Government of Bangladesh Vs. M/s. Sree Kundeswari Aushadhalaya, 29 DLR (AD) (1977) 128

Case No: Civil Appeal No. 23, 24 and 25 of 1975

Judge: Kemaluddin Hossain,

Court: Appellate Division ,,

Advocate: Mr. Abdul Wadud Bhuiyan,Md. Serajul Huq,Mr. K. A. Bakr,,

Citation: 29 DLR (AD) (1977) 128

Case Year: 1977

Appellant: Government of Bangladesh

Respondent: M/s. Sree Kundeswari Aushadhalaya

Subject: Fiscal Law,

Delivery Date: 1977-2-2

Supreme Court
Appellate Division
Syed A.B. Mahmud Husain CJ
Ahsanuddin Choudhury J
Kemaluddin Hossain J
Debesh Chandra Bhattacharya J
Bangladesh……………………......................... Appellant (in all the cases).
M/s. Sree Kundeswari Aushadhalaya………...Respondent (in Appeal No.13/75)
M/s. Sakti Aushadhalaya (P) Ltd………………………………Respondent.
(in Appeal   No.   24/76)
Mr. M.A. Quddus for M/s. Ayurvedic Kutir .......Respondent. (in Appeal No. 25/75)
February 2, 1977.
Liquor is now an ‘intoxicant’—
Government retains it rule-making power both before and after the amendment of 1937— No conflict between definition of excisable goods and intoxicant.       … (7)
Lawyers Involved:
K A Bakar, Attorney-General with M/S Sultan Hossain Khan, Deputy Attorney-General A.Wadud Bhuiyan, Assistant Attorney-General and B. B. Roy Choudhury, Assistant Attorney General, instructed by Abu Backkar, Advocate-on-Record—For the Appellant.
M. H. Khondkar, Advocate, instructed by Mr. B.C. Panday Advocate-on-Record.—For the Respondent in Appeal Nos. 23 & 24/75.
Serajul Huq, Advocate, with Amir Hossain Khandkar, Advocate instructed by S. M. Huq, Advocate-on-Record—For   the   Respondent in Appeal No. 25/75.
Civil Appeal No. 23, 24 and 25 of 1975
(From the Judgment and Order dated 10th June,1975 passed by the High Court Division in writ petition Nos.26,27 and 34 of 1975).
Kemaluddin Hossain J:
1. These three appeals are heard together as both facts and law are the same. The consideration is the vires of a Notification dated 19th December, 1974 issued by the Ministry of Finance (National Board of Revenue) amending rule 15 of the Rules framed under section 86(2) of the Bengal Excise Act 1909 r Bengal Act IV of 1909). These Rules originally were framed on August 12, 1936 under section 86 (2) of the Act for the purpose of regulating the manufacture of Ayurvedic preparations. Mritasanjibani Sura. Mrita-sanjibani Sudha, etc. to a certain fixed percentage of spirit strength. The amended rule reduced the spirit strength from 42% to 25%. It appears that these Ayurvedic preparations use a process of fermentation and distillation, and manufacture them according to the recipe and direction set out in Arkaprokash, Ayurved sangraha and Vaisaja Ratnabali. The three respondents challenged the vires of the amen­ded rule, chiefly on the ground that the pro­posed rule will destroy the medicinal efficacy of those Ayurvedic preparation. This Govern­ment however resisted the challenge denying the destruction of medicinal efficacy, and ascertaining that the reduction of spirit strength was done to avoid their misuse for alcoholic be­verages in conformity of advancing the policy of prohibition among the Muslims.
2. A Bench of the High Court Division on consideration of the rival contentions of the parties allowed the writ petitions and declared the impugned notification invalid. Leave was granted at the instance of Bangladesh, the appellant, to consider the following points:

(1) Whether the High Court Division correctly interpreted s. 86(2) of the Excise Act which expressly empowers the Government, amongst others, to fix the spirit  strength   of medicinal preparation which is liquor within the meaning of the Act, and   whether it is cor­rect in holding the amendment of rule 15 ultra vires the Act.

