Lala Hari Chand Sarda Vs. Mizo
District Council & ANR  INSC 236 (28 October 1966)
28/10/1966 SHELAT, J.M.
CITATION: 1967 AIR 829 1967 SCR (1)1012
CITATOR INFO :
D 1972 SC1816 (16) D 1974 SC1489 (16) RF 1978
SC1457 (62) RF 1980 SC1789 (36) R 1981 SC1829 (115) RF 1985 SC 613 (5)
Lushai Hills District (Trading by
non-Tribals) Regulation (2 of 1963), s. 3-Trading licence to non-Tribal-If
violative of Art. 19 of the Constitution-Constitution of India, Art.
19(1)(g)-If hits s. 3 of Lushai Hills
The Executive Committee of Mizo District
Council refused to further renew the temporary licence issued to the appellant,
a non-trader, for trading in Mizo District. The licence could be issued for one
year only and the appellant was trading after applying and obtaining its
renewal from time to time. The appellant filed a writ petition, contending,
that the order was mala fide in the sense that though the reason given for
refusal was that the number of non-Tribal traders had reached the maximum, the
Committee had in fact granted licences to new traders, and that the said order
and s. 3 of the Lushai Hills District (Trading by non-Tribals) Regulation, 1953
was invalid being violative of Art. 19(1) (g) of the Constitution. The High
Court maintained the order. In appeal to this Court.
HELD : (Per Subba Rao, C. J. and Shelat, J.)
: Section 3 of the Regulation is violative of Art. 19(1)(g) of the
Even if the Sixth Schedule can be said to
contain a policy and the Regulation may be said to have been enacted in
pursuance of such a policy an analysis of the Regulation shows that that is not
sufficient. Even if a statute lays down' a policy it is conceivable that its
implementation may be left in such an arbitrary manner that the statute
providing for such implementation would -amount to an unreasonable restriction.
A provision which leaves an unbridled power to an authority cannot in any sense
be characterised as reasonable. Section 3 of the Regulation is one such
The Regulation contains no principle or
criterion on which the Executive Committee should grant or refuse to grant a
licence or its renewal; nor does it provide any machinery under which an
applicant can show cause why his application for a licence or its renewal
should not be rejected; nor does it provide any superior authority before whom
such an applicant can establish that the refusal by the Committee is arbitrary
or without any proper cause; and it leaves the trader not only at the mercy of
the Committee but also without any remedy.
In the present case, the Committee had given
the reason for refusal to renew the licence, but the order did not state what
that maximum was or who prescribed such a number and under what authority or
what was the criterion for fixing any particular maximum. [1020 D; 1021 A-F]
(Per Bachawat, J. dissenting) : Section 3 of the Regulation is not violative of
Arts. 14 and 19(1)(g) of the Constitution.
If paragraph 10 of the Sixth Schedule of the
Constitution cannot be regarded as violative of any provision in the
Constitution, it is impossible to say that s. 3 of the Regulation which is in
strict conformity with paragraph 10 is violative of Arts. 14 and 19(1)(g). The
protection of the 1013.
interests of the Scheduled Tribes is to be
the guiding policy regulating the exercise of the discretion of the District
Council. in. the matter of granting or withholding trading licences to
In the present case, the Executive Committee
found that the maximum limit of non-tribal traders had been reached, and in the
interest of the tribal it was not desirable to issue licence to more non-tribal
traders. It was neither alleged nor shown that the Committee discriminated
between similarly situated persons. [1023 G; 1024 C-D; 1025 H ],
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 648 of 1964.
Appeal by special leave from the judgment
and. order dated, November 23, 1960 of Assam and Nagaland High Court. in Civil
Rule No. 88 of 1960.
Sukumar Ghose, for the appellant.
The respondent did not appear.
The Judgment Of SUBBA RAO, C. J. and SHELAT,
J. was delivered by SHELAT., J. BACHAWAT, J. delivered a dissenting Opinion.
Shelat, J. We regret our inability to agree
with the conclusion reached by Bachawat J.
