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M/S. Indian Chemical And Pharmaceutical Works, Hyderabad v. The State Of Andhra Pradesh
Structured Summary of the Opinion (Narasimham, J.)
Factual and Procedural Background
This is an application for the issue of a writ to restrain the State of Andhra Pradesh from enforcing Notification G.O. Ms. No. 1376, Revenue dated 5 September 1962, issued under the Hyderabad Intoxicating Drugs Act (Act IV of 1333 F). The notification and rules regulated the manufacture, possession, sale, import, export and transport of Chloral Hydrate and, inter alia, required manufacture under a licence granted by the Excise Commissioner upon payment of an excise duty of Rs. 500 per annum.
The petitioners are three manufacturers licensed under the Drug Rules framed under the Drugs Act of 1940: Indian Chemical Pharmaceutical Works, Pankaj Chemical and Pharmaceutical Works, and Commercial Chemical Co. They challenged the Notification as ultra vires on multiple grounds (overlap with the Central Drugs Act 1940, that Chloral Hydrate is not an “intoxicating and narcotic substance” under the Hyderabad Act, illegality of the licence fee/duty, and infringement of Articles 19(1)(f) and (g) of the Constitution).
The State filed a counter-affidavit asserting large-scale manufacture (nearly 40,000 lbs.), misuse of the product mixed into local liquor to increase intoxication, adverse medical opinion as to the drug’s effects on health, lack of effective control, and that the Notification was a necessary measure to control improper use. The State denied that the Notification interfered with the petitioners' right to carry on trade.
Legal Issues Presented
- Whether the State government could, consistent with constitutional and legislative distribution of powers, notify Chloral Hydrate as an "intoxicating drug" under the Hyderabad Intoxicating Drugs Act despite the Drugs Act, 1940 (Central) being applicable to the erstwhile Hyderabad State.
- Whether Chloral Hydrate falls within the definition of “any other intoxicating and narcotic substance” under Section 2(iv) of the Hyderabad Intoxicating Drugs Act, such that the Government could validly declare it an intoxicating drug by notification.
- Whether the imposition of a licence fee (excise duty) on the manufacture of Chloral Hydrate by the State was ultra vires state taxing/levying powers.
- Whether the Notification unjustifiably infringed the petitioners’ fundamental rights under Article 19(1)(f) and (g) of the Constitution, or whether any restriction was permissible as a reasonable restriction under Articles 19(5) and 19(6).
Arguments of the Parties
Petitioners' (and learned counsel Sri Surya Prakasam's) Arguments
- The Intoxicating Drugs Act, as applied, is ultra vires because the subject matter (drugs) is covered by the Central Drugs Act, 1940; the State law should be treated as implicitly repealed or displaced by the Central enactment.
- Even if the State could legislate, Chloral Hydrate is not an “intoxicating and narcotic substance” within Section 2(iv) of the Hyderabad Act and therefore could not be validly notified as such.
- The imposition of a licence fee/excise duty by the State in respect of Chloral Hydrate is illegal and ultra vires because duties of excise lie in the State List only as to particular items (item 51), and Chloral Hydrate cannot properly be brought within that item.
- The Notification violated the petitioners' rights to carry on business under Article 19(1)(f) and to practice any profession or carry on any occupation, trade or business under Article 19(1)(g).
Respondent State Government's Arguments (as per counter-affidavit)
- Large-scale manufacture of Chloral Hydrate by petitioners (nearly 40,000 lbs.) and material indicating widespread misuse — mixing into local liquors to increase intoxication — justified control measures.
- Medical opinion indicated Chloral Hydrate was highly obnoxious to human health; there was insufficient effective control by Excise authorities over manufacture, sale and possession.
- The Notification was a necessary and valid step to control improper use and did not interfere with the petitioners' right to carry on trade.