(2) Whether the  High Court Division  is right in holding that the amendment of rule 15 is not related to the purpose of the Excise Act and s. 86 (2) of the Act and that the fixa­tion of spirit strength of the medicinal  pre­paration at  25% will destroy the   medicinal efficacy.
Mr. Attorney-General appearing for Bangla­desh, and Mr. M. H. Khondker for Respondent, Sree Kundeswari Aushadhalaya, and Sakti Aushadhalaya (P) Limited and Mr/ Serajul Huq for Ayurvedic Kutir, have raised various controversies, and have elaborated them by many refinements of arguments. Im­portant among them is whether the amendment of rule 15 is intra vires the Government's rule making power.
It appears that both the points are inter­related and interdependent upon each other, and it is appropriate that they are dealt with together and not separately.
3. To appreciate the points some of the relevant provisions of the Act may be set out for discussion. The specific rule making power is to be found in sub-section (2) of section 86 of the Bengal Excise Act 1909 (as amended) and the relevant portion may be set out as follows:
"86. The provincial Government may make rules—
(1) …. ….. ….. … …. … ….
(2) for fixing the strength, price or quan­tity in excess of or below which any (intoxicant) shall not be supplied or sold, and the quantity in excess of which denatured spirit shall not be possessed and for prescribing a standard of quality- for any (intoxicant);
4. A controversy has arisen over the word 'intoxicant' in the section, inasmuch   as the word was introduced by amendment of 1937 in place of the words 'excisable article’ before the amendment. By the amendment the expr­ession 'excisable article', was redefined and a new definition by the world 'intoxicant' was introduced. The learned counsel for the res­pondents argue that by this redefinition the Government has lost the rule-making power over Ayurvedic preparations which are medi­cinal preparations containing alcohol, and falls into the third category of redefined expression of 'excisable article'.
They say, that the amendment of 1937 introduced a new category in the definition clause that of 'intoxicant' and amended section 86(2) gave rule making power to the Govern­ment with regard to 'intoxicant', and not 'ex­cisable article.' Before the amendment the rule making power of the government extended to 'excisable article'.
5. The argument though apparently plau­sible does not stand the scrutiny of reason. No doubt the earlier section 86(2) conferred a rule-making power on the   Government for excisable article' and after the amendment of 1937, the power is   confined to 'intoxicant.' But if we turn to definition of 'excisable article' before the amendment of 1937, we find that the expression was defined to mean 'any liquor or intoxicating drugs'. The definition of 'intoxicant’ introduced in 1937 repeats the identical words.  The result is not so much of rede­finition as of reclassification of the definition clause. 'Excisable article' before the amend­ment of 1937, is now reclassified as 'intoxicant.' The change, if at all, is one of terminology. It is not disputed that the earlier Rules framed in 1936 is applicable to the respondents. By mere reclassification, we fail to see, how the Government can lose its rule-making power or the 1936 Rule ceases to be operative.
6. Another contention set up by the res­pondents is that under redefined expressions the respondents' Ayurvedic articles fall under the category of 'medicinal preparations  con­taining alcohol' under 'excisable article', and therefore they cannot come under the defini­tion of 'intoxicant'. It is difficult to sustain the respondents' articles answer to a particular category of one of the definitions, it does not follow that the same article, if it also answers another definition in the same article, if it also answers another definition in the same Act, it cannot be dealt with under a second meaning, and when there is no conflict between the two, and when the purpose is different. A reading of the Act shows, that this double definition has been given to achieve two differ­ent purposes. Articles under the Act have broadly been classified as 'excisable' and 'intoxi­cant' for the purpose of levying duty under the first category, and to govern the manufacture, sale and transportation under the second. When the legislature has treated a particular article in the same Act differently to achieve different purposes and there is no ambiguity, it is against all canons of interpretation to restrict the meaning of the one, or the other by putt­ing an artificial construction under the supposed notion of repugnancy or ambiguity and thus to exclude it from the operation of the Act, when the plain meaning does not do so.
