The Union of India & Ors Vs.
Messrs. Bhana Mal Gulzari Mal& Ors  INSC 156 (16 December 1959)
SINHA, BHUVNESHWAR P.(CJ) SUBBARAO, K.
GUPTA, K.C. DAS SHAH, J.C.
CITATION: 1960 AIR 475 1960 SCR (2) 627
CITATOR INFO :
RF 1961 SC 705 (18) RF 1961 SC 928 (7,16) R
1965 SC1107 (30,31) RF 1967 SC1895 (14) MV 1968 SC1232 (95) F 1971 SC 474 (7) R
1974 SC 366 (56,59) F 1987 SC1802 (9)
Iron and Steel Control-Notification issued by
Controller fixing maximum price of steel--Constitutional validity-Iron and
Steel (Control of Production and Distribution) Order , 1941, cl.11B Essential
Supplies (Temporary Powers) Act, 1946 (XXIV of 1946), ss. 3, 4-Constitution of
India, Arts. 19(1)(f) and (g).
The respondent company was registered a
stock-holder under the Iron and Steel (Control of Production and Distribution)
Order, 1941 issued by the Central Government in exercise of its powers under r.
81(2) Of the Defence of India Rules. On December 10, 1949, the Iron and Steel
Controller issued a notification under cl. 11B of the Order decreasing the
prices already fixed for all categories of steel by Rs. 30 per ton. Crirminal
cases were started against the company, its three directors, its general 628 manager
and two sales-men under cl. 11B, read with s. 7 of the Essential Supplies
(Temporary Powers) Act, 1946, on the allegation that they had sold their old
stock of steel for prices higher than those prescribed by the said
notification. The respondents moved the High Court under Art. 226 of the
Constitution for quashing the said criminal proceedings. Their contention was
that cl. 11B of the Order was invalid and unconstitutional as it violated Arts.
19(1)(f) and (g) of the Constitution. It was
also urged that the said clause was ultra vires the powers conferred on the
Central Government by S. 3 Of the Act, under which the order must now be deemed
to have been issued. The High Court held that the cl. 11B violated Arts.
19(1)(f) and (g) of the Constitution. The Union of India appealed.
Held, that neither cl. 11B of the Iron and
Steel (Control of Production and Distribution) Order, 1941, nor the impugned
notification violated Art. 19(1)(f) and (g) of the Constitution and their
validity was beyond question.
The clear implication of the constitutional
validity of ss. 3 and 4 of the Essential Supplies (Temporary powers) Act, 1946,
as found by this Court in Harishankar Bagla v. The State of Madhya Pradesh,
 1 S.C.R. 380, is that if the Central Government, instead of exercising
its own authority under s. 3 Of the Act, chooses by a notified order to
authorise the Controller to pass appropriate orders, the notified order cannot
be challenged on the ground that it suffers from the vice of excessive
All that the Iron and Steel (Control of
Production and Distribution) Order, 1941, seeks to do is to prescribe an
integrated scheme for the guidance of the Controller and other specified
authorities in effectuating the policy laid down by s. 3 of the Act and it is
obvious that cl. 11B of the Order by authorising the fixation of the maximum
price for the different categories of iron and steel directly carries out that
legislative object, namely, equitable distribution of the goods at fair prices.
The power conferred on the Central Government by S. 3 and on the specified
authority by s. 4 Of the Act is canalised by the policy clearly enunciated by
S. 3, and cl. 11B which seeks to further canalise the exercise of that power
cannot be said to confer on the delegate uncanalised or unbridled power or
suffer from excessive delegation.
It is apparent, therefore, that cl. 11B read
by itself cannot violate Art. 19 of the Constitution and there is no basis for
the argument that by conferring such powers as it does on the Controller, it
unreasonably restricts the exercise of fundamental rights under Art. 19(1)(f)
and (g) of the Constitution.
It may, however, still be open to a party to
show that a price structure fixed by the Controller by a particular
notification violates Art. 19 of the Constitution. But before this can be
successfully done, he must be able to show not merely that a particular
stock-holder suffered loss in respect of particular 629 transactions but that
in a large majority of cases, if not all, the impugned notification is likely
-to adversely affect the fundamental right of the dealers under Arts.
19(1)(f) and (g) of the Constitution.
M/s. Dwarka Prasad Laxmi Narain v. The State
of Uttar Pradesh, S.C.R. 803 and The State of Rajasthan v. Nath Mul and
Mitha Mal,  S.C.R. 982, distinguished.
