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Now, the total capacity of all the 9 distilleries in- cluding Nowgaon Distillery and Ratlam Alcohol Plant was only 203 lacs proof litres but even this capacity of production was not realised and the actual production fell for short of this capacity. The total production of country liquor from all the 9 distilleries in the year 81-82 came to only 129 lacs proof litres and though in the year 1982-83 there was some improvement, the total production did not go beyond 171 lacs proof litres. The result was short supply on many occasions leading to loss of licence fee as well as excise duty by the State Government. The State Government, in order to meet the requirement of the consuming public, had actual- ly to purchase liquor from other States at a higher price. Moreover, the consumption of liquor was growing from year to year and it was estimated that by the year 1991, the total consumption to country liquor would be likely to be in the neighbourhood of 482.36 lacs proof litres and by the turn of the century it was expected to be in the neighbourhood of 1696.80 lacs proof litres. Obviously, the existing 9 dis- tilleries were totally inadequate to meet this growing demand for country liquor. Furthermore, the buildings in which these distilleries were housed had become old and were in a state of disrepair and it was not easy for the State Government to maintain them in good condition without incur- ring heavy expenditure every year. The plant and machinery were also old and antiquated and it was necessary to instal new and modern plant and machinery having increased capacity 'to manufacture country liquor. Moreover, it seems that though at the time of construction, these distilleries were away from the city or town, what had happened was that with the growth of population and haphazard and unplanned urban development, these distilleries had now come to be in the heart of the city or own and they created health hazards and pollution problems. There was a demand from all sections of the public living in surrounding area to move the distiller- ies away in order to avoid water and environmental pollu- tion. It was in these circumstances, when the mind of the State Government was already exercised in respect of these matters that an application was made by M.P. Distillers' Association in July 1983 for transferring these distilleries to private ownership. The members of the M.P. Distillers' Association who were old distillers holding D-2 licence in respect of these distilleries offered to invest their own funds in the construction of new buildings and installation of latest plant and machinery with capacity to produce more country liquor in conformity with the standards laid down by M.P. Eradication of Pollution Board for Removal of Polluted water by constructing lagoons, etc., provided they were assured D-1 licence for the area attached to their respective distilleries.

This application of M.P. Distillers Association was examined by the State Government at different levels. The Excise Commissioner submitted his opinion to the Separate Revenue Department stating that "it would be more appropri- ate to hand over the Government distilleries to private ownership because thereby the Government will get additional income from the sale of buildings, land, etc., of the dis- tilleries and at the same time the distillers will pay more heed to the distilleries buildings, etc., due to transfer of the distilleries to private ownership and they will instal the latest machinery and implements as a result of which there will be an increase in liquor production and supply of liquor as per requirement of the State Government and at the same time they will be liable for solving the problem of pollution." The Revenue Department, after obtaining the Report from the Excise Commissioner examined the matter carefully from various aspect. But since several points required consideration such as whether the distilleries should be transferred to private ownership during the period of the subsisting contracts, and if so, what would be the legal consequences and whether the distilleries should be allowed to continue at the same place or should be trans- ferred to new sites in view of the problem of pollution and the question of transfer of distilleries to private owner- ship was itself an important policy issue, the Separate Revenue Department referred the matter to the Chief Minister with a suggestion that a high level committee should be appointed for the purpose of examining the various issues. The State Government accordingly under the orders of the Chief Minister constituted a Cabinet SubCommittee consisting of Ministers of Separate Revenue Department, Major and Minor Irrigation Department, Commerce and Industry Department and Rehabilitation and Environment Department and four highly placed officers, namely, Chief Secretary, Secretary, Sepa- rate Revenue Department, Secretary Finance Department and Excise Commissioner were directed to assist the Cabinet SubCommittee. The Separate Revenue Department submitted a note for the consideration of the Cabinet Sub-Committee and this note formulated various issues arising for considera- tion and set-out various aspects relating to these issues so as to form the basis for. discussion. These issues may be summarised as follows:

tilleries for use of Mahuwa product in the State?

(5) Determination and question of fixing prices of liquor under the new management?

The Cabinet Sub-Committee at its meeting held on 27th June 1984 considered these issues and after discussion came to the conclusion that in view of the problem of pollution, it should first of all be examined "as to which distillery is to be transferred from the existing site and which distill- ery is to be maintained at the present site" and in order to determine this question, the Cabinet Sub-Committee consti- tuted a Committee headed by Shri Vijayvargi Special Secre- tary, Separate Revenue Department. The Vijayvargi Committee was also authorised to select new sites for the distilleries which in its opinion required to be removed from the exist- ing sites on account of the problem of pollution. The Vijay- vargi Committee thereafter made spot inspection of all the 9 distilleries in the State and submitted its report to the Cabinet Sub-Committee on 18th July 1984. This Report was a detailed and exhaustive Report and it was pointed out in this Report that 5 distilleries, namely, Bhopal, Ujjain, Badwaha, Seoni and Bhilai were required to be removed to new sites on account of the problem of pollution, but so far as the remaming two distilleries at Gwalior and Dhar were concerned, it was not necessary to remove them from their present sites, though in regard to Dhar Distillery, it was necessary to fix lagoon plant for removing pollution. The Vijayvargi Committee also stated in its Report that it was necessary to make arrangement in regard to polluted water thrown out from Nowgaon and Ratlam Distilleries. The Cabinet Sub-Committee at its meeting held on 21st July 1984 considered the Report of the Vijayvargi Committee and decided to accept it wholly. The Cabinet Sub-Committee directed that an estimate of the cost involved in setting up the Bhopal, Ujjain, Badwaha, Seoni and Bhilai distilleries at the new sites should be worked out by the Excise Commis- sioner as also by the M.P. Consultancy Organisa-

But, while considering the applicability of Article b, in such a case, we must bear in mind that, having regard to the nature of the trade or business, the Court would be slow to interfere with the policy laid down by the State Govern- ment for grant of licences for. manufacture and sale of liquor. The Court would, in view of the inherently perni- cious nature of the commodity allow a large measure of latitude to the State Government in determining its policy of regulating, manufacture and trade in liquor. Moreover, the grant of licences for manufacture and sale of liquor would essentially be a matter of economic policy where the court would hesitate to intervene and strike down what the State Government has done, unless it appears to be plainly arbitrary, irrational or mala fide. We had occasion to consider the scope of interference by the Court under Arti- cle 14 while dealing with laws relating to economic activi- ties in R.K. Garg etc. v. Union of India & Ors. etc. [1982] 1 SCR 947. We pointed out in that case that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc. We observed that the legislature should be ,allowed some play in the joints because it has to deal with complex problems which do not admit of solution through any doctrinaire or strait-jacket formula and this is particular- ly true in case of legislation dealing with economic mat- ters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature. We quoted with approval the following admonition give by Frankfurter, J. in Morey v. Dond, (354 US 457):