7.  'Liquor' has again been defined in the Act. It says, inter alia, that it is a liquid con­sisting of or containing alcohol. There is no denial of the fact that Respondents Ayurvedic preparations are liquor, consisting of alcohol and this alcohol is produced during the course of the distillation in the preparation of this Ayurvedic article. The Respondents' Ayur­vedic article, according to the definition of the Act, remains liquor both before and after the amendment of 1937. Liquor is now an 'intoxicant'.
8. There is another reason why the con­tention of the Respondents cannot be accepted. The word ‘liquor’ simpliciter does not find place in the redefined expression of 'excisable article', whereas the word constituted an integ­ral part of the earlier definition. It now finds place in the new expression of 'intoxicant'. Evidently the definition of the expression 'excisable article' is neither exhaustive, nor it is in conflict with the expression 'intoxicant'. Both can co-exist to achieve their purposes as provided in the Excise Act. We therefore find that the Go­vernment both before and after the amendment of 1937, retains the rule-making power over the Ayurvedic preparations of the Respondents.
We now take the principal point for consi­deration as to the vires of the amended rule. To appreciate the question, relevant portion of the 193 6 Rules and that of the amended rule may be set out:
No. 812 Ex-12th August 1936. In exer­cise of the powers conferred by section 86 of the Bengal Excise Act, 1909 (Bengal) (Act V of 1909), the Government of Bengal (Ministry of Excise) are pleased to make the following rules for the manufacture of Ayurvedic preparations’ such as Mritasanjibani sura, Mritasanjibani Sudha, etc., in which processes of fermentation and distillation are used in production.
1. Definition :—The Ayurvedic medicinal preparations in which process of fermen­tation and distillation are used in their pre­parations such as Mritasanjibani sura or Mritasanjibani Sudha or Mritasanjibani or any other preparation manufactured in accordance with the recipe and direction laid down in Arkaprokash, Ayurved sang-raha and Vaisaja-Ratnabli hereafter refer­red to as "the preparations" are medicated wines of spirits.
14. The Commissioner may, if he deems it necessary, fix normal spirit strength and allowable margins for the preparations.
15. (1) Distillation shall be so conducted that distillates from a complete number of fermenting vessels may be collected in a receiver at a strength of about 42 per cent proof. After the distillation is over the licenced shall be permitted to take a duty-free sample not exceeding 22 ounces from a receiver for analysis and declaration of spirit strength of the disiillate. If the strength is found to be over 42 per cent, proof of the distillate shall be reduced and afresh sample similar to the first one aga­in be tested by the licencee before declar­ing the final strength. If, however the str­ength of the first distillation is found to be below 42 percent, it shall not be increa­sed except with the previous sanction of the Collector of the district. When the requisite strength has been reached, the Officer-in-charge shall send at the cost of the licencee a quart battle of duty free sample of the product to the Chemical Examiner, Government of Bengal for a report on the correct strength and obser­vation and also for a declaration as to whether the product is free from deleteri­ous matters and therefore, fit for consum­ption. He shall then take charge of the receiver and issue at the strength declared by the licencee. The strength must however be corrected and necessary adjustments in the prescribed registers shall be made if the actual strength as found by the Chemical Examiner differs from it by more than 3.0 proof degrees or exceed 42 percent proof.
(2) …………………………………
(3) …………………………….
The amended Rule which was published on 19.12.74 in the   Gazette Notification stands thus:—
"No. S.R.O./146-L/74/2(45)/NBR Excise-Pol)72/432.—In exercise of the powers conferred by section 86 of the Excise Act, 1909 (Ben. Act V of 1909), the Govern­ment is pleased to make the following amendment in the Rules for the manufac­ture of Ayurvedic preparations such as Mritasanjibani Sura, Mritasanjibani Sudha, etc. published under Notification No. 812-Ex. dated the 12th August, 1936, namely :—
In the aforesaid Rules, in rule 15, for the figure "42" wherever occurring the figure “25" shall be substituted."
9. Diverse branches of argument centering the vires of the amended Rule have been ad­vanced by both the parties. Some of the con­troversies will be dealt with at their appropriate places. For the present, we will consider whe­ther the amended Rule has been framed within the rule-making power of the Government under sub-section (2) of section 86. We have earlier set out the relevant provisions of the Act. An analysis of the sub-section (2) shows that the Government has power to make rules, with regard to intoxicant for fixing  the strength, price or quantity in excess or below which, it shall not be supplied or sold, and also the po­wer of prescribing a standard of quality for any intoxicant.
