The Chamber of Commerce, Hapur, &
Ors Vs. The State of Uttar Pradesh & Ors [1954] INSC 93 (18 October 1954)
DAS, SUDHI RANJAN MAHAJAN, MEHAR CHAND (CJ)
HASAN, GHULAM BHAGWATI, NATWARLAL H.
JAGANNADHADAS, B.
CITATION: 1955 AIR 8 1955 SCR (1) 838
ACT:
Uttar Pradesh Food-grains(Futures and Options
Prohibition) Order, 1951-Uttar Pradesh Food-grains (Futures and Options
Prohibition) Order, 1945-Restrictions on dealings in pulses other than grams-In
both orders-Order of 1951 partly declared ultra vires by Supreme Court--Not so
s. 9 thereof which repealed Order of 1945-Whether Order of 1945 still in
force-Proper procedure for clarification of the matter.
HEADNOTE:
Uttar Pradesh Food-grains (Futures and
Options Prohibition) Order, 1951, made it illegal and a punishable offence for
any person to enter into any futures in pulses other than gram, or to pay or
receive or to agree to pay or receive any margin relating to such futures. By
s. 9 of that Order the Order of 1945 containing similar provisions was
repealed. An application under Art. 32 of 839 the Constitution presented by
several persons (including the present petitioners) for the enforcement of
their fundamental right under Art. 19(1)(g) of the Constitution to carry on
their business and restraining the State from enforcing the Order of 1951 in so
far as it related to pulses other than gram and for a declaration that s. 2(a)
of the Order read with items 6, 7, 8 and 9 of the schedule thereto was illegal
and ultra vires the State Government' succeeded in the Supreme Court and the
State of Uttar Pradesh was directed by the Supreme Court by its judgment dated
the 15th 'day, 1952, to abstain from giving effect to it.
On the 10th June, 1953, a letter (Exhibit B
to the petition) was addressed by the Deputy Commissioner, Food, Uttar Pradesh,
to all Regional Food Controllers and Deputy Food Controllers and all District
Magistrates in Uttar Pradesh instructing them to regard all futures in food grains
mentioned in the Schedule to the 1945 Order including pulses other than gram as
punishable.
It was contended on behalf of the State (1)
that section 3 of 1946 Act which reproduced s. 3 of the 1946 Ordinance
conferred on the Central Government extensive powers to control production,
supply, distribution of and trade and commerce in essential commodities and
this power was delegated by the Central Government to the Provincial Government
by notification dated 21st October, 1946, under s. 4 of the 1946 Ordinance. The
subsequent amendments made by two Notifications dated 5th March, 1947, and
dated 15th November, 1947, withdrew the power so delegated only with respect to
"edible oils and oil seeds and pulses other than gram" and such
withdrawal was only with regard to production, supply, and distribution of
those commodities but was not with regard to trade and commerce therein; (ii)
that the Order of 1951 having been declared ultra vires, the Order of 1945
which was continued by s. 5 of the Ordinance of 1946 and then by s. 17 of the
Act of 1946 was still in force.
Held, (repelling the contentions) (i) that as
the Order of 1945 ceased to have effect with regard to the price, production,
distribution and movements of those commodities, that Order could not in any
way continue to regulate or control trade or commerce in those commodities and
the two Notifications of 1947 quite effectively superseded the Order of 1946 so
far as it purported to regulate or control the price, production, distribution
and movement of or trade and commerce in edible oils and oil seeds and pulses
other than gram;
(ii) that the Order of 1951 was not declared
ultra vires and invalid in its entirety by the judgment of the Supreme Court
dated 15th May, 1952. The Order was declared invalid in so far as it purported
to restrict the dealings in edible oils and oil seeds and pulses other than
gram. The rest of the Order of 1951 and in particular s. 9 thereof by which the
Order of 1945 had been withdrawn, remained unaffected by the judgment of the
Supreme Court.
840 Strong disapproval was expressed by the
Supreme Court of the wholly unwarranted attitude adopted by the officers of the
State of Uttar Pradesh in circumventing the decision of the Supreme Court on a
flimsy pretext.