Harishankar Bagla v. The State of Madhya
Pradesh,  1 S.C.R. 380, explained and applied.
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeals Nos. 36 to 38 of 1955.
Appeals from the judgment and order dated the
14th February, 1955, of the Punjab High Court (Circuit Bench), Delhi, in
Criminal Writs Nos. 36-D, 37-D and 52-D of 1954.
C. K. Daphtary, Solicitor-General of India,
N. S. Bindra and R. H. Dhebar, for the appellants.
N. C. Chatterjee, A. N. Sinha and N. H.
Hingorani, for the respondents.
1959. December 16. The judgment of Sinha, C.
J., Gajendragadkar, Das Gupta and Shah, JJ., was delivered by Gajendragadkar,
J. Subba Rao, J., delivered a separate judgment.
GAJENDRAGADKAR J.-These three appeals which
have been filed in this Court with certificates issued by the Punjab High Court
under Art. 132(1) of the Constitution are directed against the orders passed by
the said High Court by which cl. 11B of Iron and Steel (Control of Production
& Distribution) Order, 1941 (hereinafter called the Order) has been
declared unconstitutional and inoperative, and the criminal proceedings
commenced against M/s. Bhana Mal Gulzari Mal and others under the said clause
11B read with s. 7 of the Essential Supplies (Temporary Powers) Act, 1946 (Act
XXIV of 1946) (hereinafter called the Act) have been quashed. M/s. Bhana Mal
Gulzari Mal Ltd., is a private limited company having its registered office at
Chawri Bazar, Delhi. Since 1948, it has been registered as a stockholder by the
Iron and Steel Controller (hereinafter called the Controller) under cl. 2(d) of
the Order. It appears that 630 under cl. 11B of the Order notifications had
been issued from time to time giving a schedule of base prices in respect of
iron and steel. On December 10, 1949, the Controller issued a, notification
under cl. 11B decreasing by Rs. 30 per ton the prices already fixed for all
categories of steel. Several criminal cases, were instituted (Nos. 385-410 of
1954) against the said company, its three directors, its general manager and
two salesmen (hereinafter called respondents 1 to 7) on the allegation that
they, had sold their -old stock of steel for prices higher than those
prescribed by the said notification of December 10, 1949. When the respondents
had thus to face several criminal proceedings they filed three writ petitions
in the Punjab High Court against the Union of India, the State of Punjab and
others (hereinafter called the appellants). By their Writ petition No. 36 of
1954 (23-3- 54) they prayed for a direction, order or writ restraining the
appellants from enforcing or giving effect to cl. 11B or the said notification,
as well as a writ or order quashing the criminal proceedings commenced against
them. The decision in this writ petition has given rise to Criminal Appeal No.
36 of 1955. Writ Petition No. 37 of 1954 (23-3- 54) prayed for a similar order
specifically in respect of the criminal cases Nos. 385410 of 1954 then pending
-against the respondents, and asked for an interim stay of the said
proceedings. The order passed on this writ petition has given rise to Criminal
Appeal No. 37 of 1955. It appears that under some of the criminal proceedings
filed against the respondents orders for search had been passed by the trial
Magistrate on May 12, 1953. These orders ,were challenged by the respondents by
their Writ Petition No. 52- D of 1954 (7-4-54). An appropriate writ was asked
for quashing the warrants issued under the said orders. From the orders passed
on this writ petition, Criminal Appeal No. 38 of 1955 arises. In all 'these
writ petitions the respondents' contention was that cl. 11B was invalid and
unconstitutional as it violated Arts. 19(1)(f) and (g) as well as Art. 31 of
the Constitution. They also urged that the said clause was ultra vires the
powers 631 conferred on the Central Government by s. 3 of the Act. The
notification issued by the Controller on December 10, 1949, was challenged by
the respondents on the ground that it was issued under a clause which was
invalid and was otherwise unreasonable and void. In substance the High Court
has upheld the respondents' plea that cl. 11B is ultra vires as it is violative
of the fundamental rights guaranteed under Arts. 19 (1)(f) and (g) of the
Constitution. In the present appeals the appellants seek to challenge the
correctness of this conclusion. Thus the main point which calls for our
decision in this group of appeals is whether cl. 11B of the Order is valid or
The impugned clause forms part of the Order
which has been issued by the Central Government in exercise of its powers
conferred by sub-r. (2) of r. 81 of the Defence of India Rules. Before
considering the appellant's contention that cl. 11B is valid it would be
necessary to refer briefly to the parent Act, and to trace the vicissitudes
through which it has passed, to examine its material provisions and their
effect on the controversy in the present appeals. It is well-known that on
September 29, 1939, the Defence of India Act was passed to provide for special
measures to ensure the public safety and interest and the defence of British
India and the trial of certain offences. The Act and the Rules framed there under
were enacted to meet the emergency which had arisen as a result of the Second
World War. Rule 81(2)(b) of the Rules authorised the Central Government inter
alia, so far as appears to it necessary or expedient for securing the defence
of British India or the efficient prosecution of war or for maintaining
supplies and services essential to the life of the community, to provide by
order for controlling the prices or rates at which articles or things of any
description whatsoever may be sold or hired and for relaxing any maximum or
minimum limits otherwise imposed on such prices or rates. This Act was followed
by Ordinance No. XVIII of 1946, which was promulgated on September 25, 1946.
