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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.10836 OF 2014 [Arising out of SLP (Civil) No.30832 OF 2011]

Narinder S. Chadha & Ors.                                        … Appellants  

VERSUS

Municipal Corporation of                                              … Respondents  Greater Mumbai & Ors.  

WITH

CIVIL APPEAL NOS.10837-10839 OF 2014 [Arising out of SLP (Civil) Nos. 31048-31050 OF 2011]

WITH

CIVIL APPEAL NO.10840 OF 2014 [Arising out of SLP (Civil) No.33140 OF 2011]

WITH

CIVIL APPEAL NOS.10841-10843 OF 2014 [Arising out of SLP (Civil) Nos.33141-33143 OF 2011]

WITH

CIVIL APPEAL NOS.10844-10845 OF 2014 [Arising out of SLP (Civil) Nos.19247-19248 OF 2012]

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AND

CIVIL APPEAL NO.10846 OF 2014 [Arising out of SLP (Civil) No.8143 OF 2014]

J U D G M E N T  

R.F. Nariman, J.

1. Leave granted.

2. In this batch of matters, we are concerned with the Municipal  

Corporations of various cities implementing the Cigarettes and other  

Tobacco Products (Prohibition  of  Advertisement  and  Regulation  of  

Trade and Commerce, Production, Supply & Distribution) Act, 2003.  

In the first case before us, namely, civil appeal arising out of SLP(C)  

No.30832  of  2011  –  Narinder  S.  Chadha  and  others  v.  Municipal  

Corporation  of  Greater  Mumbai  and  others,  a  judgment  of  the  

Bombay  High  Court  dated  11th August,  2011  disposed  of  a  writ  

petition in which several wide ranging contentions were urged, and  

ultimately decided that the impugned circular dated 4th July, 2011 only  

implemented the Cigarettes and other Tobacco Products (Prohibition  

of  Advertisement  and  Regulation  of  Trade  and  Commerce,  

Production, Supply & Distribution) Act, 2003  (hereinafter referred to  

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as  the  “Cigarettes  Act”)  and the  Prohibition of  Smoking in  Public  

Places  Rules,  2008  (hereinafter  referred  to  as  the  “Rules”)  and  

dismissed  the  challenge  to  the  said  circular.   Similarly,   in  cases  

arising from Chennai and Ahmedabad, similar circulars/notices were  

under  challenge  and  in  both  the  impugned  judgments  in  SLP(C)  

Nos.19247-19248  of  2012  (Temperature  etc.  v.  Deputy  Police  

Commissioner, Zone-1 Ahmedabad and Others) and SLP(C) No.8143  

of 2014 (Robustaa (Hyglow Café) v. The Commissioner Corporation  

of Chennai and others), the Gujarat and Madras High Courts followed  

the  Bombay  High  Court  judgment  dated  11th August,  2011  and,  

consequently,  dismissed  the  writ  petitions  filed  before  them.   It  is  

from these three judgments that appeals have been preferred.

3. Mr. C.U. Singh, learned senior advocate appearing on behalf of  

the appellants in the civil appeal arising out of SLP(C) No.30832 of  

2011 made wide ranging arguments on the genesis of the Cigarettes  

Act and the fact that it was legislation made under Entry 52 List I read  

with Entry 33 List III of the 7th Schedule to the Constitution of India.  

He cited Godawat Pan Masala Products I.P. Ltd. & Anr. v. Union  

of  India  &  Ors., (2004)  7  SCC  68,  particularly  the  concluding  

paragraph  77  (6)  stating  that  the  Cigarettes  Act  is  a   special  Act  

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dealing only with tobacco and tobacco products, while the Prevention  

of Food Adulteration Act, 1954 is general and must therefore yield to  

the Cigarettes Act.  He also cited Bajinath Kedia v. State of Bihar  

& Ors.,  (1969) 3 SCC 838 for the proposition that once the requisite  

declaration under Section 2 of the Cigarettes Act is made, the State  

Government is denuded of any power to legislate in the field occupied  

by the Cigarettes Act.  He also cited Paluru Ramakrishnaiah & Ors.  

v. Union of India & Anr., (1989) 2 SCC 541 for the proposition that  

executive instructions and conditions cannot be contrary to statute or  

statutory rules.   Ultimately,  however,  he contended that there were  

three features of the impugned circular which required to be struck  

down being ultra vires the Cigarettes Act and the Rules made therein.  

4. The first condition did not allow a licensee of a restaurant to  

keep or sell or provide any tobacco or tobacco related products in any  

form in the licenced premises.  This, according to him, was contrary  

to Section 6 of  the Cigarettes  Act and the Rules made thereunder.  

