Tanishk Goyal

The doctrine of “Res Extra Commercium”  allows the State to keep the standard of morality static and infringe the civil rights of the citizens, without having to satisfy the test of reasonableness at all. There is an imperative need for the State to balance its welfare obligations with the civil rights of the stakeholders in liquor trade

I. Introduction

Upon the introduction of prohibition in Bombay in 1951, the first Solicitor General of India, C.K. Dapthtary famously remarked “A Republic without a PUB is a mere RELIC”. Come 69 years later, despite the odds being heavily stacked in Dapthtary’s favour, Indian jurisprudence still favours ex-ante restrictions on liquor trade under the garb of an alien doctrine called “Res Extra Commercium.” The unprecedented entry of the doctrine of “Res Extra Commercium” into the Indian jurisprudence came at a time when the Courts themselves were not sure how they would interpret its multiple meanings. This gave rise to a variety of conflicting opinions and judgments by the Apex Court, and the High Courts of various states.

This was even more so, in light of the fact that the obvious caveats about importing American Constitutional doctrines into the Indian Constitution were conspicuously ignored by the Supreme Court, and it ultimately ended up giving a backdoor entry to the American Doctrine of Police Powers into India.

Notwithstanding the unarguably wide scope of the doctrine of “Res Extra Commerium” and its tryst with Article 19(1)(g) of the Constitution of India, I restrict the scope of this article to apprising the reader of the imperative duty of the State to balance the competing interests of its welfare obligations with the rights of the stakeholders in liquor trade; an obligation which it has very conveniently disregarded.

Against the backdrop of the conflicting opinions of the Apex Court and the various High Courts, I start in Part II by apprising the reader of the current jurisprudence on the doctrine of “Res Extra Commercium.” In Part III, I critique this jurisprudence, while essentially highlighting the ambiguity in judgments which have more often than not led to inconsistent outcomes. I trace this ambiguity to a variety of factors which, inter-alia include, Firstly, the logical asymmetry of the Supreme Court in equating liquor trade to criminal offences, viz, slavery, human trafficking etc. while concluding that the doctrine applies to both classes alike, Secondly, the incongruence of an ex-ante restriction with the scheme of Article 19 of the Constitution of India, and Thirdly and most importantly, the dominant puritanical beliefs which have allowed such a doctrine to continue under Indian jurisprudence. I conclude, in Part IV by making the case for a framework, where the liquor industry is allowed to regulate itself, (on the lines of ‘The Code of Good Practice, USA’) subject to certain curated ex-post restrictions. (on the lines of the Hudson test, which has been used for regulating liquor advertisements in the United States of America). I essentially argue for such a framework to harmonise the competing interests of the stakeholders in the liquor industry, with the welfare and moral obligations of the State under Article 47 of the Constitution of India.

II. Current jurisprudence on the doctrine of Res Extra Commercium

The current jurisprudence on the doctrine of “Res Extra Commercium”is far from settled. In the case of State of Bombay vs. F.N Balsara, the Apex Court held that although Article 47 of the Constitution of not enforceable per se, it had an indirect bearing on the idea of prohibition, which ultimately tied up to the larger obligation of the State to maintain public health. The Court, subsequently went on to uphold the Constitutional validity of the Bombay Prohibition Act, 1949.

However, in a drift from the above ruling, the Supreme Court, in the case of Krishnakumar Narula vs. State of Jammu & Kashmir, held that liquor business qualified as a trade, and therefore was subject to reasonable restrictions under Article 19(6) of the Constitution. It is interesting to note here, that Justice Subba Rao, speaking for the majority, held that if the argument of the State on the immorality of dealing in inherently dangerous commodities was accepted, it would lead to a peculiar situation where a particular business or trade would be interpreted differently at different times, in accordance with the acceptable standards of morality prevailing at that point of time.

Subsequently, the Supreme Court departed from this ruling as well in the case of Harshankar vs. Dy. Excise and Taxation Commissioner, where it distinguished between a right and a privilege, and classified liquor trade under the latter head. It went on to hold that privileges of trading in liquor, as opposed to rights were subject to absolute governmental control. It further held that such control extended to the government absolutely prohibiting the sale of intoxicants, as it was under a mandate to ensure the continuance of a welfare State.

Before we go into the analysis of the ruling, which actually imported the doctrine of “Res Extra Commercium” in India, it is pertinent to mention that, the Supreme Court, in the case of A.K Gopalan vs. State of Madras, had refused to import the American doctrine of due process into the Indian Constitution. The necessary implication of this decision was that the doctrine of police powers (which ultimately transcended into the doctrine of “Res Extra Commercium”) was also rejected by a five-judge bench of the Supreme Court of India.