Clauses 3 and 4 of this Ordinance are relevant for our 632 purpose. Clause 3(1)
provides inter alia that the Central Government, so far as it appears to it
necessary or expedient for maintaining or increasing supplies of any essential
commodity, or for securing their equitable distribution and availability at
fair prices, may by notified order provide for regulating or prohibiting the
production, supply and distribution thereof, and trade and commerce therein;
sub-cl. 2(c) adds inter alia that without prejudice to the generality of the
powers conferred by sub- s. (1), an order made there under may provide for
controlling the prices at which any essential commodity may be bought or sold.
This Ordinance was issued to provide for the continuance during a limited
period of powers to control the production, supply and distribution of, and
trade and commerce in, certain commodities which were treated as essential for
national economy. The essential commodities which were covered by the Ordinance
were defined by cl. 2(a) as meaning any of the classes of commodities
specified; they included iron, steel and coal. Having provided for the
delegation of the specified powers to the Central Government under cl. 3 the
Ordinance provided for sub-delegation by cl.
4. Under this clause the Central Government
was authorised to direct by a notified order that the power to make orders
under cl. 3 shall, in relation to such matters and subject to such conditions, if
any, as may be specified in the direction, be exerciseable by (a) such officer
or authority subordinate to the Central Government, or (b) such Provincial
Government or such officer or authority subordinate to a Provincial Government,
as may be specified in the direction. This Ordinance was later followed by the
Act (Act XXIV of 1946) which was passed on November 19, 1946. The preamble to
the Act, the definition of essential commodity and the provisions for
delegation and sub- delegation which were included in the Ordinance have been
re-enacted by the Act. The life of the Act thus passed was continued from time
to time until the Essential Commodities Act No. 10 of 1955 was put on the
statute book as a permanent measure. The provisions of the ] Defence of India
Act and the 633 Rules framed there under came into force to meet the emergency
created by the war; but even after the war came to an end and -hostilities
ceased the emergency created by the war continued and the economic problems
facing the country needed the assistance of similar emergency provisions.
That explains why those provisions have
continued ever since 1939.
The Order of which cl. 11B is a part was
issued on July 26, 1941, by the Central Government in exercise of the powers
conferred on it by r. 81(2) of the Defence of India Rules which correspond to
the provisions of s. 3 of the Act.
It may be pointed out that as a result of the
combined operation of cl. 5 of Ordinance XVIII of 1946 and s. 7 of the Act, the
Order must now be deemed to have been issued under s. 3 of the Act. It is
necessary to examine briefly the broad features of the scheme of this Order.
The Controller specified in the Order is the person appointed as Iron and Steel
Controller by the Central Government and includes any person described by cl.
2(a) of the Order. The Order applies to all iron and steel of the categories
specified in its Second Schedule. Clauses 4 and 5 regulate the acquisition and
disposal of iron or steel, and cl. 8 requires that the use of iron and steel must
conform to the conditions governing the acquisition. This clause shows that, in
exercise of the powers conferred on the Controller by the proviso to it, the
Controller has to take into account the requirements of persons holding stocks,
the requirements of persons needing such stocks, the transport facilities
available and any other factor including a strike or lock-out affecting the
production or fabrication.
Clauses 10B and 10C empower the Controller to
direct sale of iron and steel in cases specified in the said clauses.