- The Notification and any licence fees imposed were within the powers conferred by the Intoxicating Drugs Act itself.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Pannalal Lahoti v. State of Hyderabad, A.I.R. 1952 Hyd. 187 | Illustration where, during pendency of a criminal case, the Hyderabad Criminal Procedure was repealed and the Central Code of Criminal Procedure came to be applied; held that the Central Act governed criminal procedure even though the subject was in the Concurrent List. | The court distinguished this decision from the present facts and held it did not assist petitioners' argument that the Intoxicating Drugs Act was implicitly repealed by the application of the Central Drugs Act. The precedent was therefore not followed as controlling here. |
| Adilakshmi Ammal (In Re) | Held that the Madras Legislature could not interfere with the Madras Abkari Act by passing the Madras Prohibition Act, 1937, insofar as it related to dangerous drugs; the Prohibition Act was not reserved for assent and so the provincial legislature had no power to override the Abkari Acts on that point. | The court found this decision inapplicable to the present case, stating it did not present any similarity or render assistance to petitioners' contentions about the validity of the Hyderabad amendments and Notification. |
Court's Reasoning and Analysis
The court's analysis proceeded in structured steps, grounded in legislative history, statutory interpretation, and scope of judicial review of factual matters.
-
Legislative background and applicability:
- The Hyderabad Intoxicating Drugs Act (Act IV of 1333 F) pre-existed. The erstwhile State of Hyderabad became part of India as a Part-B State on 26 January 1953.
- Central laws were made applicable to Part-B States in 1951; the Drugs Act, 1940 was one of those central enactments applied to Hyderabad.
- Because the application of the Central law made certain adjustments necessary, the Intoxicating Drugs Act was amended by the Hyderabad Opium and Intoxicating Drugs (Amendment) Act, Act XXII of 1953; the Amendment received the President's assent and was published in the Hyderabad Gazette on 7-1-1954.
- The court observed that the Amendment was manifestly assented to under Article 254(2) of the Constitution, which permits a State law repugnant to an earlier parliamentary law to prevail in that State if it is reserved for the President and he gives assent.
-
On whether the Central Drugs Act excludes other law:
- Section 2 of the Drugs Act, 1940 states that the provisions of that Act "shall be in addition to, and not in derogation of the Dangerous Drugs Act, 1930, and any other law for the time being in force." The court read this as preserving other laws rather than occupying the entire field.
- The petitioner's restricted reading of "for the time being" — i.e., that it meant only laws in force at the moment the Drugs Act was applied — was rejected. The court relied on the ordinary legal meaning of the phrase to include laws in force at varying future times as contextually appropriate.
- Consequently, the court concluded that the Drugs Act is not an exhaustive or self-contained code that necessarily repeals or displaces State law concerning intoxicating drugs.
-
On repeal by implication and effect of Presidential assent:
- The court rejected the submission that the Intoxicating Drugs Act was implicitly repealed on application of the Drugs Act, noting that the Hyderabad amendments had the President's assent under Article 254(2) and therefore the State law prevails in that State absent subsequent parliamentary action contemplated by the proviso to Article 254(2).
- The court distinguished authorities cited by petitioners (Pannalal Lahoti and Adilakshmi Ammal), explaining that those decisions did not have factual similarity or persuasive effect in this context.
-
On whether Chloral Hydrate is within Section 2(iv) (intoxicating and narcotic substance):
- Section 2(iv) authorises the Government to declare "any other intoxicating and narcotic substance" (other than specified exceptions) to be an intoxicating drug by notification.
- The term "narcotic" is not defined in the Act. The court noted the ordinary dictionary meaning but observed that the effect of Chloral Hydrate on human senses is a matter of evidence and not suitable for trial in the present writ proceedings.
- The statutory language contemplates the Government’s subjective satisfaction in issuing such a notification; therefore, judicial interference on pure factual/technical questions of intoxication or narcotic quality was inappropriate in this forum.
- The court considered but rejected the petitioner's attempt to treat language in the State's counter-affidavit as an admission that Chloral Hydrate is not a narcotic; the court found that the counter-affidavit merely listed substances not contained in the drug, which does not logically amount to an admission that Chloral Hydrate is not narcotic.
