State of M.P. & Ors Vs. M/S.
Chhotabhai Jethabhai Patel & Co. &  INSC 343 (10 December 1971)
SIKRI, S.M. (CJ) SHELAT, J.M.
KHANNA, HANS RAJ
CITATION: 1972 AIR 971 1972 SCR (2) 838 1972
SCC (1) 209
Madhya Pradesh Tendu Patta (Vyapar Viniyaman)
Adhiniyam, 1964 Section 5-Whether restrictions on transport of tendu leaves
imported from outside the State is violative of Part XIII of the Constitution.
The respondent, a partnership firm of which
the second respondent was a partner, carried on business as manufacturers of
bidis at various places in the State of Madhya Pradesh. Being unable to secure
sufficient tendu leaves locally, the firm took leases for the collection of
such leaves in Bihar & Maharashtra. They actually imported tendu leaves
under two railway consignments from Bihar.
They informed the Divisional Forest Officer
about the same and asked permission for transport of the leaves and to utilise
them in their factories. By letter, the D.F.O.
informed the respondents that the leaves must
not be moved for bidi manufacture until permission is given. Respondents obeyed
the order; but in spite of that, the Sub-divisional Forest Officer seized two
quantities of such leaves and filed a complaint alleging contravention of s. 5
of Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964.
The respondent filed a petition under Art.
226 of the Constitution for a writ of certiorari quashing the complaint. The
contention of the respondents was that the Act did not prohibit import of tendu
leaves from outside norwas there any restriction on a manufacturer to consume
the same for the manufacture of bidis or the Rules made under the Act did not
regulate the transport of the tendu leaves imported from outside.
The State however, contended that transport
of tendu leaves whether grown locally or imported from outside was completely
prohibited under s. 5 of the Act, except by a license-holder in terms of a
permit issued. S.5(1) provides that no person other than the State Government
or an Officer of the State Government etc. shall purchase or transport tendu
leaves. Further, the Act did not prohibit import of tendu leaves and so the Act
is not violative of Arts. 31, 301 and 304 of the Constitution and the control of
movement of tendu leaves after their import was in no way repugnant to Arts.
301 and 304 of the Constitution. The State contended that unless the State had
the power to check the purchase of tendu leaves from outside the State and to
restrict the transport thereof within the State, the monopoly of State trading
in tendu leaves would not be effective. The High Court rejected these
contentions of the State and hence the appeal. Dismissing the appeal,
HELD : (1) All the relevant provisions of the
Act and the rules made thereunder show that the legislature intended that
everybody growing leaves within the State should offer the same to it to its
agents in different units for sale and the State was bound to purchase every
single lot of usable tendu leaves. Prima facie trade in tendu leaves could
consist of dealing in those leaves, i.e., their purchase and sale but transport
'of the leaves once purchased or sold would not prima facie be an organic or
integral part of dealing in those leaves. [842 D] 839 Vrajlal Manilal v. M.P.
State  1 S.C.R. 400, followed.
(ii) In the present case, the transport of
tendu leaves purchased outside but consigned to places within the State to be
used for the manufacture of bidis is not integrally connected with the State
monopoly as envisaged in the Act.
The Act ought not to be construed so as to
ban import of tendu leaves from outside the State or restrict their movement
once they are within the State unless clear language was used in that behalf.
[844 C] Akadasi Padhan v. State of Orissa,  Supp. 2 S.C.R.
691, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 684 of 1968.
Y. S. Dharmadhikari, Advocate-General for the
State of Madhya Pradesh and 1. N. Shroff, for the appellants.
M. C. Setalvad, Rameshwar Nath and S. K.
Dholakia, for respondent No. 1.
The Judgment of the Court was delivered by
Mitter, J. This is an appeal from a judgment of the Madhya Pradesh High Court
quashing the proceedings initiated on the complaint filed by the Divisional
Forest Officer, Saugor in the Court of the Magistrate of the First Class Saugor
for imposition of a penalty on the respondents.
The matter arises thus. Chhotahhai Jethabhai
Patel, a partnership firm of which the second respondent, Jhaverbhai Bhulabhai
Patel is a partner, carried on business on a fairly large scale as
manufacturers of bidis at various places in the State of Madhya Pradesh
Being unable to secure sufficient quantities
of tendu leaves grown in the forest units in the State, the firm took leases
for the collection of such leaves in the States of Bihar Maharashtra. They
actually imported tendu leaves under two railway consignments from Bihar to
Saugor. They informed the Divisional Forest Officer about the same and asked
for permission for transport of the leaves and to utilise the said leaves for
manufacture of bidis in their factories.
