TaxTMI 
TaxTMI 
2004 (8) TMI 692
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibution of pan masala and gutka (pan masala containing tobacco) were banned for different periods. We shall take the facts in the civil appeal arising out of special leave petition No. 24449 of 2002 as typical of the cases. Facts: Civil Appeal arising out of SLP(C) No. 24449 of 2002 The appellants manufacture gutka within the state of Maharashtra, which is stored in convenient godowns and sold both within and outside the state of Maharashtra. By a notification dated 23rd July, 2002 issued by the Commissioner, Food and Drug Administration and Food (Health) Authority for the State of Maharashtra, the manufacture, sale, storage and distribution of pan masala and gutka (pan masala containing tobacco) were banned for a period of five years with effect from 1st August, 2002. The appellants challenged the validity of this notification by a writ petition No. 2024 of 2002 before the High Court of Judicature at Bombay. By its judgment dated 18th /19th September, 2002, the division bench of the Bombay High Court dismissed the writ petition upholding the validity of the notification. Aggrieved thereby, the appellants challenge the said judgment by the present appeal. Writ Petition No. 173 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and pan masala, containing tobacco or not containing tobacco, by whatever name called," is prohibited within the state of Goa and it is directed that "no person shall himself or any person on his behalf, shall manufacture for sale or store, sell or distribute gutka or pan masala, containing tobacco or not containing tobacco, by whatever name called." The prohibition in the notification is made effective from 26th January, 2003. All the four notifications are under challenge. Civil Appeals arising out of S.L.P. Nos. 23635/02, 24292/02, 533/03, 834/03 and 2186/03 The appellants are engaged, inter alia, in the manufacture and trade of pan masala and gutka, pan masala containing tobacco and other allied tobacco products. They sell their products all over India including State of Maharashtra. They have a wide network of dealers through whom their products are sold to the public at large in the state of Maharashtra. They also have operating depots in the state of Maharashtra. The appellants challenge the notification dated 23rd July, 2002, issued by the Commissioner, Food and Drug Administration and Food (Health) Authority for the state of Maharashtra. The High Court by its common judg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rwise. 5. The impugned notification dated 23rd July, 2002, issued by the State of Maharashtra operates extra territorially, and, to that extent, is ultra vires of the powers of the State. 6. By enacting the Cigarettes and Other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, 2003, (Act 34 of 2003), Parliament has evinced its intent to occupy the whole field with regard to prohibition of advertisement and regulation of trade and commerce, production, supply and distribution of tobacco products. While the central legislation prohibits the sale of tobacco products only to persons below age of 18 years, the impugned notification purports to impose a wholesale ban without any qualification. Thus, there is a conflict between the powers exercisable under two central statutes dealing with the same subject and, therefore, provisions of the Act 34 of 2003 must prevail. Legal provisions: In order to appreciate the contentions of the learned counsel, it will be necessary to briefly notice the relevant provisions of the Act. As the preamble of the Act indicates, "it is an Act to make provision for the prevention ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(vi) any adulterant. Explanation.-For the purposes of this section, a person shall be deemed to store any adulterated food or misbranded food or any article of food referred to in clause (iii) or clause (iv) or clause (v) if he stores such food for the manufacture therefrom of any article of food for sale." Section 22A empowers the Central Government to give such directions as it may deem necessary to a State Government regarding the implementation of the Act. Section 23 empowers the Central Government to make rules to carry out the provisions of the Act. In particular, and without prejudice to the generality of the rule making power, the power of the Central Government includes the one in clause (f). Section 24 of the Act is the section which grants rule making power to the State Government. The State Government may, after consultation with the Committee, and subject to the condition of previous publication, thereunder make rules for the purpose of giving effect to the provisions of the Act in matters not falling within the purview of section 23. Sub section (2) of Section 24 grants power to the State Government to make rules with regard to the powers and duties of the differen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Health) Authority shall be responsible for the general superintendence of the administration and enforcement of the Act. (3) The Food (Health) Authority shall, for the purpose of giving effect to the provisions of the Act, have control over the Public Health Laboratories maintained by the Government and Local Authorities and Local (Health) Authorities, Licensing Authorities, the Public Analyst and Food Inspectors appointed under the Act. (4) The Food (Health) Authority may give to a Local (Health) Authority such directions as he may consider necessary in regard to any matter connected with the enforcement of the Act and the Rules made thereunder and the Local (Health) Authority shall comply with such directions. (5) The Food (Health) Authority whenever called upon to do so shall advise the Government in matters relating to the administration and enforcement of the Act. (6)(a) If the Union Territory or any part thereof is visited