On Day 8, the Counsel for the Tobacco Institute of India continued with his submissions. He indicated, at first, that an independent argument would be made by the Petitioners for the Beedi Manufacturers Association, on Article 19 (1) (g), relating to the freedom of trade.
The Counsel started his arguments by submitting that the COTPA and the Tobacco Board Act, 1975 (TBA) together form one legislative scheme that applies to the tobacco industry. Upon reading out section 8 of the TBA, the Counsel drew attention to the function of the Tobacco Board in promoting the development of the tobacco industry. The Counsel submitted that the scheme of the TBA does not warrant the conclusion that there is any control by way of imposing prohibitions on the growth of the tobacco industry.
Justice Nagarathna asked the Counsel to explain what would be the meaning of the provision in the TBA wherein the Union takes control over the tobacco industry in ‘Public Interest’?
The Counsel answered that the TBA is for the regulation of the tobacco industry in the interest of farmers and manufacturers of tobacco. The provision is for the benefit of the stakeholders in the tobacco industry, and for its improvement, given that India is a tobacco growing country.
The Counsel stated that there is a similar “declaration of expediency” in the COTPA, as in the TBA, under Section 2, such that the Union should take control of the tobacco industry. Hence, the Counsel submitted that Rules drafted under COTPA should also follow the mandate of the TBA. With regard to public interest, the Counsel submitted that it does not just encompass public health, but also includes the rights of the tobacco farmers, manufacturers and other stakeholders.
The Counsel placed reliance on Godawat Pan Masala Products I.P. Ltd. Vs. UOI & Ors. (2004) 7 SCC 68 to submit that trade in tobacco products is not injurious to public health.
Justice B.S. Patil pointed out that while trade may not be injurious, the consumption of tobacco products might be and that Godawat stated that there is no ban on tobacco. The Counsel re-emphasized his earlier argument, that, whatever be the case, he has the fundamental right under Article 21 to consume any product that he is legally entitled to enjoy and consume.
Justice B.S. Patil then asked the Counsel to elaborate the context in which the statement relied upon by the Counsel, (trade in tobacco products not injurious to public health) in the Godawat case, was made. The Counsel explained that this was stated in the context of a challenge to a ban on gutka, wherein the Court had stated that tobacco is not res extra commercium [“a thing outside commerce” and hence not protected under Article 19(1)(g)]; or injurious to public health. The counsel submitted that Rules cannot be made to implement such a restriction on tobacco products in public interest.
To this, Justice B.S. Patil replied that there is no ban, and that the Godawat case would be apt as authority against imposition of a ban on tobacco products. The Counsel responded that through the new Rules, the government is trying to impose a ban.
Justice Nagarathna asked about which products contain Tobacco as an ingredient. The Counsel cited gutka, cigarettes, as well as ‘tobacco seed oil’ -which is used for medicinal purposes. Thus, Justice Nagarathna asked whether the regulation is only for chewing and smoking forms of tobacco. The Counsel replied that, from a 19(1)(g) perspective, the primary trade demand is indeed only for chewing tobacco and cigarettes.
Justice Nagarathna then pointed out that while both the COTPA and the TBA allow for regulation of tobacco, the only question is as to what extent such regulation is permissible. The Counsel responded by saying that while there is regulation under the COTPA, the TBA also contains the stated objective to promote the tobacco industry. The Counsel stated that the parameters of challenge thus involve the extent of control and regulation exercised by the Centre, and that total restrictions pertain only to certain aspects, such as smoking in public places and sale to minors. The Counsel went on to state that while the notification of health effects is a policy, deterrence is not a policy envisaged in the legislative framework.
Inconsistency between Rule and Schedule to the Rules
The Counsel argued that the Packaging and Labeling Amendment rules, 2014 were an act of excessive delegation. Section 8 of the COTPA provides that the pack warning must be “legible, prominent and conspicuous”. The 2014 amendment rules under the 3rd Schedule, Section 3(1) provides that the pack warning must not be less than 3.5 cm X 4 cm. This roughly amounts to 40% coverage of a standard package. Such a regulation had been in force for 7 years since the time the 2008 packaging and labeling rules came into effect. The Counsel argued that this requirement already fulfilled the statutory requirement of being ‘legible, prominent and conspicuous’ and therefore if manufacturers were able to comply with this requirement, they fulfilled the mandate of the law. There was no need for compliance with the 85% health warning as prescribed in Rule 3(1)(b) of the amendment rules, 2014. Therefore, the impugned rules suffered from a lack of legislative competence.
