Punjab Excise Amendment On Liquor Policy: Can Legislative Act Nullify Judicial Order?

The Supreme Court order prohibiting sale of liquor within 500 metres from national and state highways has come as a shocker to many states.

When the order was clarified during last March to state that the prohibition was not restricted to mere retail vending of liquor but applied also to bars and pubs, the shock was compounded; quite understandably.

Liquor sale being the priced cash cow for revenue generation of most states, the prohibition was not taken that well, notwithstanding the welfare concerns motivating such prohibition.

So, attempts to somehow circumvent the order through indirect methods were initiated by some states.

Reportedly, the Maharashtra Government denotified some highways, so as to escape from the rigour of the Supreme Court order.

The Kerala Government attempted to open bars along some stretches of highways, on the strength of some observations of Kerala High Court, which invited the ire of the high court as the court felt that some casual observations were being misinterpreted.

But the most drastic step was taken by Punjab by introducing a legislative amendment to nullify the Supreme Court.

The preamble of the Act amending the Punjab Excise Act makes specific reference to the Supreme Court order, and says that the amendment is to strictly implement the prohibition of liquor vending along highways. However, it is also stated that such prohibition would not apply to supply of liquor for consumption within premises of bars and hotels. Sections 26A(3) introduced in the Act says as follows :

Notwithstanding anything contained in any judgment, decree or order of any court, tribunal or authority, every club, hotel, restaurant or any notified place having a licence shall be entitled to engage in the supply of liquor to members, guests or other persons for consumption of such liquor within the premises of such club, hotel, restaurant or notified place, irrespective of whether such club, hotel restaurant or notified  place is located on or near any National or State highway.

Further, the newly introduced Section 26A(4) states that “Notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, any licence issued to any club, hotel, restaurant or other notified place for the sale of liquor shall be deemed to have been and always be deemed to have been issued for the supply of liquor and all relevant provisions of this Act and the rules made thereunder will continue to apply as they did for sale of liquor.”

As it is apparent, Section 26A(3) is an open declaration which nullifies the Supreme Court order, insofar as it applied to bars and hotels. Section 26A(4) is intended to clothe all previously issued licenses for supply of liquor in bars, hotels etc. with legal sanctity.

Now the moot question is whether legislature can openly and directly nullify a court order by stating that the order shall have no effect. The answer is ‘no’.

The legislature cannot by a bare declaration, without anything more, directly overrule, reverse or override a judicial decision at any time. The following observations from Madan Mohan Pathak vs. Union of India AIR 1978 SC 803 are apposite:

In exercising legislative power, the Legislature by mere declaration, without anything more, cannot directly overrule, revise or override a judicial decision. It can render judicial decision ineffective by enacting valid law on the topic within its legislative field fundamentally altering or changing its character retrospectively. The changed or altered conditions are such that the previous decision would not have been rendered by the Court, if those conditions had existed at the time of declaring the law as invalid.

It means that if the court says that a particular action ‘A’ cannot be done, then the legislature is not competent to state in a subsequent legislation that ‘A’ can be done.

There is an instance where Tamil Nadu attempted such an adventure. In a writ, the Madras High Court had held that the state had no power to reassess the escaped turnover under the Entertainment Tax Act, 1939. In 1966, an amendment Act containing a validating provision was introduced by S.7 thereof. The amended section merely stated that all reassessments done under the Entertainment Tax Act were valid, irrespective of any judgment stating to the contrary.  The Supreme Court had held that the said section did not change the law retrospectively. It attempted to validate invalid assessments and to overrule the decision of the high court. S.7 was, therefore, held invalid (State of Tamil Nadu vs M Rayappa Gounder, AIR 1971 SC 231).

But at the same time, it does not mean that the legislature is totally powerless to overcome a judicial decision.

It is always open to the legislature to re-enact a law, by removing or curing the vice or defect originally existed, which led to the law being invalidated by the court. For example, in Royappa Gounder case, had the legislature attempted to confer power to reassess on the government with retrospective effect, the reassessment, which was invalidated by the court, could have been saved.

However, the legislature simply stated that the reassessments would be valid, regardless of court orders, without adding anything further to cure the original deficiency in law.  This concept is explained well in Parthiv Cotton Mills vs. Broach Borough Municipality AIR 1970 SC 172:

Validation of a tax so declared illegal may he done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively valid and legal taxing provisions and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the legislature gives its own meaning and interrelation of the law under which the tax was collected and by legislative fiat makes the new meaning binding upon Courts. The legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the Court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the legislature has the power over the subject matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject matter and whether in making the validation it removes the detect which the Courts had found in the existing law.

So, the legislature can neutralise the effect of a judgment by altering the legal basis of the judgment, or by curing the defect in the law. But, the legislature cannot directly invalidate a judgment by declaring that the judgment is not applicable. The amendment attempted by the Punjab legislature appears to be falling under the latter category.

If it is shown as an attempt to interfere with the judicial process, such law may be invalidated being in breach of doctrine of separation of powers. This was declared by a constitutional bench of the Supreme Court in State of Kerala vs. State of Tamil Nadu AIR 2014 SC 2407. Therein, the Kerala Legislature enacted the Kerala Irrigation and Water Conservation (Amendment) Act 2003, in order to nullify an earlier Supreme Court order which permitted the water level of Mullaperiyar dam to be maintained at 142 feet. The amendment Act stated that water level should not be raised above 136 feet. The court invalidated the amendment. In the light of these principles, it is doubtful if the Punjab Act would stand judicial scrutiny.

As a post-script, one is left wondering whether the Supreme Court overstepped its boundaries while passing the prohibitory order. Was the court stepping into the field of executive by ordering prohibition of sale, with omnibus directions applicable to all states, without being really cognisant of the distinct and diverse ground realities prevalent in each state? Is the legislative over-step a counter to such judicial over-step? These issues will surely come up for consideration before the High Court of Punjab and Haryana, which is now examining the validity of the amendment.

Manu Sebastian is a Lawyer practising in High Court of Kerala.

[The opinions expressed in this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of LiveLaw and LiveLaw does not assume any responsibility or liability for the same].