by, or threatened with any outbreak of any infectious diseases, the Food (Health) Authority shall ascertain the cause of such outbreak of the infectious disease. (b) If in the opinion of the Food (Health) Authority th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....number issued by the Road Transport Authority. (4) On receipt of such application, the Licensing Authority shall, if on inspecting the said premises is satisfied that the premises are free from sanitary defects and are in proper hygienic conditions and the applicant complies with other conditions for holding licence, grant the applicant a licence in Form as specified below on payment of fees laid down in the Schedule appended to the rules. (i) Form 'C' in respect of any premises. (ii) Form 'D' in respect of any mobile van. (iii) Form 'E' in respect of any temporary stall. (5) If the information furnished in the application appears to be incorrect or incomplete or if the prescribed fee has not been paid, the Licensing Authority shall make such enquiry as he considers necessary and after giving the applicant an opportunity of proving the correctness and completeness of the information so furnished, may if he is satisfied that the applicant is eligible for the licence applied for grant or renew the licence. (6) If the articles of food are manufactured, stored or exhibited for sale at different premises situated in more ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....charge of the Health Administration in the State of Maharashtra shall be the Food (Health) Authority (hereinafter referred to as the authority). (2) The authority shall be responsible for the general superintendence of the administration and enforcement of the Act. (6)(a) If the State or any part thereof is visited by, or threatened with an outbreak of any infectious disease, the authority shall ascertain the cause of such outbreak of the infectious disease. (b) If in the opinion of the authority the outbreak of any infectious disease is due to any article of food, the authority shall take such measures as it shall deem necessary to prevent the outbreak of such disease or the spread thereof." Rule 5 deals with licences and the manner of suspension or cancellation of licences. Submissions : Ex visceribus actus: The first contention urged on behalf of the appellants is that Section 7 of the Act is not declaratory of the power of any authority, but merely of the consequences of certain acts. The section prohibits the manufacture for sale, store or distribution of (i) any adulterated food; (ii) any misbranded food; (iii) any article of food for the sale of w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....les, 1962 and the corresponding rule in the Goa, Daman & Diu Prevention of Food Adulteration Rules, 1982 suggest that the power given to the Food (Health) Authority is only a pro tem power to deal with an emergent situation, such as outbreak of any infectious disease, which may be due to any article of food. In such a contingency, the Food (Health) Authority is empowered to take all such action as it deemed necessary to ascertain the cause of such infectious disease and to prevent the outbreak of such disease or the spread thereof. Certainly, such power would include the power to ban "for the time being" the sale of such injurious articles of food. Hence, correspondingly Section 7(iv) of the Act provides that no person shall manufacture for sale, or store, sell or distribute "any article of food the sale of which is for the time being prohibited by the Food (Health) Authority in the interest of public health." In other words, when a contingency envisaged by Rule 3, or one similar thereto, arises and it becomes necessary for the Food (Health) Authority to take immediate steps, the Food (Health) Authority is empowered to prohibit "for the time being" the concerned injurious article a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reasonable. We are inclined to the view that the power of the state authority, which is discernible under Section 24(2)(a) read with the state rules, operates only for a temporary period during which an emergent situation exists which needs to be controlled. It is not possible to accept the State Governments' contention that clause (iv) of Section 7 of the Act is an independent provision which clothes the Food (Health) Authority with the power to issue an order of ban for a long period. Mr. Lalit, learned counsel for the state of Maharashtra, took us through the affidavit filed by the state Government and the voluminous data presented therein by the state to indicate that gutka and pan masala are addictive and, in the long run, deleterious to human health. He also referred to certain scientific reports on the subject by the National Toxicology Centre, an International Agency for Research on Cancer, part of the World Health Organisation, and so on. In our view, it is not necessary to make any pronouncement thereupon. Even if we accept that the scientific data supports the view that chewing of pan masala with or without tobacco is injurious to health, the question which remains....