The contentions advanced on behalf of the
State Government should have been advanced before the Supreme Court on the
previous occasion when it delivered its judgment dated 15th May, 1952, or the
matter should have been brought before the Supreme Court by way of review if
any review was competent.
ORIGINAL JURISDICTION: Petition No. 309 of
1953.
Under article 32 of the Constitution of India
for the enforcement of Fundamental Rights.
K. C. Jain and B. P. Maheshwari for the
petitioners.
K. B. Asthana and C. P. Lal for the
respondents. 1954.
October 18. The Judgment of the Court was
delivered by DAS J.-This is a petition made under article 32 of the
Constitution by the Chamber of Commerce, Hapur and three individual persons
praying for a writ in the nature of mandamus directing the State of Uttar
Pradesh and two of its officers in the Food Department to abstain from
enforcing the Uttar Pradesh Food Grains (Futures and Options Prohibition)
Order, 1945, or any orders or directions contained in the letters issued by the
respondents copies whereof are annexed to the petition and marked B and D. The
facts and circumstances leading up to this application may be shortly stated at
the outset.
The Chamber of Commerce, Hapur, is a company
incorporated under the Indian Companies Act with its registered office at
Hapur. There are about 200 members of this Chamber of Commerce including
petitioners Nos. 2 to 4. Petitioner No. 3 is also its ?resident and Petitioner
No. 2 is also a member of its Executive Committee. The members of the Chamber
carry on business in foodgrains including pulses both on ready and forward
basis. The Chamber acts as a clearing agent for a commission and guarantees the
performance of forward contracts by its members upon payment of margin money
according to the rules.
841 On or about the 1st September, 1945, the
U. P. Government, in exercise of powers conferred on it by rule 81 (2) of the
Defence of India Rules, issued Notification No. 8071/c.s. promulgating the
United Provinces Food Grains (Futures and Options Prohibition) Order, 1945,
(hereinafter called "the 1945 Order"). Section 2 (a) of that Order
defined " food grains" as meaning any of the food grains mentioned in
the schedule thereto. Arhar, peas, urd and moong were mentioned as items 6, 7,
8 and 9 of that schedule. Section 3 provided as follows " 3. No person
shall- (a)enter into any futures in foodg rains or pay or receive or agree to
pay or receive any margin relating to any such futures;
(b) enter into any options in food grains.
The Defence of India Rules expired on the
30th September, 1946, and consequently all orders made there under were also
due to expire on the same date. On the 1st October, 1946, however, there came
into force the Essential Supplies (Temporary Powers) Ordinance, 1946
(hereinafter referred to as "the 1946 Ordinance") promulgated by the
Governor-General and published in the Gazette of India on the 25th September,
1946. Section 3 of that Ordinance conferred on the Central Government extensive
powers to control production, supply, distribution of and trade and commerce
in, essential commodities as defined in section 2(a) thereof. Section 4
authorised the Central Government to direct by notified order that the power to
make orders under section 3 should, in relation to such matters and subject to
such conditions as might be specified in the direction, be exercisable also by
such officer subordinate to it or by such Provincial Government or such officer
thereof as might be specified in the direction. Section 5 of that Ordinance ran
as follows :- " 5. Continuance in force of existing orders. Until other
provisions are made under this Ordinance, any order, whether notified or not,
made by whatever authority under rule 80-B, or sub-rule (2) or sub-rule (3) of
rule 81 of the Defence of India Rules, in respect 842 of any matter specified
in section 3, which was in force immediately before the commencement of this
Ordinance shall, notwithstanding the expiration of the said rules, continue in
force so far as consistent with this Ordinance and be deemed to be an order
made under section 3; and all appointments made, licenses or permits granted
and directions issued under any such order and in force immediately before such
commencement shall likewise continue in force and be deemed to be made, granted
or issued in pursuance of this Ordinance. " The 1945 Order, therefore,
continued in force until other provisions were made under the 1946 Ordinance.
In exercise of powers conferred on it by
section 4 of the 1946 Ordinance the Government of India, on the 21st October,
1946, made the notified order No. C.G.603(2)-II l(1) directing that the powers
conferred on it by section 3(1) of that Ordinance should, in relation to
foodstuffs, be exercisable also by any Provincial Government, subject to
certain conditions therein set out.