- The court therefore declined to annul the notification on the ground that Chloral Hydrate was not a narcotic substance, emphasizing the limited scope of factual inquiry in these proceedings and the Government's statutory power to notify.
-
On the imposition of licence fee and taxing power:
- Section 5 of the Intoxicating Drugs Act expressly empowers the Government to regulate, supervise, grant licences and provide for recovery of intoxicating drugs revenue and licence fees.
- Because the Intoxicating Drugs Act (as amended and assented to under Article 254(2)) prevailed in the State, the imposition of a licence fee under that Act was held to be legal and intra vires. The court therefore did not need to decide whether the levy also fell within the State List item 51.
-
On Article 19(1)(f) and (g) challenge:
- The court considered Articles 19(5) and 19(6), which permit reasonable restrictions on rights in sub-clauses (d), (e), (f) and (g) in the interests of the general public.
- The court found that the reasons set out in the counter-affidavit (mass manufacture, misuse in liquor, health concerns and lack of control) sufficed to show that the restrictions were reasonable and imposed in the interest of the general public.
-
Conclusion of analysis:
- On the combined basis of legislative history, statutory construction, deference to the Government's subjective satisfaction regarding notifications, and the express power in the Intoxicating Drugs Act to levy licence fees, the court found no ground to interfere with the impugned Notification.
Holding and Implications
Holding: The writ petition is dismissed. The court found that the petitioners had not made out a case for interference with Notification G.O. Ms. No. 1376, Revenue dated 5 September 1962, and dismissed the petition with costs (advocate's fee Rs. 100).
Immediate consequences for the parties:
- The State's Notification designating Chloral Hydrate as an intoxicating drug under the Hyderabad Intoxicating Drugs Act is upheld in these proceedings.
- The imposition of licence fees under the Intoxicating Drugs Act was held to be intra vires and therefore lawful as applied to Chloral Hydrate.
- The petitioners remain subject to the regulatory framework established by the Notification and the Intoxicating Drugs Act as it prevails in the State by virtue of the Presidential assent under Article 254(2).
Broader legal implications stated by the court (as indicated in the opinion): the Drugs Act, 1940 does not by its wording operate to exclude other existing laws; the Intoxicating Drugs Act as amended and assented to under Article 254(2) prevails in the State; and the Government's subjective satisfaction to notify substances and to impose licence fees under the State Intoxicating Drugs Act is a legitimate basis for regulation, within limits of judicial review on facts.
Costs: Petition dismissed with costs; advocate's fee fixed at Rs. 100.
Narasimham, J.:— This is an application for the issue of an appropriate writ against the State of Andhra Pradesh to for bear from enforcing the Notification G O. Ms. No. 1376.Revenue dated 5th. September, 1962, issued under the Hyderabad Intoxicating Drugs Act (Act IV of 1333 F) (hereinafter referred as the Intoxicating Drugs Act), of rules for the manufacture, possession, sale, import, export and transport of Chloral Hydrate, a drug within the meaning of the Drugs Act of 1940. One of the rules provided inter alia that the manufacture of the said drug shall be under licence granted by the Excise Commissioner on payment of Excise duty of Rs. 500/- per annum. It would not be necessary to refer to the other specific rules.