Although, in the case of R.M.D. Chambarbaugwala vs. Union of India, the Supreme Court essentially dealt with gambling, which is outside the scope of this paper, it is important to note that in the same judgement, Justice S.R Das inconspicuously labelled such inherently harmful activities as “Res Extra Commercium.”This ruling, in turn gave the government a free leeway to regulate not only gambling, but any other private rights of such character, in the name of public interest. Furthermore, one of the necessary implications of this case was also that it formally recognized ex-ante regulations on 19(1)(g)  rights, which would set the stage for the doctrine of Police powers to step into the Indian realpolitik.

III. Critiquing the current jurisprudence

A.    The Logical Asymmetry in Laying Down A Standard Doctrine For Criminal Activities And Liquor Trade

One of the fundamental flaws with the ruling of the Supreme Court in the case of R.M.D. Chambarbaugwala vs. Union of India, was that it equated criminal activities with trades being classified under the doctrine of “Res Extra Commercium.” This means that the Supreme Court essentially equated the threshold employed  by the State in regulating patently criminal activities, viz. sex slavery, human trafficking etc. with the threshold employed in regulating activities which may be dangerous, but have not been criminalized, i.e liquor trade.  Interestingly, H.M Seervai, in his Commentary on the Constitution has lauded this ruling of the Supreme Court which visibly suffers from an intractable lacuna.[1]

The logical asymmetry which is present in this judgment is inherently problematic as it fails to take into account, the fact that criminal activities like slavery and trafficking have been expressly barred by a penal law, as opposed to liquor trading which is not. This logical asymmetry has given rise to a variety of inconsistent outcomes by the Supreme Court in various decisions over the course of past 63 years.

B.    The Incongruence of Ex-Ante Restrictions with The Scheme of Article 19 of The Constitution of India

This ambiguity is amply illustrated by the decision of the Supreme Court in the case of Khoday Distilleries vs. State of Karnataka, which reiterated the decision of the Court in the case of R.M.D. Chambarbaugwala vs. Union of India. The ambiguity in illustrated due to an inherent contradiction in the Khoday Distilleries judgement. To put things into perspective, the concept of ex-ante regulations on liquor trade had been formalised in the Chambarbaugwala, case and there was enough precedent to reiterate the ostensibly settled law on regulating liquor trade. However, a practical problem was faced by the Court in harmonising the concept of ex-ante regulations with the rights under Article 19(1)(g) and the restrictions under Article 19(6) of the Constitution. In other words, the Court, was unable to put an ex-ante restriction on liquor trade under Article 19(6) of the Constitution, without having to recognise it as a right under Article 19(1)(g). The Court could not possibly recognise the right under Article 19(1)(g) because that would essentially defeat the entire concept of the doctrine of “Res Extra Commercium,” and thus, by way of necessary implication, without having recognized the right under Article 19(1)(g), there was no way the State could have imposed restrictions under Article 19(6) of the Constitution.

The scheme of Article 19 of the Constitution of India does not, in fact permit the imposition of ex-ante restrictions by the State. This is because, the freedom to carry on trade in any part of India is not circumscribed by morality or the vicious nature of the trade. It is only circumscribed and curtailed by an ex-post restriction on the freedom by way of a legislation.

A necessary counter to this line of argumentation was given by Justice S.R Das, when he averred, that an implication of discarding morality as a circumscribing factor would lead to a situation where criminal activities which have not yet been formally restricted will enjoy the protection of Article 19(1) of the Constitution.

Thus, this illustrates the two opposite ends of the morality spectrum which has left the Article 19 jurisprudence in India at crossroads. While, on one hand, if morality is taken as a restricting factor, it leads to an ex-ante restriction on trade of liquor. This, in turn necessarily implies its corresponding inclusion under Article 19(1)(g) of the Constitution, and subsequently requires such restriction to be reasonable, as per the mandate of Article 19(6) of the Constitution. On the other hand, if morality is not taken as a restricting factor, it opens up the floodgates to a situation where every criminal activity which is not expressly barred is protected under Article 19(1) of the Constitution.

C.    The Infringing of Civil Rights by the State Under the Garb of a Static Standard of Morality

One of the lesser debated questions on the doctrine of “Res Extra Commercium”is its inextricable link with the standard of morality prevailing in the society at a particular point of time. The Constituent Assembly, while drafting the Constitution was guided by the puritanical beliefs of the Indian society at that point of time. This, in turn led to the the introduction of Article 47 as a Directive Principle of State Policy into the Constitution. However, with the advancement of time, the standards of morality governing the society in general have changed. Thus, what was considered to be immoral in 1950, might not be immoral today. However, the doctrine of “Res Extra Commercium” conveniently allows the State to keep the standard of morality static and infringe the civil rights of the citizens without having to satisfy the test of reasonableness at all. Thus, there is an imperative need for the State to balance its welfare obligations with the civil rights of the stakeholders in liquor trade. Along with this, it also needs to be ensured that the State’s static standards of morality are not imposed on the liquor business while keeping in mind that an ex-ante restriction is not in consonance with the scheme of the Indian Constitution.