One significant point that did come up in Court was with regard to the inconsistency or the apparent dichotomy between the Rule 3(1)(b) of the 2014 amendment rules and Schedule 3, section 3(2). Relevant portions of the rules are extracted below:-
Rule 3(1)(b)- the specified health warning shall cover at least eighty-five per cent. (85%) of the principal display area of the package of which sixty per cent. (60%) shall cover pictorial health warning and twenty-five per cent. (25%) shall cover textual health warning and shall be positioned on the top edge of the package and in the same direction as the information on the principal display area:
Provided that for conical package, the widest end of the package shall be considered as the top edge of the package:
Provided further that on box, carton and pouch type of package, the specified health warning shall appear on both sides of the package, on the largest panels and for cylindrical and conical type of package, the specified health warning shall appear diametrically opposite to each other on two largest sides or faces of the package and the specified health warning shall cover eighty-five per cent. (85%) of each side or face of the principal display area of the package of which sixty per cent. (60%) shall cover pictorial health warning and twenty-five per cent. (25%) shall cover textual health warning.”
Schedule 3
- Size of the specified health warning. –
(1) The size of the specified health warning on each panel of the tobacco package shall not be less than 3.5 cm (width) × 4 cm (height), so as to ensure that the warning is legible, prominent and conspicuous.
(2) The size of all components of the specified health warning shall be increased proportionally according to increase of the package size to ensure that the specified health warning covers eighty-five per cent (85%) of the principal display area of the package of which sixty per cent (60%) shall cover pictorial health warning and twenty-five per cent (25%) shall cover textual health warning.”;
As per Rule 3(1)(b) an 85% health warning is required on the principal display area regardless of the size of the package. However, Schedule 3, clause 3(2) provides that the 85% warning must be increased proportionally with the increase in the size of the cigarette packs. Therefore the question raised by Justice Nagarathna was whether Rule 3(1)(b) had to be read down in terms of Schedule 3, clause 3(2) and what would be the correct way to read the same harmoniously.
The Counsel argued that as long as Rule 3(1)(b) remained on the statute books, it would not be possible to comply with the schedule to the said rule simultaneously. This is because both sub clause (1) and (2) of Section 3 of Schedule 3 cannot logically function separately and independently. This is because, a plain reading of the Section 3(1) and (2) of Schedule 3 would mean that if the cigarette packet size were not increased, then the manufacturers would not have to comply with the requirement of increasing the health warning proportionally to 85%. Then, merely ensuring that the warning fulfilled the requirement of being 3.5cm X 4 cm as per section 3(1) of Schedule 3 would be enough. However, this would contravene Rule 3(1)(b) which requires that all cigarette packs carry the 85% health warnings.
The Learned Additional Solicitor General, at this instance, pointed out that there was no apparent conflict between the schedule and the rules. He submitted that the schedule could not be interpreted as being divorced from the rules and that in any eventuality of conflict, the rules would prevail over the schedule. To read the rules and the schedule harmoniously, the ASG submitted that section 3(2) of the third schedule was the mandatory requirement while section 3(1) of the same schedule which provided the 3.5cm X 4cm requirement was the bare minimum that had to be followed.
In other words, both the requirement of 85% health warning as well as the 3.4 cm X 4cm requirement under the schedule had to be fulfilled by every cigarette pack if the rules and the schedule were to be read harmoniously. Justice Patil took note of both arguments. The Learned ASG’s argument will be further elaborated upon when the Union government makes its submission.
Manifest Arbitrariness
Another argument that the Counsel for the Tobacco Institute brought to light was that the 2014 amendment rules were capable of being struck down only on the grounds of manifest arbitrariness. It was argued that in Rule 3(1)(b), the 85% requirement for health warning needed to be on the ‘principal display area’. However, section 3(1) of the third schedule provided that the warning should be of 3.5cm X 4cm on each panel. The Counsel pointed out that there are 6 panels on each cigarette package and a strict reading of the same would mean that each panel had to carry a specified health warning. This, according to the Counsel was an example of non-application of mind while drafting of the rules and therefore on this ground alone, the 2014 amendment rules could be struck down as vague and arbitrary.
Another ground on which the 2014 amendment rules could be said to be suffering from manifest arbitrariness was the apparent inconsistency between Rule 3(1)(b) and schedule 3, the rules as elaborated above.
A third argument submitted was that the 2014 rules were arbitrary and went beyond the scope of the COTPA. This is because as per Section 7(4) of COTPA, ‘not less than one’ panel has to carry the health warning. However, the rules 3(1)(b) 2nd proviso , provides that the health warning must be printed on both panels. Not doing so would attract penalty under Section 20 of the COTPA. The rules, therefore expanded the scope of the parent legislation and created an artificial category of offence which had the effect of putting an additional disability on the manufacturers.
Another argument that was raised by the Counsel was that section 10 which prescribed the size of letters and figures of the health warning was only in the context of the textual warning and not pictorial warning. There was disagreement in court what the meaning of ‘figure’ was and whether it meant only picture or a number. The Counsel for the petitioners argued that it was the latter and therefore, the 2014 amendment had been enacted without requisite authority.
In conclusion, the counsel for petitioners argued that provisions of COTPA such as Section 5(2), 10, 8 and Rule 3(1)(b) could not be harmoniously constructed as it contravened the Petitioners’ right to commercial speech and their right to property.