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ovision becoming otiose or devoid of meaning." Against the background of these principles, it is not possible to agree with the view taken by the High Court that Section 7(iv) of the Act is an independent source of power of such amplitude as held. In our view, the power of the state under Section 7(iv) of the Act is statutory; absolute to the extent provided therein, and limited to the extent indicated by Section 23(1A) of the Act. Learned counsel for the appellants urged that the expression "for the time being" used in clause (iv) of Section 7 of the Act is significant and indicates the transient nature of the power that is conferred on the Food (Health) Authority under the rules to ban or otherwise take any other appropriate action in relation to an article of food even if it be "in the interest of public health". This too lends support to their contention. Learned counsel for the state of Maharashtra and the learned Advocate General for the state of Goa relied on the judgments of this Court in Pukhraj Jain v. Padma Kashyap and Anr. and Jivendra Nath Kaul v. Collector/District Magistrate and Anr. to contend that the expression "for the time being" would suggest the time period f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment. In our view, it is not possible to interpret these clauses disparately or disjunctively. Clause (iv) of Section 7 and clause (c) of sub-section (1) of Section 10 of the Act and their interplay unmistakably suggest that the power conferred on the Food (Health) Authority and the food inspector, being derived from the Rules made in exercise of the powers exercised under Section 24 of the Act are necessarily subservient to the powers derivable from the rules made under Section 23 of the Act. Hence, neither the Food (Health) Authority, nor the food inspector can be said to have such power which could be available to the Central Government by prescription of a rule in exercise of power under Section 23(1A)(f). Reliance was placed by the respondents on the decision of a learned Single Judge in Gandhi Irwin Salt Manufacturers Association v. The Government of Tamil Nadu . Having perused the judgment, we are unable to approve of it. We notice that neither the interplay between Sections 23 and 24, nor the question as to whether Section 24 can be the source of power, is discussed or decided therein. Conflict with Central Act 34 of 2003: Mr. Nariman, learned counsel appeared for the app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tment is to reduce the exposure of people to tobacco smoke (passive smoking) and to prevent the sale of tobacco products to minors and to protect them from becoming victims of misleading advertisements. This will result in a healthier life style and the protection of the right to life enshrined in the Constitution. The proposed legislation further seeks to implement article 47 of the Constitution which, inter alia, requires the State to endeavour to improve public health of the people. 3. The Bill seeks to achieve the aforesaid objects." The aforesaid internal evidence in the statute, by reason of the preamble, and the external evidence in the Statement of Objects and Reasons, indicate that Parliament has evinced its intention to bring out a comprehensive enactment to deal with tobacco and tobacco products. However, the provisions of the statute do not suggest that Parliament had considered it to be expedient to ban tobacco or tobacco products in public interest or to protect public health. Act 34 of 2003 passed by Parliament does not totally ban the manufacture of tobacco or tobacco products. Section 6 merely prohibits sale of cigarettes and tobacco products to a person under t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n repealed by using any particular set of words or form of drafting but that if the legislative intent to supersede the earlier law in manifested by the enactment of the provisions as to effect such supersession, then there is in law a repeal notwithstanding the absence of the word 'repeal' in the later statute. Now, if the legislative intent to supersede the earlier law is the basis upon which the doctrine of implied repeal is founded could there be any incongruity in attributing to the later legislation the same intent which s. 6 presumes where the word 'repeal' is expressly used. So far as statutory construction is concerned, it is one of the cardinal principles of the law that there is no distinction or difference between an express provision and a provision which is necessarily implied, for it is only the form that differs in the two cases and there is no difference in intention or in substance." The learned counsel relied on Vijay Kumar Sharma & Ors. v. State of Karnataka and Ors. . The observation of this Court in the majority judgment of this Court is that if the later legislation is on the same subject and the legislative intent is to occupy the whole fiel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....v) of the Act is bad for it is an unreasonable and excessive restriction on the Fundamental Right to carry on trade or business guaranteed under Article 19(1)(g) of the Constitution of India. The learned counsel highlighted the unreasonableness by reference to the provisions of the Act and the Rules and the specific situation contemplated in Appendix B at Paragraph A.25.02.01, which gives the definition and standards of quality with reference to chewing gum and bubble gum, for which magnesium carbonate, inter alia, is a permitted ingredient. He therefore contends that magnesium carbonate is not per se injurious to health for otherwise it would never have been permitted in any article of food. There is no material on the basis of which it can be demonstrated that the very same magnesium carbonate would become injurious to health if it arises on account of mixing of traces of magnesium in arecanut and carbonate in lime According to the learned counsel, this is a clear case of non- application of mind, notwithstanding the medical research papers and data made available in the affidavit filed by the state Government. We are unable to discern as to how the very same magnesium carbonate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Anr. , B.R. Enterprises and Ors. v. State of U.P. and Ors. , and State of A.P. v. National Thermal Power Corpn. Ltd. and Ors. ] Mr. Lalit, learned counsel for the States, however, supported the findings of the division bench of the Bombay High Court that the constitutional validity of Section 7(iv) was never in danger as it could be supported on the doctrine of pith and substance. He contends that in pith and substance the Prevention of Food Adulteration Act, 1954 deals with the subject of adulteration, though, incidentally, by reason of Section 7(iv) it may make an incursion into the domain of "public health" which is the exclusive province of the State legislature. This contention appears to have been accepted by the impugned judgment of the High Court of Bombay. In fact, the High Court goes to the extent of saying that the power of the Food (Health) Authority under Section 7(iv) is much wider than the power of the Central Government under the Rules made under Section 23(1A)(f) on the reasoning that while the power of the Central Government under a rule made under Section 23(1A)(f) extends to the prohibition of the sale of "any substance which may be injurious to health when used....