The appellant, a non-tribal, started trading
at Aijal, Mizo, District, in 1957 under a temporary licence issued by the Mizo
District Council investing about Rs. 50,000/therein. The temporary licence
could be issued at a time for a year only and therefore he applied for and
obtained its renewal from time to time upto May 31, 1960. He applied for a
further renewal whereupon the Executive Committee of the District Council
passed an order dated July 11, 1960 refusing any further renewal and -directing
remove his properties from the District by
the end of July 1960, and imposed a fine of Rs. 5001in case he failed to comply
The appellant filed a petition under Art. 226
of the Constitution in the High Court of Assam against the said order
contending, that the said order was malafide in the sense that though the
reason given for refusal was that the number of non-tribal traders had. reached
the maximum the Committee had in fact granted licences to new traders, and that
the said order and section 3 of the Lushai Hills District (Trading by
non-Tribals) Regulation, 2 of 1953 were invalid being violative of Art.
19(1)(e) and (g) of the Constitution. The High Court struck down that part of
the said order which directed him to remove his properties from the District
and which imposed fine but dismissed the rest of the petition, firstly, on the
ground of delay and secondly on the ground that the said order was a valid
order and was not discriminatory. The High Court also repelled the contention
that the power of the Council was unrestricted or arbitrary. The High Court
observed 1014 "The power cannot be said to be unrestricted.
The licence is to be granted or refused
having regard to the underlying object (if the enactment. This Regulation was
passed in pursuance of the provisions of the Sixth Schedule of the Constitution
which gives specific power to the District Council to pass regulations
affecting the right of non-Tribals to trade within the tribal areas and in
order to effect the purpose underlying the provision of the Sixth Schedule this
Regulation was enacted. If having regard to the scope of trade in that locality
the number of licences is restricted by the authorities, it cannot be said that
the exercise of such a power is discriminatory." This appeal by special
leave challenges the correctness of this order by which the High Court
dismissed the petition.
The appellant's contention before us was that
the said order was invalid as it was based on an invalid provision of law which
infringed his fundamental right to carry on business at Aijal under Art.
19(1)(g) that the refusal to allow him to carry on his business amounted to an
unreasonable restriction and that section 3 of the Regulation which empowers
the Council to refuse to permit him to carry on business was invalid as it
conferred on the Council an arbitrary and uncanalized power enabling it to
refuse to grant a licence or its renewal according to its sweet will.
The Sixth Schedule to the Constitution
constitutes the Mizo District, formerly known as the Lushai Hills District, as
an autonomous district. Paragraph 10 of that Schedule provides for the power of
the District Council to make Regulation for the control of money-lending and
trading by non-tribals.
Clauses 1 and 2 of that paragraph read as
under -(1) The District Council of an autonomous district may make regulations
for the regulation and control of money-lending or trading within the district
by persons other than Scheduled Tribes resident in the District.
(2) In particular and without prejudice to
the generality of the foregoing power, such regulations may (a)prescribe that
no one except the holder of a licence issued in that behalf shall carry on the
business of money landing (b) (C) (d)prescribe that no person who is not a
member of the Scheduled Tribes resident in the District shall 1015 carry on
wholesale or retail business in any commodity except under a licence issued in
that behalf by the District Council.
Paragraph 10 thus empowers the District
Council to make Regulations for regulating and controlling money-lending and
trading by non-tribals in the District and in particular to provide by such
Regulations that no non-tribal shall carry on any trade without a licence. In
pursuance of this power the District Councils enacted the Lushai Hills District
(Trading by non-Tribal) Regulation, 2 of 1953 the preamble of which merely
states that it was expedient to provide for the regulation and control of
trading within the Lushai Hills District by persons other than scheduled tribes
resident in the District. Section 3 of the Regulation provides that no person
other than a Tribal resident in the District shall carry on wholesale or retail
business in any commodities except under and in accordance with the terms of a
licence issued by the District Council. The first proviso to this section does
not concern us as it deals with permanent licences to be issued to persons who
were carrying on business prior to the enactment of the Regulation. But the
second proviso seems to apply to both permanent and temporary licences and lays
down that if a licence is refused, the grounds of refusal should be recorded by
the District Council. Sections 4 and 5 prescribe that a licensee should
maintain accounts in prescribed forms and such accounts should be open to
inspection by an authorised officer. Section 6 empowers the Executive Committee
to make rules for carrying out the purposes of the Regulation and in particular
to provide the form and conditions of the licence, the fees therefor, the
procedure for applying for a licence, the forms of accounts to be maintained by
the licensee and for any other matter connected with or ancillary to the
matters aforesaid. Section authorises the Executive Committee to cancel the
licence of a trader if he were convicted for contravention of any of the
provisions of the Regulation. In exercise of the aforesaid power the Executive
Committee framed the Lushai Hills District (Trading by non-Tribals) Rules,
1954. Rule 5(2)(a) provides that the terms and conditions of the licence shall
be strictly adhered to by the licensee, a contravention thereof being
punishable under the law for the time being in force.