Clause 11A authorises the Controller, where
he is satisfied that such action is necessary in order to co-ordinate the
production of iron and steel with the demands of iron or steel which have
arisen or are likely to arise, to prohibit or require production of the said
commodities in the manner indicated by sub-cls. (a), (b) and (c) therein. That
takes us to cl. 11 B the validity of which 81 634 falls to be considered in the
present appeals. It reads thus:
"11B. Power to fix prices-(1) The
Controller may from time to time by notification in the Gazette of India fix
the maximum prices at which any iron or steel may be sold (a) by a producer,
(b) by Stockholder including a Controller Stockholder and (c) by any other
person or class of persons.
Such price or prices may differ from iron and
steel obtainable from different sources and may include allowances for
contribution to and payment from any Equalisation Fund established by the
Controller for equalising freight, the concession rates payable to each
producer or class of producers under agreements entered into by the Controller
with the producers from time to time, and any other disadvantages.
The Controller, may also, by a general or
special order in writing, require any person or, class of persons enumerated
above to pay such amount on account of allowances for contribution to any
Equalisation Fund, within such period and in such manner as the Controller may
direct in this behalf.
(2) For the purpose of applying the prices
notified under sub-clause (1) the Controller may himself classify any iron and
steel and may, if no appropriate price has been so notified, fix such price as
he considers appropriate:
Provided that the Controller may direct that
the maximum prices fixed under sub-clause (1) or (2) shall not apply to any
specified stocks of iron or steel and may, in respect of such stocks specify
the maximum prices at which such iron or steel may be sold and communicate the
same in writing to the persons concerned and any person or persons holding such
stocks of iron and steel for which prices have been so specified shall, at the
time of the sale of such iron or steel or part thereof, mention the number and
date of the order of the Controller in every Cash Memo, Bill or other document evidencing
the sale or disposal out of the respective stocks to which the order of the
635 (3) No producer or stockholder or other
person shall sell or offer to sell, and no person shall acquire any iron or
steel at a price exceeding the maximum prices fixed under sub-clause (1) or
(2)." Clause 12 gives power to the Central Government to give directions
to the Controller or other authorities in respect of the procedure to be
followed by them in exercising their powers and generally for the purpose of
giving effect to the provisions of the Order. It would thus be seen that in
issuing this Order the Central Government have prescribed a self sufficient
scheme for regulating the production, supply and distribution of steel and iron
at fair prices. The Controller is required to take an over-all view of the
needs of national economy in respect of steel and iron and to issue appropriate
directions in order to effectuate the policy of the Act. The appellants'
contention is that if cl. 11 B is considered in the light of the scheme which
the Order has in view it cannot be said that the said clause is violative of
Arts. 19(1)(f) and (g) of the Constitution.
Before we address ourselves to the question
about the vires of cl. 11B it is necessary to make it clear that the validity
of ss. 3 and 4 of the Act has not been disputed before us, and indeed it cannot
be disputed, in view of the decision of the Court in Harishankar Bagla &
Anr. v. The State of Madhya Pradesh (1). The challenge to the vires of cl. 11B
has, therefore, to be examined on the basis that ss. 3 and 4 of the Act are
valid. It is relevant to set out the implications of this position. When it is
assumed that ss.
3 and 4 are valid it necessarily means that
they do not suffer from the vice of excessive delegation. When the Legislature
delegated its authority to the Central Government to provide by order for
regulating or prohibiting the production, supply and distribution of steel and
iron, it had not surrendered its essential legislative function in favour of
the Central Government. The preamble to the Act and the material words used in
s. 3(1) itself embody the decision of the Legislature in the matter of the
legislative policy, and their effect is to lay (1)  1 S.C.R. 380.
636 down a binding rule of conduct in the
light of which the Central Government had to exercise its powers conferred on
it by s. 3. The Legislature has declared its decision that the commodities in
question are essential for the maintenance and pi-ogress of national economy,
and it has also expressed its determination that in the interest of national
economy it is expedient that the supply of the said commodities should be
maintained or increased as circumstances may require and the commodities should
be made available for equitable distribution at fair prices. The concept of
fair prices which has been deliberately introduced by the Legislature in s. 3
gives sufficient guidance to the Central Government in prescribing the price
structure for the commodities from time to time. With the rise and fall of
national demand for the said commodities or fluctuations in the supplies
thereof, the chart of prices may, in the absence of well planned regulation,
prove erratic and prejudicial to national economy, and without rational and
well-planned regulation equitable distribution may be difficult to achieve; and
so the Legislature has empowered the Central Government to achieve the object
of equitable distribution of the commodities in question by fixing fair prices
for them. Thus, when it is said that the delegation to the Central Government
by s. 3 is valid, it means that the Central Government has been given
sufficient and proper guidance for exercising its powers in effectuating the
policy of the statute.