IV.          The way forward- Suggesting measures to address the jurisprudential gaps

As already discussed above, the state is under a positive obligation to balance the competing interests of its welfare obligations with the right of the liquor traders. Moreover, this balance needs to be achieved in a manner where the State is not in a position to impose its static standards of morality on the society. Furthermore, as discussed the doctrine of “Res Extra Commercium” furthers the proposition of having ex-ante restrictions on the rights under Article 19, thus inevitably promoting the doctrine of police powers in India. Therefore, the doctrine of “Res Extra Commercium” needs to be replaced by an ex-post restriction which is reasonable and does not open the floodgates to a situation which protects criminal activities merely because they have not been formally criminalised.

This balance can be achieved by importing two American concepts into the Indian jurisprudence. However, before that can be done, the usual caveats need to be reiterated that “when American decisions and doctrines are to be imported into the Indian Constitution, they need to be scrutinised with utmost caution before such import can take place.”[2]

The two American concepts which can be used to achieve this balance are the American Code of Good Practice which embodies the principle that although the citizens do not have the inherent fundamental right to trade in liquor, the State also has the limited privilege of regulating this trade, and not imposing a blanket ban on them altogether. This principle, when read along with the 4-pronged Hudson Test, can help in achieving the required balance between the competing interests mentioned above.

Before we proceed to put this into perspective, it is to be noted here that both of these concepts/doctrines had originally been evolved to regulate the advertisement of liquor. Therefore, the standard of their regulation is aimed at regulating commercial speech. However, as further analysis will show, the two doctrines, when read together, possess the capability to address the jurisprudential gaps which the doctrine of “Res Extra Commercium” has left in   India.

The Preamble to the Code of Good Practice necessarily implies that the liquor industry shall be allowed to regulate its own practices, and that the State enjoys a power of regulation over the it. The Hudson Test mandates that in order to be constitutional, the limitations on commercial speech should be able to satisfy the following  four pronged test:

1. “It should concern a lawful activity
2. the government should have a‘substantial’interest in the restriction
3. the regulation should directly advance the governmental interest asserted
4. the regulation should not be more than necessary to serve the interest”

Curating the Hudson Test to suit the Indian jurisprudential setup, the first and second conditions could be rephrased as follows:

1. “It should concern a lawful activity which is not otherwise expressly or impliedly barred by any penal law in force in the territory of India”
2. the government should have a‘substantial’ interest in the restriction and the restriction should have a proximate nexus with the object sought to be achieved.

 This, in turn ensures that the ex-post restriction on a Article 19(1)(g) right does not open the floodgates to a situation where patently criminal activities are given the protection of Article 19(1) of the Constitution.

The combined reading of the above two concepts ensures that while the liquor industry would be allowed to regulate its own practices, the State’s intervention and regulation on liquor trade will be limited to the extent of the four conditions of the Hudson Test. This, in turn harmonizes the interests of the State with those of the liquor traders. The fourth condition of the Hudson test concurrently ensures that the test of reasonableness is satisfied and the State’s static standard of morality cannot be imposed on the liquor industry arbitrarily. .

To put things into perspective, let us take an example. if the objective of the government is to prevent accidents on highways, the ban on the sale of liquor on the highways would imply a substantial governmental interest according to the second condition. Thus, if the government imposes a ban on the sale of liquor along National Highways across the State, the regulation will directly advance the governmental interest asserted, and subsequently be in consonance with the the third condition of the Hudson Test.

However, now if the government seeks to ban the sale of liquor across the state, without making a policy which seeks to serve a direct substantial interest and has a proximate nexus with the object sought to be achieved, the ban would violate the fourth condition of the Hudson test, and therefore be impermissible.

The debate on whether the doctrine of “Res Extra Commercium” has been beneficial for India or not, and whether it needs to be replaced with a set of ex-post reasonable restrictions is far from settled and it remains to be seen whether the State actually makes an attempt to balance and harmonize the competing interests which are at play here.

[1] 1 H.M. SEERVAI, CONSTITUTIONAL LAW OF INDIA: A CRITICAL COMMENTARY (4th Ed. 2002).

[2] Ibid. 232

The author is a student at WBNUJS, Kolkata