The Rule also provides that no temporary
licence shall be granted for a period exceeding one year at one time. Rules 6
and 7 deal with permanent licences, that is, licences granted to non-tribals
carrying on business before the enactment of the said Regulation. We are not
concerned with those Rules as the appellant is not one of those persons entitled
to a permanent licence.
The appellant being a citizen of India and
the Mizo District being part of the Union Territory he has undoubtedly a
fundamental right under Art. 19(1)(g) to carry on trade in any part of 1016 the
country including the Mizo District. Any restriction infringing such a right
can only be sustained if it is a reasonable restriction imposed in the interest
of the general public as envisaged by Art. 19(6). In State of Madras v. V.G.
Row(1) this Court laid down an elaborate test of reasonableness which has since
been accepted in several subsequent decisions. Patanjali Sastri C. J. in that
decision observed :"In considering the reasonableness of laws imposing
restrictions on fundamental rights both the substantive and procedural aspects
of the impugned law should be examined from the point of view of reasonableness
and the test of reasonableness, wherever prescribed should be applied to each
individual statute impugned and no abstract -standard or general pattern of
reasonableness can be laid down as applicable to all cases. The nature of the
right alleged to have been infringed, the underlying purpose of the restriction
imposed, the extent or urgency of the evil sought to be remedied thereby, the
disproportion of imposition, the prevailing conditions at the time should enter
into the judicial verdict.
" In the State of Rajasthan v. Nath
Mal(2) clause 25 of the Rajasthan Foodgrains Control Order, 1949 empowered
certain specified officers to freeze any stocks of foodgrains held by any
person and further provided that such stocks were liable to be requisitioned or
disposed of under orders of the said authority at the rate fixed for the
purpose of Government procurement. The clause was struck down by this Court on
the ground that while the authorities may fix the ceiling price at which
foodgrains should be sold in the market by the dealers there was no such
limitation on the power of the Government to acquire the stocks. It would
therefore be open to the Government to requisition the stocks at a price lower
than the ceiling price thus causing loss to the persons whose stocks are
freezed, while at the same time the Government would be free to sell the same
stocks at a higher price and make profit. No dealer would therefore be prepared
to buy foodgrains at the market price when he knew that he was exposed to the
risk of his stocks being freezed any moment and the same being requisitioned at
the procurement rate. The clause thus left it entirely to the discretion of the
executive to fix any compensation it liked. The decision held that clause 25
placed an unreasonable restriction upon the carrying on of trade or business,
was thus an infringement of the right under Art.
19(1)(g) and was therefore to that extent
void. In R.M. Seshadri 'v. The District Magistrate, Tanjore(3) two conditions
subject to which the appellant was granted a licence and which compelled a
licensee to exhibit in his cinema theatre at each performance (1) S. C.
R. 597. (3)  1 S. C. R. 686.
(2)  S. C. R. 982.
1017 one or more approved films of such
length and for such length of time, as the Provincial or the Central Government
may direct and which also compelled the licensee to exhibit at the commencement
of each performance not less than 2000 feet of one or more approved films were
struck down as imposing unreasonable restrictions on the right of the licensee
to carry on his business. At page 689 of the Report the Court observed:"Neither
the length of the film nor the period of time for which it may be shown is
specified in the condition and the Government is vested with an unregulated
discretion to compel a licensee to exhibit a film of any length at its
discretion which may consume the whole or the greater part of the time for
which each performance is given.... As the condition stands, there can be no
doubt that there is no principle to guide the licensing authority and a
condition such as the above may lead to the lossor total extinction of the
business itself. A condition couched in such wide language is bound to operate
harshly upon the cinema business and cannot be regarded as a reasonable
restriction. It savours more of the nature of an imposition than a
restriction." In Mineral Development Ltd. v. The State of Bihar(1) this
Court on the other hand upheld the validity of S. 25()(c) of the Bihar Mica
Act, 1947 on the ground that the provisions of that section did not impose any
In upholding the validity of the said
provisions the court observed that the section clearly provided ascertainable
standards for the State Government to apply to the facts of each case. Clauses
(a), (b), (c) and (d) of section 25(1) described with sufficient particularity
the nature of the defaults to be committed and the abuses to be guilty of by
the licensee in order to attract the penal provisions.