Similarly the validity of s. 4 postulates
that the powers conferred on the sub-delegate do not suffer from the vice of
excessive delegation. Sub-delegation authorised by s. 4 is also justified
because, like the delegate under s. 3, the sub-delegate under s. 4 has been
given ample guidance to exercise his powers when he is authorised by the
Central Government in that behalf. If the Central Government chooses to
exercise its powers under s. 3 itself it may pass appropriate orders to give
effect to the policy of the Act in respect of matters covered by s. 3(1) and
(2). When it adopts such a course the Central Government would have exercised
its own authority under s. 3; and the exercise 637 of its power cannot be
challenged on' the ground that it suffers from the vice of excessive delegation.
Similarly where by a notified order passed by the Central Government tinder s.
3 the Controller is authorised to pass appropriate orders, the notified order
cannot be challenged on the ground that it suffers from the vice of excessive
delegation. In our opinion, this position implicit in the assumption that ss. 3
and 4 are valid.
What does the Order purport to do ? It
purports to prescribe a scheme for the guidance of the Controller or other
authorities specified in it when they exercise their powers and attempt to
effectuate the policy of the Act. There can be no doubt that in exercising its
powers under s. 3 the Central Government could itself have prescribed a price
structure for steel and iron from time to time. Similarly, if by a notified order
issued under s. 3 the Central Government bad authorised the Controller to do
so, he could have himself prescribed a price structure in respect of steel and
iron from time to time. Instead of passing a bare notified order authorising
the Controller to take appropriate steps to effectuate the policy of the Act,
the Order purports to give him additional guidance by making several relevant
provisions in regard to the production, supply and sale of steel and iron. The
several clauses of the Order constitute an integrated scheme which would enable
the Controller to take steps to give effect to the policy laid down by s. 3 of
the Act. Clause 11B itself provides for the fixation of maximum prices for iron
First of all the Controller has to classify iron
and steel into different categories according as they are tested or untested;
an Equalisation Fund has to be established by him for equalising freight, and
he has to take into account the concession which is payable to each producer or
class of producers under existing valid agreements and any other disadvantages.
He is empowered to require the parties concerned to make a contribution to the
Equalisation Fund, and the maximum prices which he has to fix have to be fixed
separately for the producers, the stockholders including the controlled
stockholders and other persons or class of persons. Having fixed 638 maximum
prices as prescribed by cl. 12 the proviso confers power on the Controller to
grant exemptions to specified stocks of iron and steel falling under the said
After thus prescribing the procedure for
fixing the maximum prices and after indicating some of the factors which have
to be considered in fixing the maximum prices, sub-cl. (3) of cl. 11B imposes a
statutory prohibition against the specified persons from selling or offering to
sell iron and steel at a price exceeding the maximum price fixed under sub-cl.
It is obvious that by prescribing the maximum
prices for the different categories of iron and steel cl. 11B directly carries
out the legislative object prescribed in s. 3 because the fixation of maximum
prices would make stocks of iron and steel available for equitable distribution
at fair prices. It is not difficult to appreciate how and why the Legislature
must have thought that it would be inexpedient either to define or describe in
detail all the relevant factors which have to be considered in fixing the fair
price of an essential commodity from time to time. In prescribing a schedule of
maximum prices the Controller has to take into account the position in respect
of production of the commodities in question, the demand for the said
commodities, the availability of the said commodities from foreign sources and
the anticipated increase or decrease in the said supply or demand. Foreign
prices for the said commodities may also be not irrelevant. Having regard to
the fact that the decision about the maximum prices in respect of iron and
steel would depend on a rational evaluation from time to time of all these
varied factors the Legislature may well have thought that this problem should
be left to be tackled by the delegate with enough freedom, the policy of the
Legislature having been clearly indicated by s. 3 in that behalf. The object is
equitable distribution of the commodity, and for achieving the object the
delegate has to see that the said commodity is available in sufficient
quantities to meet the demand from time to time at fair prices. In our opinion,
therefore, if cl. 11B is considered as a part of the composite scheme evidenced
639 by the whole of the Order and its validity is examined in the light of the
provisions of ss. 3 and 4 of the Act, it would be difficult to sustain the plea
that it confers on the delegate uncanalised or unbridled power. We are inclined
to hold that the power conferred on the Central Government by s. 3 and on the
authority specified by s. 4 is canalised by the clear enunciation of the
legislative policy in s. 3 and that cl. 11B seeks further to canalise the
exercise of the said power ; and so it is not a case where the validity of the
clause can be successfully challenged on the ground of excessive delegation. We
have referred to this aspect of the matter at some length because it appears to
have influenced the final conclusion in the judgment under appeal. As we will
presently indicate the argument before us has, however, centred on the question
as to whether the clause has violated Art. 19 of the Constitution.