In November, 1946, was passed the Essential
Supplies (Temporary Powers) Act, 1946 (hereinafter called "the Act").
Section 3 of the Act reproduced section 3 of
the 1946 Ordinance with certain modifications not material for our present
purpose. Section 4 of the Act corresponds to section 4 of the 1946 Ordinance.
The relevant portions of section 17 of the Act provide as follows : --- "
17. Repeal and savings.- (1) The Essential Supplies (Temporary Powers)
Ordinance, 1946 (XVIII of 1946), is- hereby repealed.
(2)Any order made or deemed to be made under
the said Ordinance and in force immediately before the commencement of this Act
shall continue in force and be deemed to be an order made under this Act; and
all appointments made, licences or permits granted and directions issued under any
such order and in force immediately before such commencement shall likewise
continue in force and be deemed to be made, granted or issued in pursuance of
this Act.
843
(3)....................................................
(4)................" In exercise of
powers conferred on it by section 4 of the Act the Central Government, by
Notification No. C. G.
603(2)-III(1), dated the 5th March, 1947,
amended the abovementioned notified order No. PY 603(2)-I, dated the 21st
October, 1946, by inserting after the word "foodstuff" the words
"including coconut oil but excluding other edible oils and oilseeds.
" The net result of this notification was that "edible oils and
oilseeds" were excluded from the scope or operation of the delegated
power. In other words, the power delegated to the Provincial Government was
withdrawn in respect of "edible oils and oilseeds" so that the
Provincial Government could not thenceforth make any order controlling the
production, supply and distribution of or trade and commerce in "edible
oils and oilseeds". On the same day another Notification, being
Notification No. C. G.
603(2)-III(2), was issued by the Central
Government in exercise of powers conferred on it under section 3 of the Act
directing that no order made or deemed to be made by a Provincial Government
under the Act should have effect from that date so as to prohibit or restrict
the movement of edible oilseeds or oils other than coconut oil from any place
in a Province to any other place within or outside the Province, or so as to
regulate or control the price, production or distribution thereof in any way.
Therefore, the 1945 Order ceased to have effect so as to prohibit or restrict
the movement of edible oilseeds or oils other than coconut oil or so to
regulate or control the price, production or distribution thereof in any way.
On the 15th November, 1947, two Notifications
were issued by the Central Government. By Notification No. PY. 603(2)- VI(1)
made under section 4 of the Act the Central Government made a further amendment
in Notification No. PY. 603(2)-1 dated the 21st October, 1946. by inserting
after-the word "oil-seeds" the words "and pulses other than
gram". The effect of this amendment was that "pulses other than
gram" were 844 also excluded from the operation of the power delegated to
the Provincial Governments. In other words, the power delegated to the
Provincial Governments was withdrawn in respect also of "pulses other than
gram", so that the Provincial Governments could not thenceforth make any
order controlling the production, supply and distribution of or trade or
commerce in edible oils and oilseeds and pulses other than gram. Simultaneously
by Notification No. PY. 603 (2)-VI(2) made on the 15th November, 1947, under
section 3 of the Act the Central Government directed that no order made or
deemed to be made under the Act by a Provincial Government should have effect
from that date so as to prohibit or restrict the movement of pulses other than
gram from any place in a Province to any other place within or outside the
Province or so as to regulate or control the price, production or distribution
thereof in any way. As a result of this Notification the 1945 Order also ceased
to have effect so as to prohibit or restrict the movement of pulses other than
gram or so as to regulate or control the price, production or distribution
thereof in any way.
Then came the Uttar Pradesh Food grains
(Futures and Options Prohibition) Order,' 1951. It was promulgated by the State
of Uttar Pradesh on the 20th September, 1951. By section 2(a) this Order
defined "foodgrains" as meaning any of the food grains specified in
the schedule thereto. Arhar, peas, urd and moong were items Nos. 6, 7, 8 and 9
of that schedule. Section 3 of the Order ran as follows " No person
shall-- (a)enter into any "futures in food grains" or pay or receive
any margin relating to any such futures;
(b) enter into any options in
foodgrains." Section 8 made a contravention of any provision of the.