By letter dated July 27, 1965 the said Forest
Officer intimated the firm that the imported leaves were not to be moved for
bidi manufacture until permission was accorded for so doing. The respondents'
grievance was that notwithstanding the above communication and in spite of the
fact that they had not moved the imported leaves from their godowns, the Sub
Divisional Forest Officer Saugor seized two quantities of such leaves of 9007
bags imported from Garwah Road, Bihar and 256 bags of tendu leaves imported
from Bindoumaganj, Bihar and followed the same up by filing a complaint
alleging contravention of s. 5 of the Madhya Pradesh Tendu Patta Wyapar
Viniyaman) 84 0 Adhiniyam, 1964, hereinafter referred to as the Act. The
respondents filed a petition under Art. 226 of the Constitution before the High
Court for the issue of a writ of certiorari quashing the complaint. The
contention of the respondents (importers of the leaves) before the High Court
was that the Act did not prohibit the import of tendu leaves from places
outside the State nor was there any restriction on a manufacturer importing
such leaves with the express object of consumption of the same, in his factory
for the manufacture of bidis and in any event the Act or the Rules made there under
did not purport to regulate the transport of tendu leaves imported from places
outside the State.
On behalf of the State it was contended that
transport of tendu leaves whether grown in the State or outside the State was
completely prohibited by s. 5(2) of the Act and regulation and control of
transport of such imported leaves was necessary for the successful working of
the State monopoly in the trade of tendu leaves envisaged by the Act.
Further the Act did not prohibit the import
of tendu leaves and was not therefore violative of Arts. 31, 301 and 304 of the
Constitution and the control of movement of tendu leaves after their import
from another State was in no way repugnant to Arts. 301 and 304.
The High Court rejected the contentions of
the State. Hence the appeal.
In order to find out whether the action of
the Forest Officer was justified, we have to look into the relevant provisions
of the Act and the rules framed there under. The Act as its preamble shows is
one to make provision for regulating in the public interest the trade of tendu
leaves by creation of State monopoly in such trade. By s. 1(2) it was to extend
to the whole of the State and under sub-s. (3) of s. 1 it was to come into
force in such area or areas and on such date or dates as the State Government
may, by notification, specify. The broad scheme of the Act appears to be as
follows. Under s. 3 the State Government was empowered to divide every
specified area defined in cl. (h) of s. 2 into such number of units as it may
deem fit. S. 4 empowered the State Government to appoint agents in respect of
different units for the purpose of purchase of and trade in tendu leaves on its
behalf. Under s. 5(1);
"On the issue of a notification under
subsection (3) of section 1 in any area no person other than(a) the State
(b) an officer of State Government authorised
in writing in that behalf; or 841 (c) an agent in respect of the unit in which
the leaves have grown;
shall purchase or transport tendu
leaves." The two Explanations to this subsection show that purchase of
tendu leaves from the State Government or its officers or agents was not to be
deemed to be a purchase in contravention of the Act and a person having no
interest in a holding but acquiring the right to collect tendu leaves grown on
such holding was to be deemed to have purchased such leaves in contravention of
the Act. Sub-s. (2) of the section allowed a grower of tendu leaves to
transport them from any place within the unit wherein such leaves had grown to
any other place in that unit and tendu leaves purchased from the State
Government or any officer or agent of the Government by any person for
manufacture of bidis within the State or by any person for sale outside the
State could be transported by such person in accordance with the terms and
conditions of a permit to be issued in that behalf. S. 7 empowered the State
Government to fix prices at which tendu leaves were to be, purchased by it or its
agent and under s. 9 the State Government or their authorised officer or agent
was to be, bound to purchase at the price fixed under s. 7 leaves offered for
sale at the depot, subject to the right of rejection of such leaves as were not
fit for the manufacture of bidis. Under s. 1 1 all manufacturers of bidis and
all exporters of tendu leaves had to get themselves registered in such manner
as might be prescribed.
S. 12 enabled the State Government to sell or
dispose of tendu leaves purchased by it or its agent as therein prescribed.
Under s. 1 5 any person contravening any of the provisions of the Act or the
rules thereunder was liable to punishment, both with imprisonment and fine and
tendu leaves in respect of which such contravention took place were liable to
forfeiture by Government. S. 19 gave the Government power to make rules to
carry out the provisions of the Act.
Rule 4 framed under the Act lays down the
kinds of transport permits which may be issued. They are to be, of four types
(i) for transport from collection depot to storage godown;
(ii) for transport from one storage godown to
another or to distribution centre; (iii) for transport from a distribution
centre to Sattedars or Mazdoors' and (iv) for transport outside the State. The
application for a transport permit is to be under rule 9 in form 'M' and the
permit to be issued is to be in form 'M. Form 'M' gives the quantity of tendu
leaves purchased, the place or places where they were stored, the destination
to which they were to be transported and the place or places where transported
leaves were to be stored. Similar particulars are to be contained in a permit
in form 'N'.
842 It was contended on behalf of the State
that the High Court had gone wrong in taking the view that the object of the
Act was confined to trading in tendu leaves grown in the State as disclosed by
the above provisions. It was urged that the embargo on purchase and transport
of tendu leaves by s. 5 was necessary for creation and preservation of the
State monopoly in tendu leaves. It was submitted that there was nothing in the
Act, which on the face of it showed that tendu leaves mentioned in the
different provisions were to be confined to leaves grown in the State. It was
further submitted that unless the State had the power to check the purchase of
tendu leaves from outside the State and in any event to restrict the transport
thereof within the State, the monopoly would not be effective. It was urged
further that transport of goods within the State was so essentially integrated
with the trade in the goods that the restriction on transport should be upheld
in the interest of the State monopoly.