2. The petitioners, three in number, Messrs Indian Chemical Pharmaceutical Works, Hyderabad, Messrs. Pankaj Chemical and Pharmaceutical Works. Hyderabad and Messrs. Commercial Chemical Co., Sanathnagat, Hyderabad, are the manufacturers of the said drug under the licences issued under the Drug Rules framed under the Drugs Act of 1940. They challenge the notification of the respondent Government as ultra vires the powers of the Government on the ground that the Government have no right to include a drug coming within the purview of the Drugs Act of 1940 (Central Act) as an intoxicating drug within the meaning of the Hyderabad Intoxicating Drugs Act (Act IV of 1333 F.). They impugn the Notification on the further ground that Chloral Hydrate is not an intoxicating and narcotic Substance, as defined under S. 2 Cl. 4 of the Intoxicating Drugs Act. The further ground of attack is that the Government have no power to impose a duty on the manufacture of Chloral Hydrate and their powers of levying impost are confined to the State list (List II of the Seventh Schedule) appended to the Constitution which, among other items, provides for duties of excise on all alcoholic liquors, opium, Indian hemp and other narcotic drugs and Narcotics (Vide item 51). It is further alleged that the Notification infringed their right to carry on trade and business guaranteed under the Constitution-Article 19(1)(f) and (g). The State Government in their counter affidavit filed by the Assistant Secretary to Government, Revenue Department averred that the petitioners are manufacturing nearly forty thousand lbs. of Choral Hydrates, that it had come to the notice of the Excise authorities that the bulk of this product was being mixed in “Sendi” and liquor to give intoxication, and that the medical opinion is that the drug is highly abnoxous to human health. It is further averred that there was no effective control over the manufacture, sale and possession of the drug by the Excise authorities, and that the Government have taken necessary steps by the above Notification to control its improper use. This Notification does not interfere with the right of the petitioners to carry on their trade. They repudiated the other allegations impugning the Notification.
3. In support of this petition, Sri Surya Prakasam has raised the following contentions: Firstly, that the State Control in respect of Chloral Hydrate under the intoxicating Drugs Act as amended by Act XXII of 1953, is ultra vires the State powers inasmuch as the said drug was covered by the Drugs Act of 1940, a Central enactment; secondly that assuming that it could exercise such control under the Intoxicating Drugs Act, Chloral Hydrate is not as intoxicating and narcotic substance as defined under Sec. 2(4) of the Intoxicating Drugs Act; thirdly, that the imposition of a licence fee is illegal and ultra vires the State powers, as ‘Chloral hydrate’ cannot be brought under item 51 of list II of seventh Schedule appended to the Constitution. We will presently deal with these contentions.
4. Taking the first contention, we may notice briefly how the Intoxicating Drugs Act came to be enacted in its present form. The Intoxicating Drugs Act of 1333F. was in force in the erstwhile State of Hyderabad. The State of Hyderabad became part of the Indian Union as a Part-B State under the Indian Constitution as and from 26th. January, 1953. The Central Laws were made applicable to Part-B States in 1951, the Drugs Act of 1940 being one of the Central enactments thus made applicable. The application of the Central Law necessitated certain amendments to Act IV of 1333 F. The amendments were made by Act XXII of 1953. We may appropriately notice that the preamble to the Hyderabad Opium and Intoxicating Drugs (Amendment) Act (Act XXII of 1953) brings out fully the necessity for the amendments made. The preamble reads thus:—
“Whereas in consequence of the extension to the State of Hyderabad of the Opium Act, (Central Act XIII of 1857,) the Opium Act, 1878 (Central Act I of 1878) and the Dangerous Drugs Act, (Central Act 2 of 1930) and the repeal of the corresponding Hyderabad State Law by the Opium and Revenue Laws (Extension of application) Act, 1950 (Central Act XXXIII of 1950). It is expedient to amend the Hyderabad Opium and Intoxicating Drugs Act (IV of 1333 Fasli) for the purpose of bringing its provisions into accord with the provisions of the aforesaid Central Acts and for certain other purposes.
5. It is hereby enacted as follows:—”
The Amendment Act (Act XXII of 1953) received the assent of the President on 31-12-1953 and was published in the Hyderabad Gazette dated 7-1-1954 The Act was manifestly assented to by the President under Article 254(i) of the Constitution which provides thus:
“Art. 254(2)
Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State.
Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter including a law adding too, amending, varying or repealing the law so made by the Legislature of the State”.
6. It may be noticed that drugs and poisions, subject to the provisions of entry 59 of List I with respect to opium occur as item 19 in the concurrent list III of the Seventh Schedule appended to the Constitution. There can be no controversy over these facts. The important fact to bear in mind about the Intoxicating Drugs Act is that it is a State Law which prevails in the State in that it received the assent of the President under Article 254(2) of the Constitution, and Parliament has not enacted a law contemplated by the proviso.