Further, smoking areas which are to be used only for the purpose of  

smoking cannot have any apparatus designed to facilitate smoking.  

This in his respectful submission puts a bar on Hookah smoking and is  

also  outside  the  scope  of  the  Cigarettes  Act  read  with  the  Rules.  

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Further, smoking area dimensions laid down in paragraphs (D) and  

(E) of Condition No.35 were also conditions which one did not find  

either  in  the  Cigarettes  Act  or  in  the  Rules  made  thereunder  and,  

hence,  were  ultra  vires.  Other  learned counsel  appearing for  other  

appellants and interveners adopted the arguments of Shri Singh.   

5. Mr.  R.P.  Bhatt,  learned  senior  counsel  appearing  for  the  

Municipal Corporation of Greater Mumbai argued before us that on a  

true reading of the Cigarettes Act and the Rules made thereunder, all  

that the added conditions did was to implement the Cigarettes Act and  

the Rules and on a true construction of the Act and Rules nothing was  

really  added  to  what  is  already  there.  Miss  Pinky  Anand,  learned  

Additional  Solicitor  General  appearing  on  behalf  of  the  Union,  

broadly supported Mr. Bhatt’s stand.   

6. In  view of  the  rival  contentions,  the  point  that  needs  to  be  

decided in this case is in a narrow compass.  We have basically to see  

whether the impugned circular dated 4th July, 2011 travels outside the  

Cigarettes Act and the Rules or merely seeks to implement the said  

Act and the Rules as they stand.   

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7. For a determination of this case, it will be necessary to set out  

the relevant statutory provisions. First, the Cigarettes Act-  

“Section 3- Definitions. - In this Act, unless the  context otherwise requires,-

(k)  “production”,  with  its  grammatical  variations  and  cognate  expressions,  includes the making of  cigarettes,  cigars, cheroots, beedis, cigarette tobacco, pipe tobacco,  hookah  tobacco,  chewing  tobacco,  pan  masala  or  any  chewing material having tobacco as one of its ingredients  (by whatever name called) or snuff and shall include-

(i) Packing, labeling or re-labelling, of containers;

(ii)  Re-packing from bulk packages  to  retail  packages;  and

(iii)  The  adoption  of  any  other  method  to  render  the  tobacco product marketable;

(l) “public place” means any place to which the public  have  access,  whether  as  of  right  or  not,  and  includes  auditorium,  hospital  buildings,  railway  waiting  room,  amusement  centres,  restaurants,  public  offices,  court  buildings,  educational  institutions,  libraries,  public  conveyances  and the like which are  visited by general  public but does not include any open space;

(m) “sale”, with its grammatical variations and cognate  expressions, means any transfer of property in goods by  one person to another, whether for cash or on credit, or  by way of exchange, and whether wholesale or retail, and  includes  an  agreement  for  sale,  and offer  for  sale  and  exposure for sale;

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(n) “smoking”, means smoking of tobacco in any form  whether  in  the  form  of  cigarette,  cigar,  beedis  or  otherwise with the aid of a pipe, wrapper or any other  instruments;

(p) “tobacco products” means the products specified in  the Schedule.”

“THE SCHEDULE [See Section 3(p)]

1. Cigarettes

2. Cigars

3. Cheroots

4. Beedis

5. Cigarette tobacco, pipe tobacco and hookah tobacco

6. Chewing Tobacco

7. Snuff

8. Pan masala or any chewing material having tobacco as  one of its ingredients (by whatever name called).

9. Gutka

10. Tooth powder containing tobacco.”

“Section 4. Prohibition of smoking in a public place.- No person shall smoke in any public place:

Provided that in a hotel having thirty rooms or a  restaurant  having  seating  capacity  of  thirty  persons  or  more  and  in  the  airports,  a  separate  provision  for  smoking area or space may be made.

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Section 6.  Prohibition on sale  of  cigarettes or other  tobacco  products  to  a  person  below  the  age  of  eighteen  years  and  in  particular  areas.-  No  person  shall sell, offer for sale, or permit sale of, cigarette or any  other tobacco product-

(a) to any person who is under eighteen years of age, and

(b) in an area within a radius of one hundred yards of any  educational institution.

Section 21. Punishment for smoking in certain places.-  (1) Whoever contravenes the provisions of section 4 shall  be  punishable  with  fine  which  may  extend  to  two  hundred rupees.

(2) An offence under this section shall be compoundable  and  shall  be  tried  summarily  in  accordance  with  the  procedure  provided for  summary trials  in  the  Code  of  Criminal Procedure, 1973 (2 of 1974).