We find ourselves unable to accept the
contentions put forward by counsel on behalf of the State. All the relevant
provisions of the Act and the rules referred to above show that the legislature
intended that everybody growing leaves within the State should offer the same
to it or its agents in different units for sale and the State was bound to
purchase every single lot of tendu leaves unless the same could be said to be
unfit for the manufacture of bidis.
Prima facie trade in tendu leaves as was held
by this Court in Vrajlal Manilal v. M. P. State(1) would consist of dealing in
those leaves i.e. their purchase and sale but "transport of the leaves
once purchased or sold would not prima facie be an organic or integral part of
dealing in those leaves." It was further held in that case:
:..a permit system which regulates the
movement of leaves purchased by a manufacturer of bidis from the unit where
they are purchased to his warehouse, then to the branches and to the sattedars
cannot up to that stage be regarded as unreasonable in the light of the object
of the Act, the economic conditions prevailing in the State, and the mischief
which it seeks to cure. At the same time to expect the manufacturer to get
permits issued to his sattedars for distribution by them to the innumerable
mazdoors of comparatively small quantities of these leaves would not only be
unreasonable but frustrating." In that case there was no question of
import of any tendu leaves from outside the State or the issue of any permits
in that regard. What was objected to was the insistence upon transport permits
for the leaves to be distributed by the manufacturers to his innumerable
sattedars and mazdoors under s. 5 of the Act. It was held that though the
section "is couched in apparently wide language, (1)  1 S.C.R. 400
843 the very object of the Act, as disclosed
by its long title, contains inherent limitations against an absolute or as
strictly regulated a ban as it would at first reading of the section
appear." Though the Court there upheld the provisions relating to the
creation of the monopoly in the public interest in the matter of sale and
purchase of tendu leaves, it was not disposed to uphold the restrictions on
movement to the extent it was sought to be enforced by the State in that case.
In coming to the above conclusion the Court
relied on the dictum in Akadasi Padhan v. State of Orissa(1) "A law
relating to a State monopoly cannot, in the context, include all the provisions
contained in the said law whether they have direct relation with the creation
of the monopoly or no the said expression should be construed to mean the law
relating to the monopoly in its absolutely essential features. If a law is
passed creating a State monopoly, the Court should enquire what are the
provisions of the said law which are basically and essentially necessary for
creating the State monopoly. It is only those essential and basic provisions
which are protected by the latter part of Art.
19(6). If there are other provisions made by
the Act which are subsidiary, incidental or helpful to the operation of the
monopoly, they do not fall under the said part and their validity must be
judged under the first part of Art. 19(6). In other words, the effect of the
amendment made in Art. 19(6) is to protect the law relating to the creation of
monopoly and that means that it is only the provisions of the law which are
integrally and essentially connected with the creation of the monopoly that are
protected. The rest of the provisions which may be incidental do not fall under
the, latter part of Art. 19(6) and would inevitably have to satisfy the test of
the first part of Art. 19(6)." It is settled law that where two
constructions of a legislative provision are possible one consistent with the
constitutionality of the measure impugned and the other offending the same, the
Court will lean towards the first if it be compatible with the object and
purpose of the impugned Act, the mischief which it sought to prevent
ascertaining from relevant factors its true scope and meaning.
It was in the light of this principle that
the High Court observed :
"If s. 5 of the Act or any of its
provisions were to be construed as prohibiting the import of tendu leaves into
(1)  Supp. 2 S.C.R. 691.
844 the State or restricted within the State
of imported leaves, then the provision would clearly be invalid as violative of
Arts. 301 and 304 of the Constitution." Without expressing our views on
the subject we hold that the entire provisions of the Act and the rules are
consistent with and aim at the State monopoly in the trade of tendu leaves in
case of leaves grown or _produced in the State and the legislature never
intended that the monopoly should be operative even to the extent of banning
import of tendu leaves from outside or stalling the tendu leaves once they
found their way into the State from outside. The transport of tendu leaves
purchased outside but consigned to places within the, State to be used for the
manufacture of bidis is not integrally connected with the State monopoly as
envisaged in the Act. It stands to reason that manufacturers of bidis in the
State of Madhya Pradesh would not think of importing tendu leaves from distant
places like, Bihar and Maharashtra if they could help it and it must be the
exigencies of the situation which drives a manufacturer of bidis to such course
of action. In any event, the Act ought not to be construed so as to ban import
of tendu leaves from outside the State or restrict their movement once they
were within the State unless clear language was used in that behalf. If and
when such express embargo is imposed, a question may arise as to whether it
offends the different provisions of Part XIII of the Constitution.
In the result the appeal fails and is
dismissed with costs.
S.C. Appeal dismissed.