Clause (c) with which the Court was concerned
embodied the last step that could be resorted to by the State Government to
eliminate a recalcitrant operator from the field of mining industry provided he
was guilty of repeated failures to comply with any of the provisions of the Act
or the rules made thereunder. The discretion of the State Government under cl.
(c) of s. 25 (1) was hedged in by important restrictions, viz., the repeated
failure on the part of the licensee and the necessity for the State Government
to afford reasonable opportunity to him to show cause why his licence should
not be cancelled. In Kishan Chand Arora v. The Commissioner of Police(2) the
majority judgment observed that in order to decide whether a provision in a preConstitution
statute like the one in question there satisfied the test of constitutionality
laid down by Art.
19(1)(g) read with Art. 19(6) the impugned
section must be read (1)  2 S.C.R. 609.
M17Sup.CI/66-20 (2)  3 S. C. R. 135.
1018 as a whole and in a fair and reasonable
manner and should not be declared void simply because considerations relevant
to those articles are not immediately apparent from its language. These
observations were made in connection with a pre-Constitution enactment. Even
then Subba Rao J. (as he then was) with whom Sinha C. J. agreed uttered a note
of caution saying that it was not the function of the court to search for an
undisclosed policy in the crevices of the statute, for by doing so "this
court will not only be finding an excuse to resuscitate an invalid law but also
be encouraging the making of laws by appropriate authorities in derogation of
fundamental rights." Even according to the majority decision, there must
be disclosed in the statute apparently or otherwise, a policy guiding the
exercise of power conferred thereunder by the concerned authority.
These authorities clearly demonstrate that
the fundamental right of a citizen to carry on trade can be restricted only by
making a law imposing in the interest of the general public reasonable
restrictions on the exercise of such a right, that such restrictions should not
be arbitrary or excessive or beyond what is required in the interest of the
general public and that an uncontrolled and uncanalized power conferred on the
authority would be an unreasonable restriction on such right. Though a
legislative policy may be expressed in a statute, it must provide a suitable
machinery for implementing that policy in such a manner that such
implementation does not result in undue or excessive hardship and
arbitrariness. The question whether a restriction is reasonable or not is
clearly a justiciable concept and it is for the court to come to one conclusion
or the other having regard to the considerations laid down in State of Madras
v. V. G. Row.(1) It is also well established that where a provision restricts
any one of the fundamental rights it is for the State to establish the
reasonableness of such restriction and for the court to decide in the light of
the circumstances in each case, the policy and the object of the impugned
legislation and the mischief it seeks to prevent.
With this background we now proceed to
examine the provisions of the Regulation and consider whether the power granted
under section 3 amounts to a reasonable restriction so as to save it under Art.
19(6). As already stated, under Paragraph 10 of the Sixth Schedule the District
Council has the power to enact Regulations for regulating and controlling money-lending
or trading by non-Tribals in the District. Clause 1 empowers the Council in
general terms to make Regulations and Clause 2 empowers it in particular to
make Regulations prescribing that a non-tribal after the enactment of such a
Regulation shall not carry on trade except under a licence. Reading Paragraph
10 fairly and as a (1)  S.C.R. 597.
1019 whole it would seem that the
Constitution-makers were anxious that the tribals should be safeguarded from
unfair exploitation by non-tribals entering the District and carrying on
money-lending and other activities. It appears that Regulation 2 of 1953 was
passed for the avowed object set out in Paragraph 10 of the Sixth Schedule
though its preamble merely states that it was expedient to regulate and control
trade by non-tribals. Section 3 of the Regulation lays down a prohibition
against any one carrying on trade without a licence and except in accordance
with the terms of such licence. The effect of this section is that if a nontribal
wishes to carry on trade in the District but is refused the licence, such
refusal would result in a total prohibition against him from carrying on any
trade. Even if a licence is issued it can only be a temporary licence for one
year only. If the Executive Committee to which this power is delegated by the
Rules were to refuse to renew it such refusal would mean that he has to stop
the trade which he was until then carrying on. In the first case it is a
prohibition and in the other a total extinction of his trade. It is clear from
the Regulation and the Rules made there under that there is no right of appeal
to any superior authority against a refusal to grant or renew a licence.