Order or any order issued thereunder
punishable under sections 7 and 7-A of the Act of 1946. By section 9 of this
Order the 1945 Order was withdrawn.
As the Uttar Pradesh Foodgrains (Futures and
Options Prohibition) Order, 1951 directly made it illegal and a punishable
offence for any person to enter into any futures in, amongst others, arhar,
peas, urd and moong or to pay or receive or to agree to pay or receive any
margin relating to any such futures. IO members of the Chamber of Commerce,
Hapur, including the' present petitioners Nos. 2 to 4, on the 29th October,
1951, made an application to this Court under article 32 of the Constitution
for- enforcement of their fundamental right under article 19(1)(g) to carry on
their business and prayed for the issue of a mandamus restraining the State of
Uttar Pradesh from enforcing the Uttar Pradesh Foodgrains (Futures and Options
Prohibition) Order, 195 1, in so far as it related to pulses other than gram
and from exercising any power there. under and for a declaration that section
2(a) read 'with items 6, 7,8 and 9 of the schedule thereto was illegal and
ultra vires the powers of the State Government.
That application succeeded and the offending
Notification to the extent it dealt with arhar, peas, urd and moong was
declared invalid and the State of Uttar Pradesh was directed to abstain from
giving effect to it. As will appear from the judgment pronounced by this Court
on the 15th May, 1952, on that application, it was not seriously disputed that
the effect of the amendments referred to above was that the power to control
and regulate trade originally delegated to the Provincial Government by
Notification No. PY. 603(1)-I, dated the 21st October, 1946, was modified so as
to exclude from the scope of such delegation pulses other-than gram".
On the 10th June, 1953, a letter (Ex. B to
the petition) was addressed by the Deputy Commissioner, Food, Uttar Pradesh, to
all Regional Food Controllers and Deputy Regional Food Controllers and all
District Magistrates in Uttar Pradesh instructing them to regard all futures in
foodgrains mentioned in the schedule to the 1945 Order including pulses other
than gram as punishable. The reasoning advanced was that the Uttar Pradesh
Foodgrains (Futures and Options Prohibition) Order, 1951, having been declared
ultra vires by the judgment pronounced by this Court on the 15th May, 1952,
that Order became unenforceable and 108 846 consequently the 1945 Order
continued in force. A copy of this letter was forwarded, amongst others, to the
Chamber of Commerce, Hapur, for information and guidance. By its letter dated
the 25th June, 1953, the Chamber pointed out that the earlier Order of 1945 had
been withdrawn by section 9 of the Order of 1951 and as the last mentioned
section had not been declared ultra vires by the Supreme Court the 1945 Order
could not be regarded as continuing in force. On the 17th September, 1953, the
Regional Food Controller of Uttar Pradesh wrote a letter (Ex. D to the
petition) to the President, Chamber of Commerce, Hapur, asking the latter to
immediately stop all future transactions pertaining to the foodgrains mentioned
in the schedule to the 1945 Order in which delivery was contemplated within the
State of Uttar Pradesh and threatening action to be taken against the Chamber.
This threat of action necessitated the present petition for the reliefs
mentioned above.
Learned advocate appearing for the State
seeks to justify the attitude of the State on two grounds. It is urged that
section 3 of the 1946 Act which reproduced with certain modifications section 3
of the 1946 Ordinance, conferred on the Central Government extensive powers to
control production, supply, distribution of and trade and commerce in essential
commodities. This power was delegated by the Central Government to the
Provincial Governments by Notifi- cation No. PY. 603(2)-1 issued on the 21st
October, 1946, under section 4 of the 1946 Ordinance. The subsequent amendments
made by Notification No. C.G. 603(2)-III(1) dated the 5th March, 1947, and
Notification No. PY. 603(2)-VI(1) dated the 15th November, 1947, withdrew the
power so delegated only with respect to "edible oils and oilseeds and
pulses other than gram" and such withdrawal was only with regard to the
production, supply and distribution of those commodities but not with regard to
trade and commerce therein. The second ground advanced is that the Order of
1951 having been declared ultra vires the Order of 1945, which was continued
first by section 5 of the 1946 Ordinance and then by section 17 of the Act,
remained 847 in full force. In our judgment there is no substance in either of
the two arguments.