Section 24.  Punishment  for  sale  of  cigarette  or  any  other tobacco products in certain places or to persons  below the age of eighteen years.- (1) Any person who  contravenes the provisions of section 6 shall be guilty of  an offence under this Act and shall be punishable with  fine which may extend to two hundred rupees.

(2) All offences under this section shall be compoundable  and  shall  be  tried  summarily  in  accordance  with  the  procedure  provided for  summary trials  in  the  Code  of  Criminal Procedure, 1973 (2 of 1974).

Section 31. Power of the Central Government to make  rules.- (1) The Central Government may, by notification  in  the  Official  Gazette,  make  rules  to  carry  out  the  provisions of this Act.

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(2) Without prejudice to the generality of the foregoing  power,  such  rules  may  provide  for  all  or  any  of  the  following matters, namely: -

(a) specify the form and manner in which warning shall  be given in respect of cigarettes or other tobacco products  under clause (o) of section 3;

(b)  specify  the  maximum permissible  nicotine  and  tar  contents in cigarettes or other tobacco products under the  proviso to sub-section (5) of section 7;

(c)  specify the manner  in which the specified warning  shall be inscribed on each package of cigarettes or other  tobacco  products  or  its  label  under  sub-section  (2)  of  section 8;

(d) specify the height of the letter or figure or both to be  used in specified warning or to indicate the nicotine and  tar contents in cigarettes or other tobacco products under  section 10;

(e) provide for the manner in which entry into and search  of  any premises is to be conducted and the manner in  which the seizure of any package of cigarettes or other  tobacco products shall be made and the manner in which  seizure list shall be prepared and delivered to the person  from whose custody any package of cigarettes or other  tobacco products has been seized;

(f) provide for any other matter which is required to be,  or may be, prescribed.

(3) Every rule made under this Act and every notification  made under section 30 shall be laid, as soon as may be  after it is made, before each House of Parliament, while it  is in session, for a total period of thirty days which may  be comprised in one session or in two or more successive  

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sessions,  and  if,  before  the  expiry  of  the  session  immediately  following  the  session  or  the  successive  session  aforesaid,  both  Houses  agree  in  making  any  modification in the rule or  notification or  both Houses  agree that the rule or notification should not be made, the  rule  or  notification  shall  thereafter  have  effect  only  in  such modified form or be of no effect, as the case may  be; so, however, that any such modification or annulment  shall  be  without  prejudice  to  the  validity  of  anything  previously done under that rule or notification.”

The Prohibition of  Smoking in  Public  Places  Rules,  2008 are  also  

relevant.

“2. Definitions.-In  these  rules,  unless  the  context  otherwise requires,-

(d) “public place” defined in Section 3(1) of the Act shall  also  include  work  places,  shopping  malls,  and  cinema  halls.  

(e) "smoking area or space" mentioned in the proviso to  Section 4 of the Act shall mean a separately ventilated  smoking room that-

(i) is physically separated and surrounded by full height  walls on all four sides;  

(ii)  has an entrance with an automatically closing door  normally kept in close position;

(iii) has an air flow system, as specified in schedule I,

(iv)  has  negative  air  pressure  in  comparison  with  the  remainder of the building.

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(f) Words and expressions used herein and not defined in  these  rules  but  defined  in  the  Act  shall  have  the  meanings, respectively, assigned to them in the Act.

3. Prohibition of smoking in a public place.- (1) The  owner,  proprietor,  manager,  supervisor  or  in  charge of  the affairs of a public place shall ensure that:

(a)  No  person  smokes  in  the  public  place (under  his  jurisdiction/implied).

(b)  The  board  as  specified  in  schedule  II  is  displayed  prominently at the entrance of the public place, in case  there are more than one entrance at each such entrance  and conspicuous place(s) inside. In case if there are more  than one floor, at each floor including the staircase and  entrance to the lift/s at each floor.

(c)  No  ashtrays,  matches,  lighters  or  other  things  designed to facilitate smoking are provided in the public  place.

(2)  The  owner,  proprietor,  manager,  supervisor  or  incharge of the affairs of a public place shall notify and  cause  to  be  displayed  prominently  the  name  of  the  person(s)  to  whom  a  complaint  may  be  made  by  a  person(s)  who  observes  any  person  violating  the  provision of these Rules.

(3) lf the owner, proprietor, manager, supervisor or the  authorized officer of a public place fails to act on report  of  such  violation,  the  owner,  proprietor,  manager,  supervisor or the authorized officer shall be liable to pay  fine equivalent to the number of individual offences.