It was faintly argued that cl. 11B should
have referred to the prices of some specified year as basic prices of the
commodities and should have directed the Controller to prescribe the maximum
prices in respect thereof by reference to the said basic prices. In support of
this contention reliance is placed on the provisions of s. 3 of the English
Prices of Goods Act, 1939. It appears that s. 1 of the said Act prohibits sale
of price-regulated goods at more than permitted price, and s. 3 defines the
expression " basic price " as the price at which in the ordinary
course of business in the case of which those goods were to be sold, agreed to
be sold or offered for sale at the 21,st day of August, 1939. Section 4 defines
the permitted increases.
It is in the light of the operation of ss. 3
and 4 that the prohibition enacted by s. 1 becomes effective under the act.
Reference is also made to the American
Emergency Price Control Act 1942, under which the administrator is directed, in
fixing prices, to give due consideration so far as practicable to prices
prevailing during a designated base period and to make adjustments for relevant
factors of general applicability (Vide: Yakus v. United States (1)).
In our (1) (1943) 321 U. S. 4314.
640 opinion, the analogy of the two statutes
cannot effectively sustain the argument that in the absence of a corresponding
provision in cl. 11B it must necessarily be held to be unconstitutional. In
deciding the nature and extent of the guidance which should be given to the
delegate Legislature must inevitably take into account the special features of
the object which it intends to achieve by a particular statute. As we have
already indicated the object which was intended to be achieved and the means
which were required to be adopted in the achievement of the said object have
been clearly enumerated by the Legislature as a matter of legislative decision.
Whether or not some other matters also should have been included in the
legislative decision must be left to the Legislature itself. The question which
we have to consider is whether the power conferred on the delegate is
uncanalised or unguided. The answer to this question must, we think, be in
favour of the appellants.
Having regard to the nature of the problem
which the Legislature wanted to attack it may have come to the conclusion that
it would be inexpedient to limit the discretion of the delegate in fixing the
maximum prices by reference to any basic price. Therefore, we must hold that
cl. 11B is not unconstitutional on the ground of excessive delegation.
It is of course true that though cl. 11B may
not be unconstitutional on the ground of excessive delegation its validity can
still be attacked on the ground that it violates Arts. 19(1)(f) and (g) of the
Constitution. Mr. Chatterjee realised that failure to appreciate the effect of
this Court's decision in Bagla's case (1) constituted the main infirmity in the
judgment under appeal; and so he did not press the argument about excessive
delegation. He contended that cl. 11B was void because it violated Arts. 19
(1)(f) and (g) inasmuch as the power conferred on the Controller by the said
clause puts an unreasonable restriction on the respondents' fundamental rights
guaranteed under Art. 19. In support of this argument he has relied on the
decisions of this Court in M/s. Dwarka Prasad Laxmi Narain v. The State of Uttar
Pradesh & Two Ors.
(1)  1 S.C.R. 380.
(2)  S.C.R. 803.
641 and The State of Rajasthan v. Nath Mal
and Mitha Mal (1).
On the other hand, the learned
Solicitor-General has contended that the decision of this Court in the case of
Harishankar Bagla (2) in effect concludes the controversy between the parties
in the present appeals. We will presently refer to these decisions; but before
we do so we may mention the material facts on which the contention is raised.
The challenge to the validity of the criminal proceedings pending against the
respondents can be made on three alternative grounds; it can be urged that ss.
3 and 4 of the Act are ultra vires, and if that is so neither the Order
subsequently issued nor cl. 11B nor the fixation of prices would be valid. We
have already shown that this form of challenge has not been adopted by the
respondents. It can also be urged that either the whole of the Order issued by
the Central Government or cl. 11B in particular is invalid as offending Arts.