There is also no provision either in the
Regulation or in the Rules empowering any civil court to adjudicate against any
such order of the Executive Committee. A nontribal trader therefore has no
remedy whatsoever against such an order though the refusal to grant or renew a
licence amounts to his being totally barred from trading in one case and his business
or trade being destroyed in the other. Even if a non-Tribal obtains a licence
and starts a trade investing therein a large, capital, there would be no
security for such trade as the licence would be for one year only. The
Executive Committee can refuse to renew his licence and such refusal would as
aforesaid result in the total extinction of his trade. Under the second proviso
to section 3 the Committee no doubt has to record the grounds for refusal but
that is hardly a safeguard against an arbitrary refusal, for, the Regulation
does not constitute any superior authority with power to revise such an order
or to% examine whether the grounds are legal or proper. Though the Regulation
provides that no non-tribal can carry on any trade without a licence issued by
the Council it is the Executive Committee under the Rules to which an
application has to be made for such a licence or for a renewal thereof and in
the event of the Committee refusing to grant such a licence or refusing to
renew it the applicant is left without any remedy whatsoever. A perusal of the
Regulation shows that it nowhere provides any principles or standards on which
the Executive Committee has to act in granting or refusing to grant the
licence. The non-tribal trader either wishing to start a trade or continue his
trade started on a grant of licence is entirely at the mercy of the Executive
Committee for the grant or the renewal of a licence.
1020 There being no principles or standards
laid down in the' Regulation there are obviously no restraints or limits within
which the power of the Executive Committee to refuse to grant or renew a
licence is to be exercised. This situation is clearly seen from the fact that
though section 9 of the Regulation authorises the Executive Committee to cancel
a licence-presumably both permanent and temporary-if the licensee is convicted
of contravention of any of the provisions of the Regulation, the power of
refusal under section 3 is not limited or circumscribed by any such provision
or any other criterion. The power of refusal is thus left entirely unguided and
untrammelled. How arbitrary the exercise of such unguided power can be is seen
from the fact that the Executive Committee not only refused to renew the
appellant's licence but also directed him to remove his property by the end of
July 1960 and imposed a fine if he failed to do so.
It is true that the Executive Committee in
the present case has given the reason for refusal to renew the licence, viz.,
that the number of licensees had reached the maximum. But the order does not
state what that maximum is or who prescribed such a number and under what
authority or what is the criterion for fixing any particular maximum. Indeed
there is nothing in the Regulation empowering the Council much less the Executive
Committee to lay down any such maximum number nor does the Regulation prescribe
any principles on which such a maximum number is to be fixed.
The Executive Committee can at any time and
on its whim arbitrarily fix a maximum number and refuse to grant or renew a
licence. Such a maximum number may also vary from time to time. The result
would be to prevent any newcomer to trade in the District or to destroy the
trade of a licensee carrying on his business under a licence. At the end of
each year every nontribal trader would be at the mercy of the Executive
Committee and would not even know whether he would be permitted to continue his
trade. Even the Rules made under section 6 do not lay down any principles or
standards. Rule 7 is couched in general terms and provides that the Executive
Committee may refuse to renew any licence granted to a non-tribal trader after
the commencement of the Regulation. Rule 4 empowers the Committee to make such
enquiry as it deems proper into the antecedents and character of any new
applicant and then reject or accept his application. The Rule, however, does
not lay down any standards on the basis of which the Committee has to decide
whether the antecedents or the character are such that the application should
The Committee therefore can in any given case
reject an application merely stating that the antecedents of an applicant are
not good or proper without the applicant knowing what standards of character or
antecedents he has to conform to.
1021 Even though it may perhaps be said that
the Sixth Schedule to the Constitution shows a policy to safeguard the tribals
from being exploited and the Regulation was enacted in exercise of the power
conferred there under that is not enough to save the restriction from the vice
of being unreasonable. It provides no principles on which such a policy is to
be implemented. As already stated, the Regulation contains no principle or
criterion on which the Executive Committee should grant or refuse to grant a
licence or its renewal. It does not provide any machinery under which an
applicant can show cause why Ms application for a licence or its renewal should
not be rejected. It does not also provide any superior authority before whom
such an applicant can establish that the refusal by the Committee is arbitrary
or without any proper cause. Indeed the Regulation does not contain any
provision laying down what is and what is not a proper cause for refusal.
Equally it does not show any guiding criterion on which the Committee should
decide to grant or refuse a licence or its renewal. The Regulation contains no
provisions on the basis of which an applicant would know what he has to satisfy
in order to entitle him to a licence. The power to grant or not to grant is
thus entirely unrestrained and unguided.