4. Hotels, Restaurants and Airports. – (1) The owner,  proprietor, manager, supervisor or in-charge of the affairs  of  a  hotel  having  thirty  or  more  rooms  or  restaurant  

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having seating capacity of thirty persons or more and the  manager of the airport may provide for a smoking area or  space as defined in rule 2(e).  

(2) Smoking area or space shall not be established at  the entrance or exit of the hotel, restaurant and the airport  and shall be distinctively marked as “Smoking Area” in  English and one Indian language, as applicable.

(3) A smoking area or space shall be used only for the  purpose  of  smoking  and  no  other  service(s) shall  be  allowed.  

(4) The owner, proprietor, manager, supervisor or in- charge  of  the  affairs  of  a  hotel  having  thirty  or  more  rooms  may  designate  separate  smoking  rooms  in  the  manner prescribed as under:

(a) all  the  rooms  so  designated  shall form a separate section in  the same floor or wing, as the  case may be.  In case of more  than one floors/ wings the room  shall be in one floor/wing as the  case may be.

(b) all  such  rooms  shall  be  distinctively  marked  as  “Smoking  rooms”  in  English  and  one  Indian  language,  as  applicable.  

(c) the  smoke  from  such  room  shall  be ventilated outside and  does not infiltrate/permeate into  the  non-smoking  areas  of  the  hotel including lobbies and the  corridors.”

8. The  Cigarettes  Act  was  really  in  implementation  of  World  

Health Assembly Resolutions and was enacted to put a total ban on  

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advertising of  tobacco products  and to  prevent  the  sale  of  tobacco  

products to minors.  It  is  also legislation which seeks to implement  

Article 47 of the Constitution which reads as under:-

“47. Duty of the State to raise the level of nutrition  and  the  standard  of  living  and  to  improve  public  health.—The State shall regard the raising of the level of  nutrition and the standard of living of its people and the  improvement  of  public  health  as  among  its  primary  duties  and,  in  particular,  the  State  shall  endeavour  to  bring about prohibition of  the consumption,  except  for  medicinal  purposes of intoxicating drinks and of  drugs  which are injurious to health.”

9. It  all  began  vide an  order  dated  5th May,  2011  in  a  Public  

Interest  Litigation  which is  No.111 of  2011 in which the Bombay  

High Court asked the Municipal Corporation to incorporate terms and  

conditions while issuing licences under Section 479 of the Mumbai  

Municipal Corporation Act so as to comply with the provisions of the  

Cigarettes Act and the Rules made thereunder.  This was directed to  

be done within a period of six weeks. It is as a result of this direction  

that the impugned circular dated 4th July, 2011 was issued in which  

Conditions  35  to  37  in  general  conditions  of  licence  issued  under  

Section 394 of the Mumbai Municipal  Corporation Act were to be  

added. These conditions read as under:

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“Condition No. 35: The licensee shall not keep or  allow to keep or sell or provide any tobacco or tobacco  related  products  in  any  form  whether  in  the  form  of  cigarette, cigar, bidis or otherwise with the aid of a pipe,  wrapper or any other instrument in the licensed premises.  

The  Commissioner  may  permit  smoking  area  as  per  Section 4 of Cigarette and other Tobacco Products  (Prohibition of  Advertisement and Regulation of Trade  and Commerce Production Supply and Distribution) Act,  2003  (COTPA)  in  an  eating  house  having  seating  capacity of thirty persons or more.  

A) The smoking area shall mean separately ventilated  smoking room that:

i. is  physically  separated  and  surrounded  by  full  height walls on all four sides.

ii. has  an  entrance  with  an  automatically  closing  doors normally kept in close position.  

iii. has an air flow system that

a. is exhausted directly to the outside and not  mixed back into the supply air for the other parts  of the building.  

b. is  fitted  with  a  non-recirculation  exhaust  ventilation system or an air cleaning system, or by  a  combination of  the  two,  to  ensure  that  the  air  discharges  only  in  a  manner  that  does  not  re- circulate  or  transfer  it  from  a  smoking  area  or  space to non-smoking areas.

iv. has negative air pressure in comparison with  the remainder of the building.  

B) The smoking area shall not be established at  the Entrance or Exit of the eating house and shall  be  distinctively  marked  as  “Smoking  Area”  in  English & in Marathi as per the COTPA.  

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C) The Smoking area shall be used only for the  purpose of smoking and no other service(s) or any  apparatus designed to facilitate smoking shall  be  provided.  

D) The smoking area shall not be less than 100  sq. ft. with each side of the room shall not be less  than 8 ft. and height of the room shall not be less  than 9 ft.  The smoking area shall be included in  the licensed area of the eating house.  

