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Supreme Court of India
W.P. (C) No. 893/2019
M/s. Balaji Formalin Pvt. Ltd. & Anr.
…Petitioners
Versus
Union of India & Anr. …
Respondents
WRITTEN SUBMISSIONS ON BEHALF OF THE
PETITIONERS
A. Introduction
1. M/s Balaji Formalin Pvt. Ltd. (Petitioner No. 1) is a
private limited company duly registered company under
the Companies Act, 1956 with its office at Raigad District,
Maharashtra. Mr. Mukesh Kumar Gupta (Petitioner No.
2) is the Director of Petitioner No. 1.
2. The Petitioners are engaged in the business of
manufacturing of Formaldehyde and Paraformaldehyde,
which is further used as a raw material in the
manufacturing of Disinfectants, Pharmaceutical Drugs,
Resins, Ranitidine (Antacid) and various lifesaving drugs
(such as Amoxicillin, Metformin, etc.). The manufacturing
of these products requires the use of Methyl Alcohol,
commonly known as Methanol, as an essential raw
material. During which it is imperative that a minimum of
99.85% of pure / unadulterated Methanol is used as a raw
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ingredient, otherwise it would not be accepted by drug
manufacturers and downstream product manufacturers.
3. The Petitioners have a factory in Patalganga,
Maharashtra, and even in Gujarat, with an annual
turnover of approximately Rs. 195 crores. Moreover, the
Petitioners have also invested approximately Rs. 150
crores in terms of the land, plants and machinery, which is
functional 24 hours a day with approximately 250 workers
operating across three shifts a day.
B.Facts
4. All State Governments are empowered under Section 2 of
the Poisons Act, 1919 to regulate the possession for sale
and sale of any poison, in light of which the Government
of Maharashtra introduced the Maharashtra Poisons
Rules, 1972 on 03.07.1972 (pp. 45-61/WP). Methanol
was classified as a ‘Class-B’ poison under the Schedule to
these Rules (see #49 at p. 60) but was subsequently
removed from the list of poisons.
5. On 31.12.1991, there was a hooch tragedy (death of
persons after consuming contaminated / spurious liquor)
at Chhaya Bar, Andheri, Maharashtra where 93 persons
died after consuming an illicit brew, which was later
discovered to have methanol mixed into the brew. In light
of such a tragedy, the Government of Maharashtra
appointed the Parthasarthy Committee led by Mr. P.R.
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Parthsarthy, Addl. Director General of Police to inter alia
investigate the causes for the liquor tragedy and suggest
preventive measures.
6. The Parthsarthy Committee submitted its Report (pp. 62-
141/WP) and inter alia recommended that Methanol be
mixed with substances to alter its colour, odour and taste,
so that even if it were to be mixed in an illicit brew, that
brew would be rendered undrinkable (See #6 at p. 65/WP
and #4.4.9 at p. 117/WP). This Report also stated that
the addition of materials might disturb sensitive industrial
processes, therefore, a decision must be preceded by a
detailed interaction with the industries (see p. 119/WP).
7. In 2006, a draft notification to the Maharashtra Poisons
Rules, 1972 was published by the Government of
Maharashtra which inter alia suggested the addition of a
bitterant and colourant to Methanol, in the event that the
same is sold by a licensee under the said Rules. This
notification also invited objections from the public, to
which the Indian Chemical Council (an umbrella
organisation of chemical manufacturers and traders)
made its representation before the Government of
Maharashtra on 07.12.2006 raising concerns regarding
the proposed adulteration of Methanol (pp.
142-152/WP).
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8. The Medical Education and Drugs Department,
Government of Maharashtra without considering the
objections and concerns of the affected parties issued
Notification No. DRG 2006/1006/C.R.659/06/DRUGS-2
dated 21.01.2011 which amended the Maharashtra Poison
Rules, 1972 (Impugned Notification at pp.
158-159/WP).