10. We are concerned with the amended rule regarding the power of the Government under last clause of the rule-making power under sub-section (2). The provision is that, the Government can fix a standard of quality for any intoxicant. We have held earlier that the respondents' Ayurvedic preparations are a species for intoxicant under the Act, being liquor. If we also refer to the first clause of the rule-making power under sub-section (2), we find that the Government has the power of fiving the strength, price or quality in excess or below which any intoxicant, shall not be sup­plied or sold. The Government apparently has power of fixing the strength of Mritasanjibani preparations, in excess or below which it cannot be supplied or sold. It has equally the power of filing the standard for any intoxicant. Under this rule-making power the Government in 1936, framed a set of Rules, the relevant part of which has been set out. The Government in the instant case is seeking to amend Rule 15 of the 1936 Rules in the manner set out above.
11.  So far as the 1936 Rules are concerned they constitute a complete code and fix a stan­dard for the preparation of Mritasanjibani Ayurvedic products. In doing so, the rule has fixed the spirit strength at 42% proof of the dis­tillate. Rule 14 says that the Commissioner may, if he deems it necessary, fix normal spirit strength and allowable margins for the preparations. The Government by the Rules therefore, in 1936 fixed a standard of quality for Mritasanjibani Ayurvedic products. Read­ing the Rules as a whole, it is manifest that taking all circumstances in view the standard of quality for the Ayurvedic products was fixed. 1936 Rubs therefore were framed complying with the statutory requirements of the rule-making power of the Government.
12. If we again turn to two clauses of the rule-making power in sub-section (2), it is apparent, that the consideration for exercising the power under first and the last   clauses may not be the same. Under the first clause, the strength of an intoxicant is fixed for the purpose of supply or sale. The Government enjoys a wider discretion in fixing the strength under this clause inasmuch as the law is silent with regard to the control of the exercise of the dis­cretionary power of the Government. But that is not so with regard to the last clause, which restricts the Government's discretion to the prescribing of 'standard' of quality for any intoxicant. The amended rule is referable to the last clause of sub-section (2). By the amended Rule the Government has purported to modify the prescribed standard of quality of Mritasanjibani Ayurvedic product prescribed in 1936, Amendment therefore requires re-fixation of the standard. How could this be done? The government has merely sought to amend one of the rules viz. rules 15, of the 1936 Rules, by reducing the spirit strength of disti­llate from 42% to 25%.
13.  It is no doubt true that if the Govern­ment has the power to fix a standard of quality, it has equal power of refixing the standard. But the question is whether by a bald fixation of 25% in place of 42% in rule 15 of lv36 Rules, could it be said that the Government has prescribed a standard of quality for Mritasanjibani Ayurvedic product? Apparently it has not.
14. Standard pre-supposes a norm. Ob­servation, investigation and conclusion are necessary to fix a norm. It requires pre­meditation. Then again as the law stands, this norm must be related to the quality of the product. Therefore to exercise the power under the last clause of sub-section (2), the rule must disclose sufficiently that a norm or standard has been fixed, and the standard is related to the quality of the intoxicant. It must appear from the reading of the rule, that the standard has been fixed or refixed. The amended rule singularly fails to fulfill this test. Obviously, a bare substitution of two figures in the earlier rule read by itself hardly conveys any sense, far less a complete sense, and refixation of a standard under no circumstances. Whereas the Rules of 1936 satisfy the requirements of sub­section (2), the amended Rule of 1974 does not. The impugned amended Rule must there­fore be declared invalid.
We now take up the other controversies raised by the parties, though they are not of much importance, in the view of the conclusion we have arrived at.