E) The total area of the smoking room shall not  be more than 30% of the total licensed service area  of the eating house.  

Condition No.36: No person below the age of 18  years shall be permitted in the smoking area.  

Condition No.37: The  owner,  proprietor,  manager, supervisor in charge of the eating house  shall  notify  and  caused  to  be  displayed  prominently the name of the person(s) to whom a  complaint  may  be  made  by  a  person(s)  who  observes  any  person  violating  the  provisions  of  COTPA.

The  Licensee  shall  comply  with  the  aforesaid  conditions  and  breach  of  any  of  the  condition  shall  entail  cancellations/  suspensions/  revocations of License.

The  proposal  regarding  inclusion  of  the  smoking area in the licensed area of Eating House  shall be approved by the concerned DEHO.  

All concerned officers of Health Department  &  Licence  Department  are  hereby  instructed  to  stringently enforce the above mentioned condition  nos. 35 to 37 of the general conditions of Licences  under Section 394 of MMC Act. These conditions  should be incorporated in all existing as well new  Eating House Licenses.  

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A notice may be issued to all  the existing  Eating Houses Licensees that condition nos. 35 to  37  shall  be  deemed  to  be  incorporated  in  the  existing licenses and any breach of the same shall  entail suspension/revocation of the said License.  

All  the  concerned  Officers  of  the  Health  Department  are  directed  to  take  special  drive  against  those  eating  houses  against  whom  complaints  of  serving  hukkah  are  received  and  take stringent action by following due procedure.”

10. Mr. Bhatt appearing for the Municipal Corporation urged that  

this circular would be valid being issued under Section 394 (1)(d) of  

the Mumbai Municipal Corporation Act which reads as under:-

“394.  Certain  articles  or  animals  not  to  be  kept  and  certain trades, processes and operations not to be carried  on  without  a  licence;  and  things  liable  to  be  seized  destroyed, etc., to prevent danger or nuisance.  

(1) Except under and in accordance with the terms and  conditions of the licence granted by the Commissioner,  no person shall—

(d) keep or use, or suffer or allow to be kept or used, in  or upon any premises, any article or animal which, in the  opinion of the Commissioner, is dangerous to life, health  or property, or likely to create a nuisance either from its  nature  or  by  reason  of  the  manner  in  which,  or  the  conditions under which, the same is, or is proposed to be,  kept or used or suffered or allowed to be kept or used;”

11. According  to  Mr.  C.U.  Singh,  the  very  first  paragraph  of  

Condition No.35 is bad inasmuch as it does not allow the licensee to  

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keep or sell or provide any tobacco or tobacco related products in the  

licenced premises.  We find considerable force in this submission.  

12. It will be noticed that Section 6 of the Cigarettes Act permits  

the  sale  of  cigarettes  and  any  other  tobacco  products,  except  to  

persons under 18 years of age and in an area within a radius of 100  

yards  of  any  educational  institution.  It  is  clear  that  any  condition  

which prohibits the sale of cigarettes or any other tobacco products in  

premises  licenced  by  the  Municipal  Corporation  would  amount  to  

adding another exception which would be impermissible in law. Mr.  

Bhatt sought to uphold this condition with a reference to Rule 4(3) as,  

in  his  submission,  in  a  smoking  area  “no  other  service  shall  be  

allowed”.  According to him, the sale of tobacco or tobacco related  

products would amount to a service that cannot be so allowed.  

13. We cannot  accept  this  contention  for  more  than one  reason.  

First and foremost, it is difficult conceptually to say that “sale” and  

“service” are interchangeable items.  “Sale” is defined under the Act  

as meaning a transfer of property in goods for consideration.  It is  

obvious that “sale” has to be understood in this sense, and properly so  

understood  would  not  include  “service”  which  would  refer  not  to  

transfer of property in goods but to “service” as is understood in its  

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ordinary  sense.   In  Northern  India  Caterers  (India)  Ltd. v.  Lt.  