9. Under the impugned notification dated 21.01.2011, Rules
18-A, 18-B and 18-C were introduced to the for its
regulation:
a. Rule 18-A (1) provides that, at the stage of sale, the
purchaser’s use of the substance must be verified by
the seller. However, verification is to be carried out
with reference to the “license issued to the purchaser
by the Licensing Authority in Form A.”
b. Rule 18-A (2) imposes a complete ban on the sale of
methanol in all forms in the State, except for the
manufacture of drugs as certified by the local food and
drugs administration; resulting in the only permissible
form of Methanol being that which is mixed with one
gram of colouring agent (Methylene Carmine) and four
grams of denaturing agent (Denatonium Saccharide) to
every hundred litres of Methanol.
c. Rule 18-B provides for a penal consequence of
confiscation for mere possession of methanol without a
valid license under Form A.
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d. Rule 18-C provides that persons engaged in whatever
capacity who are already in the business of methanol
are required to obtain a license under the Rules within
90 days of the notification.
10. The Petitioners are aggrieved by the issuance of the
impugned notification to the extent that it necessitates the
addition of methylene carmine (colouring agent) and
denatonium saccharide (denaturing agent) to methanol,
which is detrimental to the Petitioners’ business since
these adulterants will render methanol unusable for
manufacturing of inter alia Formaldehyde and
Paraformaldehyde, since it would not be accepted by drug
manufacturers and downstream product manufacturers
owing to its changed composition.
11. Aggrieved by the same, the Indian Chemical Council
challenged the impugned notification as ultra vires before
the Hon’ble High Court of Bombay in W.P. No. 2153/2012,
at this stage, several other manufacturers that used pure
Methanol also filed W.P. No.2535/2012. The Hon’ble High
Court of Bombay had granted interim reliefs by staying
the effect of the impugned notification vide Order dated
24.02.2012 in W.P. (L) No. 431/2012 (p. 175/WP).
12. These writ petitions thereafter came up for final
hearing and were dismissed vide common judgement
dated 03.05.2019 which erroneously held that Rule 18A
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(2) of the Maharashtra Poison Rules, 1972 as inserted by
the impugned notification does not fall foul of the
executive’s legislative competence. It also held that there
is no extra-territorial operation of the impugned
notification (pp. 181-206/WP).
13. The Petitioners therefore filed the present writ
petition under Article 32 of the Constitution before this
Hon’ble Court, which was pleased to issue notice and stay
the operation of the impugned notification on 19.07.2019,
as per the Hon’ble High Court’s orders which had held the
field since 2012.
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C. Submissions
I. The importance of Methanol, and the detrimental effects of
the impugned notification.
Methanol has largescale applications in the chemical
industry, even as fuel substitutes and such applications are
heavily dependent on the utilization of methanol in its
purest form. For instance, in the Petitioner’s case, for the
manufacture of downstream products such as formaldehyde
and paraformaldehyde, methanol of 99.85% minimum purity
is required.
The impugned notification specifically sub-rule 18-A (2)
imposes a complete ban on sale of methanol in all but one
form of methanol (after adding methylene carmine and
denatonium saccharide) within the State of Maharashtra.
The only exception provided is for sale for the manufacture
of drugs as certified by the local Food and Drugs
Administration. Presumably, the object of the impugned
provisions is to regulate the use of methanol by rendering it
unfit for human consumption, in view of the various hooch
liquor tragedies in the state of Maharashtra.
The Petitioner sources methanol locally and through imports
for manufacture of downstream products and is not engaged
in the sale of methanol. The newly inserted Rule 18-A (1)
provides that sale of methanol within Maharashtra shall
only be made to a purchaser holding a license in Form -A.
Form-A as per Rule 4 is issued only to persons “desiring to
possess for sale or sell any poison”. The Petitioner falls in
neither of the aforesaid categories and as such Rule 18-A(1)
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imposes a complete ban on the Petitioner and other
downstream product manufacturers from obtaining
methanol locally.
Insofar as import of methanol into the State of Maharashtra
by the Petitioner for the purpose of use in manufacture is
concerned, the business of the Petitioner is detrimentally
affected by the newly inserted Rule 18-B. The Petitioner
submits that the impugned notification which introduces a
penal provision providing for confiscation of methanol for
mere possession without a license under Form A is ultra
vires the parent Act, viz. the Poisons Act, 1919. Section 2 of
the Act is an enabling provision under which states may
make rules regulate the possession for sale and sale of
poisons. Inasmuch Rule 18-B covers within its ambit
possession of methanol for any purpose, including those
other than for sale, it is ultra vires Section 2 of the Act.