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... only about 6 per cent of tobacco and pan masala, which contains no tobacco whatsoever, even accepting on the correctness of the material presented. Further, the literature produced by the States indicates that pan masala is addictive amongst children and, therefore, likely to be injurious to their health in the long run. Assuming this to be true, the restriction could only have been on sale to under-aged persons and not by way of a total ban. Thus, in our view, the impugned notification is violative of the fundamental right of the appellants guaranteed under Article 19(1)(g), both because it is unreasonable and also because it is excessive in nature. A contrast with the provisions of the Act 34 of 2003 in this regard would drive home the point. While dealing with the nature of a reasonable restriction on the fundamental rights under Article 19(1)(g), this Court observed in Mohd. Faruk v. State of Madhya Pradesh and Ors. as under: "The impugned notification, though technically within the competence of the State Government, directly infringes the fundamental right of the petitioner guaranteed by Art. 19(1)(g), and may be upheld only if it be established that it seeks to impose reaso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nstitution was framed, it was one of the major items on the agenda of the society to ban or at least to regulate, its consumption. That is why it found place in Article 47 of the Constitution. It is only in recent years that medical research has brought to the fore the fatal link between smoking and consumption of tobacco and cancer, cardiac diseases and deterioration and tuberculosis. There is a sizeable movement all over the world including in this country to educate people about the dangerous effect of tobacco on individual's health. The society may, in course of time, think of prohibiting its production and consumption as in the case of alcohol. There may be more such dangerous products, the harmful effects of which are today unknown. But merely because their production and consumption is not today banned, does not mean that products like alcohol which are proved harmful, should not be banned. 60(b) The right to practise any profession or to carry on any occupation, trade or business does not extend to practising a profession or carrying on an occupation, trade or business which is inherently vicious and pernicious, and is condemned by all civilised societies. It does not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thority. Need to read down: There is also merit in the contention of the appellants that if the provisions of Section 7(iv) of the Act are not read down as conferring powers on the authority to deal with an emergent situation, the section would be conferring arbitrary powers on the authority and would be procedurally unfair. This is particularly so in the face of the statutory provision under which licences have already been granted to the manufactures of pan masala and gutka for manufacture of the articles. There is already a provision in the statutory scheme for cancellation and suspension of a licence. Without going through such procedure, the power in the state authority to suddenly bring out the result of cancellation or suspension of the licence, without procedural safeguards, would certainly be arbitrary and liable to be hit by Article 14 of the Constitution of India. For this reason also, the power under Section 7(iv) needs to be read down as conferring powers on the authority only to deal with an emergent situation. There has been some argument at the Bar as to whether the impugned notification is the result of an executive act or a legislative act. We have already indic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le injurious to health, when used as food or as an ingredient in the manufacture of any article of food, can only be the result of broader policy. Hence, this larger power appears to have been located only in the Central Government under Section 23(1A)(f) and not in the state Food (Health) Authority. As we have already pointed out, the power of the state Food (Health) Authority is only transitory in nature and designed to deal with local emergencies. In our considered view, the impugned notification is certainly an administrative act and not a legislative act. Inasmuch as by an executive act the manufacture for sale, storage, sale or distribution of the concerned article has been banned so as to interfere with the fundamental rights of the appellants guaranteed under Articles 14 and 19 of the Constitution of India, the impugned notification is illegal and unconstitutional. We are unable to accept that the words "in the interest of public health" used in clause (iv) of Section 7 of the Act can operate as an incantation or mantra to get over all the constitutional difficulties posited. In any event, the collocation of the words in the statutory scheme suggests not a matter of policy,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the appellants to manufacture the concerned articles, which does not lead to the conclusion that the trade or business in the concerned articles is an activity which