Governor  of  Delhi [1979]  1  S.C.R.  557,  a  distinction  was  made  

between  sale  of  food  and  the  provision  of  services  in  hotels  and  

restaurants. The Court held:-

“Like the hotelier, a restaurateur provides many services  in addition to the supply of food. He provides furniture  and furnishings, linen, crockery and cutlery, and in the  eating places of today he may add music and a specially  provided area for floor dancing and in some cases a floor  show.  The  view  taken  by  the  English  law  found  acceptance on American soil,  and after  some desultory  dissent  initially  in  certain  states  it  very  soon  became  firmly established as the general  view of the law. The  first  addition  of  American  Jurisprudence  [  Vol.  46,  p.  207, para 13] sets forth the statement of the law in that  regard,  but  we  may  go  to  the  case  itself, Electa  B.   Merrill v. James  W.  Hodson [1915  B  LRA  481]  from  which the statement has been derived. Holding that the  supply of food or drink to customers did not partake of  the character of a sale of goods the Court commented:

“The essence of it is not an agreement for  the  transfer  of  the  general  property  of  the  food or drink placed at the command of the  customer for the satisfaction of his desires,  or  actually  appropriated  by  him  in  the  process  of  appeasing his  appetite  or  thirst.  The customer does not become the owner of  the food set  before him, or of that  portion  which is carved for his use, or of that which  finds a place upon his plate, or in side dishes  set about it. No designated portion becomes  his. He is privileged to eat, and that is all.  The uneaten food is not his. He cannot do  what  he pleases  with it.  That  which is  set  

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before  him  or  placed  at  his  command  is  provided  to  enable  him  to  satisfy  his  immediate wants, and for no other purpose.  He  may  satisfy  those  wants;  but  there  he  must  stop.  He  may  not  turn  over  unconsumed  portions  to  others  at  his  pleasure, or carry away such portions. The  true essence of the transaction is service in  the satisfaction of a human need or desire,—  ministry  to  a  bodily  want.  A  necessary  incident  of  this  service  or  ministry  is  the  consumption  of  the  food  required.  This  consumption  involves  destruction,  and  nothing  remains  of  what  is  consumed  to  which the right  of  property can be said to  attach.  Before  consumption  title  does  not  pass;  after  consumption  there  remains  nothing to become the subject of title. What  the customer pays for is a right to satisfy his  appetite by the process of destruction. What  he thus pays for includes more than the price  of the food as such. It includes all that enters  into the conception of service, and with it no  small  factor  of  direct  personal  service.  It  does  not  contemplate  the  transfer  of  the  general  property  in  the  food  applied  as  a  factor in the service rendered.”

This led to the Constitution 46th Amendment Act by which Article 366  

(29A) was inserted. Article 366 (29A) reads as follows:-

“Article  366  (29-A) “tax  on  the  sale  or  purchase  of  goods” includes—

(a) a tax on the transfer, otherwise than in pursuance of a  contract,  of  property  in  any  goods  for  cash,  deferred  payment or other valuable consideration;

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(b) a tax on the transfer of property in goods (whether as  goods or in some other form) involved in the execution  of a works contract;

(c) a tax on the delivery of goods on hire-purchase or any  system of payment by installments;

(d) a tax on the transfer of the right to use any goods for  any purpose (whether or not for a specified period) for  cash, deferred payment or other valuable consideration;

(e) a tax on the supply of goods by any unincorporated  association or body of persons to a member thereof for  cash, deferred payment or other valuable consideration;

(f) a tax on the supply, by way of or as part of any service  or in any other manner whatsoever, of goods, being food  or any other article for human consumption or any drink  (whether  or  not  intoxicating),  where  such  supply  or  service is for cash,  deferred payment or other valuable  consideration,

and such transfer, delivery or supply of any goods shall  be  deemed to  be  a  sale  of  those  goods  by the  person  making the transfer, delivery or supply and a purchase of  those  goods  by  the  person  to  whom  such  transfer,  delivery or supply is made;”.

It will be seen that the definition of tax on the sale or purchase of  

goods has been artificially expanded more particularly by sub-clause  

(f),  with  which  we  are  concerned,  where  the  distinction  between  

“sale” and “service” has been done away with. In the present case, the  

well  established  distinction  between  “sale”  and  “service”  would  

continue  to  apply  in  view of  the  definition  of  “sale”  contained  in  

Section 3(m).  It will be noticed that the definition is a “means” and  

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“includes” one. It is well settled that such definition is an exhaustive  

definition  (see:  P.  Kasilingam  and  others v.  P.S.G.  College  of  

Technology and others 1995 Supp (2) SCC 348 at para 19).  There is  

thus, no scope to include “service’ in such a definition.  Further, even  

if we were to accept Mr. Bhatt’s contention, Rule 4(3) would become  

ultra vires Section 6 of the Act inasmuch as it would prohibit the sale  

of cigarettes and other tobacco products in a smoking area in hotels,  

restaurants and airports, thus, adding one more exception to the two  

exceptions already contained in Section 6.  It is, thus, clear that this  

condition  would  be  ultra  vires the  Cigarettes  Act  and  the  Rules  

properly so read.