7. While so, Sri Surya Prakasam has contended that by the application of the Drugs Act of 1940, the State enactment must be deemed to have been repealed by implication on account of the repugnancy between the State Law and the Central enactment. He argued that the law recognised the repeal of an Act by implication. He would urge that the Central Act covered the field of druges exclusively. According to him it became an occupied field and the said State law in respect of the drugs ceased to have validity. The arguments of Sri Sury Prakasam may be crystallized in this form: firstly, that the Intoxicating Drugs Act ceased to have validity after the application of the Drugs Act of 1940 to the erstwhile Hyderabad State; and secondly that ‘Drugs’ have been exclusively taken over by the Union and so became its occupied field and the Drugs Act is a self-contained enactment.
8. We are unable to accept either of these assumptions. From the evolution of the law relating to Drugs, which we have noticed, it is incorrect to say that the Drugs Act is an exhaustive and self-contained enactment. It is equally incorrect to say that the Intoxicating Drugs Act stood repealed by implication.
9. Sec. 2 of the Drugs Act, 1940 is in these words:—
“Application of other laws not barred. The provisions of this Act shall be in addition to, and not in derogation of the Dangerous Drugs Act, 1930, and any other law for the lime being in force”.
10. Sri Surya Prakasam has sought to interpret “any other law for the time being in force” occurring in this section and having reference to law in force then and not law as came to be amended later. But, this interpretation cannot be correct. The expression “for the time being” has a legal connotation. In Stroud's Judicial Dictionary ‘for the time being’ is explained thus:—
“The phrase “for the time being” may, according to its context, mean the time present, or denotes a single period of time; but its general sense is that if time indefinite, and refers to an indefinite state of facts which will arise in the future and which may (and probably will) vary from time to time”.
11. It is not, therefore, possible to accede to the restricted meaning placed on this phrase by the learned counsel. The expression “any other law for the time being in force” must be understood to include any future law and not necessarily the law in force at a point of time when the Drugs Act came to be applied. This displaces the entire argument that the Drugs Act is an exhaustive legislation relating to drugs. Equally unsound is the assumption that the Intoxicating Drugs Act must be deemed to have beer, repealed by implication by the application of Drugs Act to the erstwhile Hyderabad State, as manifestly the amendments to the Intoxicating Drugs Act had been assented to and approved by the President under Article 254(2) of the Constitution so as to make the State law prevail in the State. Sri Surya Prakasam has cited to us a decision of the erstwhile Hyderabad High Court in Pannalal Lahoti v. State of Hyderabad . A.I.R 1952 Hyd. 187.. In that case, during the pendency of a criminal Case, the Hyderabad Criminal Procedure was repealed and the Code of Criminal Procedure (Central Act) came to be applied. An accused person contended that the Hyderabad Criminal Procedure Code could not have been validly repealed on the ground that there was no repugnancy between the Hyderabad Code and the Central Act: The contention was repelled and it was held that the Central Act governed the field of Criminal procedure, although the subject of criminal Procedure was a subject which occurred in the concurrent list (item 2). The decision does not present any similarity to the facts and circumstances under consideration in the instant case. Sri Surya Prakasam has also cited Adilakshmi Ammal in Re2. It was decided in that case that the Madras Legisla-ture had no power to interfere with the Madras Abkari Act by passing the Madras Prohibition Act of 1937 in so far it related to dangerous drugs it was observed that the Prohibition Act was not reserved for the assent of the Governor General or for the signification of His Majesty's pleasure and that being the case, the Madras Legislature had no power to interfere with the Madras Abkari Acts so far as the possession of dangerous drugs was concerned the Government of India Act of 1935 also had provisions relating to the distribution of the legislative powers of the Indian Parliament and the State Legislatures. There was a threefold distribution of powers: certain subjects were set apart for the exclusive legislative jurisdiction of the Centre (Federal) while certain other subjects were reserved for the Provincial Legislatures to deal with and in addition to the subjects allotted to the Centre and to the States respectively certain specified matters were reserved for both the Centre and the Provinces to legislate about, with concurrent powers. That decision does not render an assistance or present any similarity to the instant case. We have, therefore no doubt that this contention fails.