is "criminal in propensity, immoral, obnoxious, injurious to the health of general public" or that the ban is a result of 'public expediency and public morality'. Is it food ? Mr. Nagaraja, learned counsel appearing for the petitioners in writ petition No. 173 of 2003, raised a further contention that pan masala or gutka which is the subject matter of the impugned notification does not amount to food within the meaning of its definition in Section 2(v) of the Act. Section 2(v) of the Act reads as under: "2. (v) "food" means any article used as food or drink for human consumption other than drugs and water and includes- (a) any article which ordinarily enters into, or is used in the composition or preparation of , human food, (b) any flavouring matter or condiments, and (c) any other article which the Central Government may, having regard to its use, nature, substance or quality, declare, by notification in the Official Gazette, as food for the purposes of this Act." In his submission, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....avour of a local authority like the Food (Health) Authority, paradoxical results would arise. The same article could be considered injurious to public health in one local area, but not so in another. In our view, the construction of the provision of the statute must not be such as to result in such absurd or paradoxical consequences. Hence, for this reason also, we are of the view that the power of the State (Health) Authority is a limited power to be exercised locally for temporary duration. Width of power: The learned counsel for the state of Maharashtra contended that the power of the Food (Health) Authority discernible in clause (iv) of Section 7 of the Act is an independent power and much wider than the power of the Central Government under Section 23 of the Act. He contended that while the power of the Central Government discernible from Section 23(1A)(f) is restricted only to prohibiting the manufacture or sale of articles of food or ingredients of food, the power of the state Food (Health) Authority is much wider and could extend even to articles which may not amount to food or ingredients of food, or even if they are not injurious to health, as long as the test of "in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....suppress a social and economic mischief - an evil which attempts to poison, for monetary gains, the very sources of sustenance of life and the well-being of the community. The evil of adulteration of food and its effects on the health of the community are assuming alarming proporations. The offence of adulteration is a socio-economic offence. In Municipal Corporation of Delhi v. Kacheroo Mal Sarkaria, J. said: The Act has been enacted to curb and remedy the widespread evil of food adulteration, and to ensure the sale of wholesome food to the people. It is well-settled that wherever possible, without unreasonable stretching or straining, the language of such a statute should be construed in a manner which would suppress the mischief, advance the remedy, promote its object, prevent its subtle evasion and foil its artful circumvention. (emphasis supplied) ... 18. The offences under the 'Act' are really acts prohibited by the police powers of the State in the interests of public health and well-being. The prohibition is backed by the sanction of a penalty. The offences are strict statutory offences. Intention or mental state is irrelevant. In Goodfellow v. Johnson r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tween the general and the particular'. 'A legislative act is the creation and promulgation of a general rule of conduct without reference to particular cases; an administrative act is the making and issue of a specific direction or the application of a general rule to a particular case in accordance with the requirements of policy'. 'Legislation is the process of formulating a general rule of conduct without reference to particular cases and usually operating in future ; administration is the process of performing particular acts, of issuing particular orders or of making decisions which apply general rules to particular cases'. It has also been said: 'Rule-making is normally directed toward the formulation of requirements having a general application to all members of a broadly identifiable class' while, 'adjudication, on the other hand, applies to specific individuals or situations'. But, this is only a broad distinction, not necessarily always true. Administration and administrative adjudication may also be of general application and there may be legislation of particular application only. That is not ruled out. Again, adjudication determines ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the third type of cases the satisfaction of the delegate must necessarily be based on objective considerations and, irrespective of whether the exercise of such power is judicial or quasi-judicial function, still it has to be treated to be one which requires objective consideration of relevant factual data pressed into service by one side, which could be rebutted by the other side, who would be adversely affected if such exercise of power is undertaken by the delegate. In our view, even if the impugned notification falls into the last of the above category of cases, whatever the material the Food (Health) Authority had, before taking a decision on articles in question, ought to have been presented to the appellants who are likely to be affected by the ban order. The principle of natural justice requires that they should have been given an opportunity of meeting such facts. This has not been done in the present case. For this reason also, the notification is bad in law. Conclusion: As a result of the discussions, we are of the view that: 1. Section 7(iv) of the Act is not an independent source of power for the state authority; 2. The source of power of the state Food (Health)....