The Petitioners submit that while the object sought to be
achieved viz. the prevention of the use of methanol in the
production of illicit liquor may be proper, the measure
adopted by introducing a blanket ban on sale of methanol in
all, but one form has no rational connection to the purpose.
Further, the measure inasmuch as it affects legitimate
business that depend on pure forms of methanol in order to
prevent a mischief that operates outside of a regulatory
framework viz. illicit liquor manufacture, is unnecessary.
The impugned notification is also in contravention of a
central legislation introduced in 2016, namely the ‘Bureau
of Indian Standards Act, 2016’ which prescribes certain
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standards for various goods including Methanol. As far as
Methanol is concerned, it is governed under Indian
Standard (IS): 517-1986 issued by the Bureau of Indian
Standards, and its requirement stipulates that “Methanol
shall be a clear and colorless liquid, free from matter in
suspension”, furthermore, the purity level of Methanol is
also prescribed as 99.85%. This Court has consistently
settled the principle that when there is a conflict between a
State legislation and a Central legislation, the Central
legislation must prevail.
II. The impugned notification infringes the fundamental rights
of the Petitioners guaranteed under the Constitution of
India.
The impugned notification operates as a de facto prohibition
on the sale of all but one form of methyl alcohol, directly
infringing the fundamental rights of the Petitioners under
Articles 14, 19 and 300-A of the Constitution of India, as laid
out here below:
a. Insofar as Article 14 of the Constitution of India is
concerned, the Petitioners assail the notification on the
ground of manifest arbitrariness and the ground of
discrimination. Certain drugs that are certified by the
F&D authority are exempt presumably being an
exception for the pharma industry. As stated earlier the
petitioners’ products are also used in the production of
various drugs, including vaccines making the
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Petitioners also a part of the pharma industry, however,
falling outside the exception.
b. The impugned provisions in Rule 18-A (2) provides for
an exception to only those drugs certified by the local
Food and Drugs Administration. The Petitioner states
that the downstream products of the Petitioner
manufactured from pure methanol has application in
pharmaceutical industry. However, since these
products are not drugs that can be certified by the
local Food and Drug Administration, the Petitioner is
arbitrarily denied access to methanol in its purest
form. The classification sought to be imposed by the
impugned provision is unreasonable and has no nexus
to the object sought to be achieved, and as such, it is in
violation of Article 14 of the Constitution of India.
c. The Petitioners also submit that considering the wide
industrial and other applications of the methanol, the
de facto prohibition of all but one form of methanol
(which is impure) with the object of regulating its use
in illicit liquor is akin to using a sledgehammer to crack
a nut. On proportionality as well, the notification falls
foul of Article 19.
d. The impugned notification has been passed without
reference to the extensive application of methanol in
those industries other than the pharmaceutical
industry. The impugned notification in imposing a
complete ban on all but one form of methanol is
disproportionate, excessive and renders nugatory the
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fundamental right of the Petitioner under Article 19(1)
(g) of the Constitution of India.
e. Rule 18-B inasmuch as it seeks to deprive the
Petitioner of methanol sourced and stored for the
purpose of manufacture is in violation of Article 300-A
of the Constitution of India. Rule 18-B inasmuch as it
goes beyond the ambit of Section 2 of the Poisons Act,
1919 is ultra vires and an invalid law and as such any
confiscation of the Petitioner’s property without the
authority of a valid law is in violation of Article 300-A.
This Hon’ble Court has held that for a restriction on the
exercise of the fundamental right guaranteed under
Article 19(1)(g) of the Constitution of India to be
proportionate it must meet the following tests:
i. The restriction must be intended to achieve a
proper purpose,
ii. The measures taken to achieve such a purpose
must be rationally connected to the purpose;
and,
iii. The measures must be necessary [Modern
Dental College and Research Centre v. State of
Madhya Pradesh & Ors., (2016) 7 SCC 353].
The impugned notification if allowed to stand will operate
as a complete prohibition on the business of the
Petitioners who are manufacturing downstream products
using methanol as a raw material. Due to the nature of the
manufacturing process and the deleterious impact on the
process by using impure methanol, the notification will
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have the effect of bringing the operations of the
Petitioners in the State to a stand-still.