15. The High Court Division has taken the view, that the amended rule is ultra vires the rule 15 of 1936 Rules, and it is also ultra vires suc-section (2) of section 86 of the Act, and the purpose of the Act. Both these reasonings were challenged by the learned Attorney General. We find that the contentions are well founded. The Rules of 1936 were framed by the Government and they are sought to be amended in 1974. It is made by the same authority and the power is exercised under substantially the same provisions. There can­not be a question of the amended Rule being ultra vires the earlier rule. It is made by the same authority. An authority having power to make Rule has under the General Clauses Act equal power to add to amend, vary or rescind any such rule. The competency of the Government to frame or amend the Rules under the Act cannot be disputed. Mr. Attorney-General is perfectly justified in submitting that, if the  Government could validly frame thee 1936 Rules which the Respondents do not challenge, rather accept them as binding, then the power of the Government to amend them can­not be challenged. The amendment also can not be said to be beyond the purpose of the Act. The reasons referred by the High Court Division do not commend to us.
16. No doubt the power of rule-making may remain in the authority prescribed by the Act, nonetheless the rules framed by the dele gated authority must conform to all the pre­conditions set out by the Act, before it could be said to have been framed under the Act The Rule making authority cannot in the purported exercise of its power, create a new jurisdiction in excess of that conferred by the Act The sta­tutory rule cannot enlarge the meaning of the section. If a rule goes beyond what the section prescribes, the rule must yield to the statutory provision: vide King vs. Henderson, 1898 AC 720 (P. C.). The Central Bank of India Vs. Their Workmen, A.I.R. I960 (S.C.) 12 The reasons given by the High Court Division though cannot be sustained, yet for the reasons set out above, the decision arrived at by giving must stand. The other grounds of challenged to the impugned amended rule have been direc­ted to the Government's affidavit, which is irrelevant and rather off the mark. The Government in its affidavit has advanced the reason for the support of the amended rule to the change of Government's liquor policy. In order to enforce its prohibition policy, the affidavit says, and especially against the Muslims, it was thought that this Ayurvedic product with high percentage of alcoholic strength is likely to be misused for alcoholic drink instead of medicine, that the strength was sought to be reduced. The reason has given a good ground of challenge to the Respondents, asserting that the reason neither satisfies the requirements of the law, nor could it be a good ground for prohibition, inasmuch as a drink with 25% of alcoholic content still remains an alcoholic drink. It has also given occasion to impugn the amendment on the ground that it was made for collateral purpose, not within the purview of the Act. Mr. Attorney General has found it difficult to refute the contention, but he has taken a straight-forward legalistic stand, that the rule is to be tested not on the grounds of unreasonableness, but on the ground of vires.
17. Mr. Serajul Huq, the counsel for one of the Respondents, has dilated on the question of reasonableness of the amended Rule. He has referred to a letter of the Director of Taxation to the Board of Unani and Ayurvedic system of Medicine and its reply thereto. It appears that the Director of Taxation sought the opinion of the Board, whether the reduc­tion of the spirit strength' will affect the efficacy of the medicine, and the reply was that the Board could neither recommend the increase or the decrease of the strength, and that the reduction could not be recommended as the efficacy of the medicine will be affected. Much controversy has been waged over the true mean­ing of the resolution of the Ayurvedic Board. We do not, however, think it necessary to enter into such controversies. The basis of the introduction of this fact by Mr. Huq, is to chal­lenge the reasonableness of the amended Rule, on the footing that when the Director of Taxa­tion sought an expert opinion and the opinion was against the reduction of the spirit strength the Director, without taking a second opinion, contrary to the earlier one, cannot arbitrarily ' or capriciously fix a strength according to his humour or his notion of morality. Since we have already held the rule invalid on the ground other than unreasonableness, and also because the question of invalidity of a statutory rule for unreasonableness is not free from doubt, we refrain from dwelling on this question any further.
For the reasons, we find no merit in these appeals and they are dismissed, but having regard to the facts and circumstances of the matter, we make no order as to costs.