19(1)(f) and (i) of the Constitution. It is with this argument that we are at
present concerned: or, alternatively it can be urged that the actual fixation
of prices by which a flat reduction of Rs. 30 per ton was directed is itself
unreasonable and violative of Arts. 19(1)(f) and (g). Now in regard to the
challenge to cl. 11B on the ground that it violates Art. 19 it is difficult to
see how this clause by itself can be said to violate Art. 19. In so far as the
argument proceeds on the assumption that the authority conferred on the
Controller by cl. 11B is uncanalised or unbridled or unguided, we have already
held that the clause does not suffer from any such infirmity. Therefore reading
cl. 11B by itself we do not see bow it would be possible to hold that the said
clause is violative of Art. 19. In fact, if ss. 3 and 4 are valid and cl. 11B
do-es nothing more than prescribe conditions for the exercise of the delegate's
authority which are consistent with s. 3 it is only the actual price structure
fixed by the Controller which in a given case can be successfully challenged as
violative of Art. 19. Let us therefore consider whether it is open to the
respondents to challenge the said price structure in the present appeals.
(1)  S.C.R. 982.
(2)  1 S.C.R. 380.
82 642 In their writ petition the respondents
had challenged the validity of the notification issued by the Controller on
December 10, 1949, mainly, if not wholly, on the ground that it was issued
under cl. 11B which itself was void. It is true that in the course of the arguments
it appears to have been urged before the High Court that the flat deduction of
Rs. 30 per ton directed by the impugned notification is unreasonable, and in
its judgment the High Court has characterised the said deduction as being
confiscatory. It also appears that the price for sale by registered producers
of untested articles was Rs. 333 per ton whereas the price for sale by
controlled stock holders is Rs. 363 and the price at which the respondents
could sell was Rs. 378 per ton. As a result of -the deduction of Rs. 30
directed by the impugned notification the respondents were required to sell at
Rs. 348 per ton. It is alleged on their behalf that they had purchased the
commodity from the controlled stockholders at the rate of Rs. 363 per ton and
in consequence compelling them to sell the comm. odity at the reduced price
means a loss of Rs. 15 per ton. This part of the respondents' case has not been
tried by the High Court and since it was a matter in dispute between the parties
it could not be tried in writ proceedings; but apart from it the petitions do
not show that the respondents seriously challenged the validity of the
notification on this aspect of the matter. Besides in considering the validity
of the notification it would not be enough to show that a particular registered
stockholder suffered loss in respect of particular transactions. What will have
to be proved in such a case is -the general effect of the impugned notification
on all the classes of dealers taken as a whole.
If it is shown that in a large majority of
cases, if not all, the impugned notification would adversely affect the
fundamental right of the dealers guaranteed under Arts.
19(1)(f) and (g) that may constitute a
serious infirmity in the validity of the notification. In the present
proceedings no case has been made out on this ground and so we cannot embark
upon an enquiry of that type in appeal.
643 It still remains to consider the
decisions of this Court on which Mr. Chatterjee has relied. In the case of M/s.
Dwarka Prasad Laxmi Narain (1) the provision of cl. 4(3) of the Uttar Pradesh
Coal Control Order, 1953, was held to be void as imposing an unreasonable
restriction upon the freedom of trade and business guaranteed under Art.
19(1)(g) of the Constitution, and not coming within the protection afforded by
cl. (6) of the article. It is significant that in dealing with the validity of
the impugned clause the court has expressly stated that the vires of ss. 3 and
4 of the Act were not challenged. The impugned clause, it was, however, held,
had conferred on the licensing authority unrestricted power without framing any
rules or issuing any directions to regulate or guide his discretion. Besides
the power could be exercised not only by the State Coal Controller but by any
person to whom he may choose to delegate the same and it was observed that the
choice can be made in favour of any and every person. It is because of these
features of the impugned clause that this Court held that the clause cannot be
held to be reasonable. It is difficult to see how this decision can help the
respondents in attacking cl. 11B. We have already indicated that the powers
exerciseable by the Controller under cl. 11B are in terms made subject to the
general power of the Central Government to give directions prescribed by cl.
Incidentally we may point out that though cl.