12. The second contention is that ‘Chloral hydrate’ is not an intoxicating and narcotic substance within the meaning of Section 2(iv) of the Hyderabad Intoxicating Drugs Act. S. 2(iv) reads as follows:—
“any other intoxicating and narcotic substance which the Government may, by notification declare to be an intoxicating drug, such substance not being opium, coca leaf or a manufactured drug as defined in S. 2 of the Dangerous Drugs Act, 1930”.
13. The learned counsel urges that ‘Chloral hydrate’ is not a narcotic substance and as such the Government have no power to declare it as intoxicating drug within the meaning of the Act, unless it is also a narcotic. The term ‘narcotic’ is not defined in the Act. The ordinary dictionary meaning of the term is “producing torpor, sleep or deadness”. The effect of Chloral hydrate on human senses might be a matter of evidence. But certainly such investigation is not within the scope of these proceedings. The words of the provision indicate that the declaration may be made by the Government on its own subjective satisfaction. We are not, therefore, constrained in these proceedings to entertain any objection to the Notification of the Government on that ground Sri Surya Prakasam has argued that the averments in para 2 of the counter affidavit could be read as admissions that ‘Chloral hydrate’ is not a narcotic substance. The pertinent part is as under:—
“… ………this substance in a finished form does not contain either alcohol, opium, Indian hemp or other narcotic drug or narcotics”
14. From this an admission is sought to be spelt that ‘Chloral hydrate’ is not a narcotic substance. We are persuaded that this could be construed as an admission in the manner contended for. The counter-affidavit mentions what sub stances are not contained in the Drug in question. That does not lead to the necessary inference that Chloral hydrate itself is not a narcotic substance it is much the same way of stating that water, the chemical formula of which is H-2???O, does not contain either hydrogen or oxygen in a militant state so as to be segregated. Neither hydrogen nor oxygen is a liquid, but water as a chemical substance composed of hydrogen and oxygen in certain proportions is a liquid. We are, therefore, unable to accept this contention for at least two main reasons: firstly, that controversial questions of fact are not within the purview of these proceedings and secondly, that the Intoxicating Drugs Act contemplates a subjective satisfaction on the part of the Government to notify a substance having regard to its effects on the human body.
15. The third objection with regard to levy presents no difficulty, as the Intoxicating Drugs Act itself empowers the Government to impose licence fee etc. in respect of intoxicating drugs. The relevant provision is S. 5 which provides as under:—
“The Government may regulate the matters mentioned in Sections 3 and 4 and provide for the supervision and grant of licences and the recovery of intoxicating drugs revenue in such manner and subject to such terms and conditions as may be prescribed”.
16. Inasmuch as the Intoxicating Drugs Act has to prevail in the State, the imposition of licence fees is quite legal and intra vires the powers of the Government the point raised whether such imposition is covered also by the State's powers to impose duties of excise on alcoholic liquors, opium, Indian hemp and other narcotic drugs and narcotics with reference to the State list under the Constitution, docs not, therefore arise for a decision in this case.
17. There remains the objection that the Notification is violative of the right of the petitioners under Article 19(1)(f) and (g) of the Constitution. It needs to be noticed that that Article also provides thus, (in so far as it is relevant):—
Article 19(5);— Nothing in sub-clauses (d), (e) and (f) of the said clause shall effect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub-clauses either in the interest of the general public or for the protection of the interests of any Schedule Tribe”.
(6) Nothing in sub-clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause”.
18. Thus, the very Article provides that reasonable restrictions could be imposed in the interests of the general public. From what the respondent has averred in the counter-affidavit, which we have referred to supra, we are not left in doubt as to the reasons for the Notification in respect of ‘Chloral hydrate’.
19. In our considered view, they are reasonable restrictions imposed in the interests of the general public. The objection thus fails.
20. For all the said reasons, we find that no case has been made out by the petitioner for interference. The writ petition fails and is dismissed with costs. Advocate's fee Rs. 100/-.
21. Petition Dismissed.
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