14. It  will  be  seen  that  Condition  No.  35(C)  of  the  impugned  

circular essentially reproduces Rule 4(3) of the said Rules and then  

adds the words “or any apparatus designed to facilitate smoking”. The  

effect of the added words is that a Hookah cannot be provided by the  

hotel,  restaurant or airport being an apparatus designed to facilitate  

smoking.

15. Mr.  Bhatt  sought  to derive power  for  the added words from  

Rule  3(1)(c)  and  argued  that  the  Hookah  would  be  “other  things”  

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designed to facilitate smoking which would be prohibited under Rule  

3(1)(c).

16. We  find  it  difficult  to  accept  this  contention  because,  if  

carefully read, Rule 3 deals with the prohibition of smoking in public  

places, which is referable to Section 4 (main part) whereas Rule 4 is  

referable to the proviso to Section 4.  Rule 3 would only apply where  

there is a total prohibition of smoking in all public places as is clear  

from  Rule  3(1)(a)  which  makes  it  is  incumbent  on  the  owner,  

proprietor, etc. of a public place to ensure that no person smokes in  

that place.  It is in that context that ashtrays, matches, lighters and  

other things designed to facilitate smoking are not to be provided in  

public places where smoking is prohibited altogether.  

17. On the other hand, where smoking is allowed in a smoking area  

or space, sub-rule (3) of Rule 4 makes it clear that such place can be  

used  for  the  purpose  of  “smoking”.   Under  Rule  2(f)  words  and  

expressions not defined in these Rules but defined in the Act shall  

have the meanings, respectively, assigned to them in the Act.  

18. This  takes  us  to  the  definition  of  “smoking”  contained  in  

Section 3(n) of the Act which has been set out hereinabove. A perusal  

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of this definition shows that it  includes smoking of tobacco in any  

form with the aid of a pipe, wrapper, or any other instrument, which  

would obviously include a Hookah.  That being the case, “smoking”  

with  a  Hookah  would  be  permissible  under  Rule  4(3)  and  the  

expression  “no other  service  shall  be  allowed”  obviously  refers  to  

services other than the providing of a Hookah.  It is, thus, evident that  

the added words in clause (C) of Condition No.35 are clearly  ultra  

vires the Act and the Rules.  

19. Looked at from another angle, Rule 3(1)(c) and Rule 4(3) have  

to be harmoniously construed.  If the respondents’ contention has to  

be  accepted,  Rule  4(3)  would  be  rendered  nugatory.   What  is  

expressly allowed by Rule 4(3) cannot be said to be taken away by  

Rule 3(1)(c).  For this reason also, Mr. Bhatt’s contention will have to  

be turned down.  

20. Sub-clauses (D) and (E) of Condition No. 35 were stated by Mr.  

Bhatt  to  be  regulations  relatable  to  buildings  which  is  a  purely  

municipal function within the Municipal Corporation’s ken.  There is  

no challenge to the dimensions of the smoking area set out in these  

sub-clauses. So far as these conditions are concerned, we agree with  

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Mr. Bhatt and the dimensions set out in (D) and (E) will have to be  

followed in all cases.  

21. Since we are deciding this case only on the narrow ground that  

the High Court is incorrect when it holds that all that the Municipal  

Corporation did in the present case was to follow the Cigarettes Act  

and the Rules made thereunder, we need not delve on other aspects  

that were urged before us.   

22. We, therefore, set aside the Bombay High Court judgment and  

delete the first paragraph of Condition No.35 and the added words in  

(C) of Condition No.35.  The appeal succeeds to that extent.  

23. In  the  Madras  High Court  judgment  a  notice  dated  5th July,  

2011 was upheld by the High Court.  The notice is obviously  ultra  

vires the Cigarettes Act and the Rules made thereunder as it prevents  

the owner of the hotel/restaurant from providing tobacco to persons  

who are  not  minors  and asking such  persons  affirmatively  to  stop  

people  from  sucking  and  swallowing  tobacco.   Further,  sale  of  

tobacco can only be prohibited within a  radius of  100 yards of  an  

educational  establishment  and  not  300  feet  as  is  stated  in  the  

impugned notice. This judgment also deserves to be set aside.