4(3) was struck down by this Court cls. 7 and 8 which empower the Coal
Controller to prescribe the terms and prices on which the commodity in question
could be sold were upheld as valid. Mr. Chatterjee contends that in upholding
these two clauses this Court has taken into account the formula prescribed by
Schedule III and it appeared to the Court that the application of the formula
did not on the whole lead to any unreasonable result. Besides the explanation
to cl. 8 also provided some guidance to the authority fixing the price
structure and that guidance was also taken into account by this Court in
upholding the validity of the two impugned clauses. That no doubt is true; but,
in our opinion, it would be unreasonable (1)  S.C.R. 803.
644 to suggest, as Mr. Chatterjee sought to
do, that in the absence of provisions like the explanation to cl. 8 or the
formula to Schedule 111 cl. 11B in the present ease should be struck down as
void. Such a contention finds no support in the decision in the case of M/s.
Dwarka Prasad Laxmi Narain (1).
In the case of Nath Mal (2), this Court
struck down the latter part of cl. 25 of the Rajasthan Foodgrains Control Order,
1949. In this case again it is significant that the challenge to the impugned
clause proceeded on the specific and express assumption that s. 3 of the Act
was valid. Now it appears that the impugned clause empowered the Government to
requisition the stock at a price lower than the selling price thus causing loss
to the persons whose stocks are freezed while at the same time the Government
was free to sell the same stocks at a higher price and make a profit.
The case of the respondent which illustrated
this vicious tendency of the impugned clause was treated as a typical case
which showed how business of grain-dealers would be paralysed by the operation
of the clause. It was on this view about the effect of the clause in general
that the offending portion was struck down under Art. 19(1)(g) of the
Constitution. It was held also to contravene Art. 31(2).
This decision again does not assist the
respondents' case because, as we have already pointed out, the validity of the
impugned notification has not been challenged on any such ground in the present
That takes us to the decision of this Court
in the case of Harishankar Bagla (3) on which the appellants strongly rely.
In that case this Court has held that ss. 3
and 4 of the Act are not ultra vires. It appears that s. 6 of the Act was held
to be ultra vires by, the Nagpur High Court from whose decision the appeal
arose. This Court reversed that conclusion and held that s. 6 of the Act also
The appellant had challenged not only ss. 3,
4 and 6 of the Act but also the impugned Control Order. This order was the
Cotton Textile (Control of Movement) Order, 1948. Section 3 of the Control
Order in particular was (1)  S.C.R. 803. (2)  S.C.R. 982.
(3)  1 S.C.R. 380.
645 challenged as infringing the rights of a
citizen guaranteed under Arts. 19(1)(f) and Broadly stated this section of the
Control Order prohibited transport except under and in accordance with a
general permit or special transport, permit as prescribed by it. The argument
was that the power conferred by s. 3 constituted an unreasonable restriction on
the fundamental rights of the citizen under Arts. 19(1)(f) and (g) and that in
substance it suffered from the same vice as cl. 4(3) of the Uttar Pradesh Coal
Control Order which had been struck down by this Court in the case of M/s. Dwarka
Prasad Laxmi Narain (1). This argument was rejected and it was observed that
the impugned clause was not at all similar to cl. 4(3) with which this Court
was concerned in the case of M/ s. Dwarka Prasad Laxmi Narain (1). The
appellants contend that the reasons given by this Court in upholding s. 3 of
the Order applied with equal force to cl. 11B in the present appeals. It cannot
be said that there is no force in this contention. In the result we hold that
neither cl. 11B of the Order nor the impugned notification issued by the
Controller on December 10, 1949, violate the respondents' fundamental rights
under Arts. 19(1)(f) and (g), and so their validity cannot be successfully challenged.
The orders passed by the High Court on the
writ petitions filed by the respondents before it would, therefore, be set
aside and the said petitions dismissed.
SUBBA RAO J.-I have had the advantage of
perusing the judgment of my learned brother, Gajendragadkar, J. I agree with
The question raised in this case is whether
cl. 11B of Iron and Steel (Control of Production And Distribution) Order, 1941,
violates the fundamental rights enshrined in Art.
19(1)(f) and (g) of the Constitution. In view
of the decision of this Court in Harishankar Bagla v. The State of Madhya
Pradesh (2) which is binding on us, I agree with my learned brother that cl.
11B of the said Order is valid. I do not propose to express my view on any
other question raised in this appeal.
(1)  S.C.R. 803 (2)  1 S.C.R.