrishikesh Roy, Abhay S Oka, BV Nagarathna, JB Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish Chandra Sharma, and Augustine George Masih.

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On April 18, the bench had reserved its verdict after hearing arguments from Attorney General R Venkataramani, Solicitor General Tushar Mehta, senior advocates Dinesh Dwivedi and Arvind P Datar, who appeared in the court on behalf of the Uttar Pradesh government, apart from lawyers who represented the other states.

Earlier judgement

In 1997, the seven-judge bench ruled that the Centre has regulatory power over the production of industrial alcohol and the case came to be referred to the nine-judge bench in 2010.

Also Read: Constitution bench verdict binding on smaller benches: Supreme Court

In 1990, the seven-judge bench observed through the Industries (Development and Regulation) Act, 1951, the Centre had "evinced a clear intention to occupy" the legislative competence on the subject and, therefore, Entry 33 could not empower a state government.

(With inputs from agencies)