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24. In the Gujarat High Court case, an order dated 14th July, 2011,  

purportedly made under Section 33 of the Bombay Police Act read  

with Section 144 of the Code of Criminal Procedure prohibited hotels  

and restaurants from providing the facility of hookah and prohibited  

hookah bars.  In the course of a lengthy judgment, the Division Bench  

referred  to  the  evil  effects  of  smoking  and  generally  of  tobacco  

products and ultimately came to the conclusion that Section 33 of the  

Bombay Police Act would include the power to prohibit, stating that  

the  word  “regulate”  would  include  “restriction”  and  even  

“prohibition”. Several authorities were stated for this proposition, but  

the one authority binding on the High Court was missed. In  Himat  

Lal K. Shah v. Commissioner of Police, Ahmedabad, (1973) 1 SCC  

227, the Supreme Court had to construe the word “regulate” under the  

very Act i.e. Section 33 of the Bombay Police Act.  The Court held:

“15. Coming  to  the  first  point  raised  by  the  learned   counsel,  it  seems  to  us  that  the  word  “regulating” in   Section 33(o) would include the power to prescribe that   permission in writing should be taken a few days before   the  holding  of  a  meeting  on  a  public  street.  Under   Section 33(o) no rule could be prescribed prohibiting all   meetings  or  processions.  The  section  proceeds  on  the   basis that the public has a right to hold assemblies and   processions on and along streets though it is necessary   to  regulate  the  conduct  and  behaviour  or  action  of   persons  constituting such assemblies  or processions  in   

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order to safeguard the rights of citizens and in order to   preserve public order. The word “regulate”, according   to  Shorter  Oxford  Dictionary,  means,  “to  control,   govern,  or  direct  by  rule  or  regulation;  to  subject  to   guidance  or  restrictions”.  The impugned Rules  do not   prohibit the holding of meetings but only prescribe that   permission should be taken although it is not stated on   what grounds permission could be refused. We shall deal   with this aspect a little later.”

25. From a reading of  Himat Lal’s case, it is clear that the word  

“regulate” would not include the power to prohibit.  Further, Section  

144 of the Code of Criminal Procedure provides a power to grant only  

temporary orders which cannot last beyond 2 months from the making  

thereof  (see  Section  144(6)  of  the  Code  of  Criminal  Procedure).  

Despite this being pointed out to the High Court, the High Court held:

“There is no dispute as regards the position of law and   we accept the contentions on behalf of the petitioners so   far as Section 144 of the Code is concerned. However,   solely on this ground alone the entire action on the part   of  the  Police  Commissioner  cannot  be  said  to·  be   unlawful or beyond his jurisdiction. Prima facie, we are   convinced  that  the  notification  invoked  under  Section   144 of the Code was issued with a definite idea and the   idea was to immediately give true effect to the addition of   the condition in respect  of licences of persons running   eating house/restaurant.  It  appears that the authorities   felt  that  it  would  be  difficult  to  stop  the  activity  of   providing  hookah  at  eating  house/restaurant  by  solely   adding one of the conditions not to provide hookah at a   eating house/restaurant. It appears from the affidavit-in- reply filed by the Police Commissioner that with a view   

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to meet with such an emergent situation prevailing in the   city and as it was very difficult to keep constant vigilant   and monitoring as regards compliance of the condition   which was added in the licence, the Police Commissioner   thought fit to invoke Section 144 of the Code.  

       Assuming for a moment that the action of the Police   Commissioner of  the city of  Ahmedabad in issuing the   notification  in  purported  exercise  of  powers  under   Section 144 of the Code is not tenable in law by itself   would not be sufficient to grant the relief as prayed for   by the petitioners.  Though we do not find error in the   same but assuming for a moment that it is found to be   illegal and invalid, the High Court while exercising its   extraordinary jurisdiction thereunder can refuse to upset   it in public interest. It is a settled principle of law that   the remedy under Article 226 of the Constitution of India   is  discretionary  in  nature and in a given case  even if   such action or order challenged in the petition is found   to  be  improper  and  invalid,  the  High  Court  while   exercising its extraordinary jurisdiction thereunder can   refuse to upset it.”  

26. We  are  at  a  loss  to  understand  the  aforesaid  reasoning.  If  

Section 144 is to be invoked, the order dated 14th July, 2011 would  

have expired 2 months thereafter.  The High Court went on to state  

that while administering the law it is to be tempered with equity  and  

if  an equitable situation demands,  the High Court would fail  in its  

duty if it does not mould relief accordingly. It must never be forgotten  

that one of the maxims of equity is that `equity follows the law’. If the  

law is clear, no notions of equity can substitute the same.  We are  

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clearly of the view that the Gujarat High Court judgment dated 2nd  

December, 2011 deserves to be set aside not only for following the  

Bombay High Court judgment impugned in the appeals before us but  

for the reasons stated hereinabove.  

27. All the appeals are allowed in the aforesaid terms.  There will  

be no order as to costs.   

 ……..…..………………….J.           (Ranjan Gogoi)

         …………..………………….J. (Rohinton Fali Nariman)

New Delhi; December 08, 2014.  

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