As we have already pointed out, two
Notifications were published on the 5th March, 1947,and two Notifications were
issued on the 15th November 1947. By Notification No. C. G.
603(2)-III(1) dated the 5th March, 1947, and
Notification No. PY. 603 (2)-VI (1), dated the 15th November, 1947, the earlier
Notification No. 603(2)-I, dated the 21st October, 1946, was amended by
inserting therein the words "edible oils and oilseeds" and
"pulses other than gram" and thereby excluding those commodities from
the scope of the delegation. As a result of these amendments the Provincial
Governments could not, from and after the respective dates of those amending
Notifications, make any order controlling production, supply, distribution of
or trade and commerce in those commodities. These Notifications did not purport
to affect Notifications that had been previously -made. But simultaneously with
these amending Notifications two more Notifications were issued, namely,
Notification No. C.G. 603(2)-III(2), dated the 5th March, 1947, and
Notification No. PY. 603(2)-VI(2), dated the 15th November, 1947. By these
Notifications the Central Government directed that no order made or deemed to
be made under the Act by a Provincial Government should have effect so as to
prohibit or restrict the movement of edible oils and oilseeds and pulses other
than gram or to regulate or control the price, production or distribution of
those commodities in any way.
As a result of the joint operation of these
Notifications the 1945 Order ceased to have effect so as to prohibit or
restrict the movement of edible oils and oilseeds and pulses other than gram or
to regulate or control the price, production or distribution of those
commodities. As that Order of 1945 ceased to have effect with regard to the
price, production, distribution and movement of those commodities, it is not
easy to comprehend how that Order could continue to regulate or control trade
or commerce in those commodities. Trade or commerce in any commodity cannot be
controlled unless the price, production, distribution and movement of that
commodity can also be controlled.
848 It follows, therefore, contrary to the
contentions of the State, that these two Notifications of 1947 quite effectively
superseded the 1945 Order so far as it purported to regulate or control the
price, production, distribution and movement of or trade and commerce in edible
oils and oilseeds and pulses other than gram.
The second branch of the argument is equally
fallacious. It is wholly incorrect to say that the judgment pronounced by this
Court on the 15th May, 1952, declared the Uttar Pradesh Foodgrains (Futures and
Options Prohibition) Order, 1951, ultra vires and invalid in its entirety. That
judgment only declared it invalid to the extent of the restrictions complained
of by the then petitioners, namely, in so far as it purported to restrict
dealings in edible oils and oilseeds and pulses other than gram. The rest of
that Order of 1951 and in particular section 9 by which the 1945 Order had been
withdrawn remained unaffected by that judgment of this Court. It is quite
difficult to appreciate how, in the circumstances, the Order of 1945 can be
regarded as having been revived by the judgment in respect of edible oils and
oilseeds and pulses other than gram in spite of the express withdrawal of that
Order by section 9 of the Order of 1951 which otherwise remains operative.
In our judgment there is no substance
whatever in either of the two branches of argument advanced before us and this
application must succeed. Accordingly we grant prayers (a), (b), (c) and (d) of
the petition.
Before concluding we desire to express our
strong disapproval of the wholly unwarranted attitude adopted by the officers
of the State of Uttar Pradesh. Assuming there was any substance in their
contentions, the same should have been advanced before this Court on the
previous occasion, for the contentions, if well founded, would have been a
complete answer to that application. If the contentions were subsequently
discovered, then the same should have been brought before the Court by way of
review, if any review lay.
849 Instead of adopting that straightforward
course the officers of the State have sought to circumvent the decision of this
Court on a flimsy pretext and covertly, to challenge its correctness on an
obviously untenable plea which has not even the merit of -a seeming
plausibility. This conduct verges dangerously on a contempt of this Court. We
desire to make it quite clear that we view with great disfavour such unworthy
attempt to get round the decision of this Court.
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