The Regulation leaves a trader not only at
the mercy of the Committee but also without any remedy. Therefore even if the
Sixth Schedule can be said to contain a policy and the Regulation may be said
to have been enacted in pursuance of such a policy the analysis of the
Regulation shows that that is not sufficient. Even if a statute lays down a
policy it is conceivable that its implementation may be left in such an
arbitrary manner that the statute providing for such implementation would
amount to an unreasonable restriction.
A provision which leaves an unbridled power
to an authority cannot in any sense be characterised as reasonable. Section 3
of the Regulation is one such provision and is therefore liable to be struck
down as violative of Art. 19(1)(g).
For the reasons aforesaid, we would declare
that section 3 of the Regulation is an unreasonable restriction on the
fundamental right guaranteed under Art. 19(1)(g) and therefore void. The said
order dated July 11, 1960 having been made under such a void provision is
illegal and void.
We would therefore set aside the said order
as having been made under an illegal provision of law and allow the appeal with
Bachawat, J. The appellant is a non-tribal
trader. Since 1957 he carried on business at Aijal in Mizo District under
temporary licenses issued on behalf of the District Council.
The license was renewed from time to time. In
1959, a license valid till December 31, 1959 was issued, and at the appellant's
request, the period of the license was extended from time to time up to May 3
1, 1960. By his letter dated July 11, 1960, the Revenue Officer, Mizo District
Council informed the appellant that the Executive 1022 Committee of the Mizo
District Council had decided that his license could not be extended as the
number of the license holders had reached its maximum limit, and the appellant
was directed to shift all his properties outside the Mizo District within July
1960, failing which a fine of Rs. 400/would be imposed upon him. The appellant
filed a writ application in the Assam High Court asking for the issue of a writ
setting aside this order and directing the Mizo District Council to renew his
license. The Assam High Court quashed the order in so far as it imposed a fine
500/-, and directed the appellant to remove
his goods. The High Court, however, maintained the order in so far as it
refused to renew the license. The appellant now appeals to this Court by
The Mizo District formerly known as the
Lushai Hills District is a tribal area in Assam, and is one of the autonomous
districts constituted by paragraph 1 of the Sixth Schedule to the Constitution
of India. Paragraph 10 of the Sixth Schedule gives power to the District
Council to make regulations for the control of money lending and trading by
non-tribalís. The material part of paragraph 10 is in these terms;
"10. Power of District Council to make
regulations for the control of money-lending and trading by non-tribals.(1)The
District Council of an autonomous district may make regulations for the
regulation and control of money-lending or trading within the district by
persons other than Scheduled Tribes resident in the district.
(2)In particular and without prejudice to the
generality of the foregoing power, such regulations may.
(d)Prescribe that no person who is not a
member of the Scheduled Tribes resident in the district shall carry on
wholesale or retail business in any commodity except under a licence issued in
that behalf by the District Council :
Provided that no regulations may be made
under this paragraph unless they are passed by a majority of not less than
three-fourths of the total membership of the District Council :
Provided further that it shall not be
competent under any such. regulations to refuse the grant of a licence to a
moneylender or a trader who has "been carrying on business within the
district since before the time of the making of such regulations." On
March 17, 1953 the Lushai Hills District Council with the assent of the
Governor of Assam and in exercise of its powers under paragraph 10 of the Sixth
Schedule to the Constitution made 1023 and promulgated the Lushai Hills
District (Trading by nonTribals) Regulation, 1953 (Regulation No. 2 of 1953).
Section 3 of the Regulation reads:
"3. No person, other than a Tribal
resident in the District shall carry on wholesale or retail business in any
commodities in this District except under and in accordance with the -terms of
a license issued in that behalf by the District Council under the provisions of
Provided that such a license shall not be
refused to a person who has been carrying on such business within the district
since before the commencement of this Regulation :
Provided further that if such a license is
refused, the grounds of refusal shall be recorded in writing by the District
Council." The contention of the appellant is that s. 3 of the Regulation
gives to the District Council an arbitrary power of issuing and withholding
licenses to a non-tribal and is repugnant to Arts. 14 and 19(1)(g) of the
Constitution. The High Court held that the section is not violative of Art.
14. The point that the section infringes Art.
19(1)(g) was not argued in the High Court. However, on the merits the attack on
s. 3 based on both Arts. 14 and 19(1)(g) must fail.
Paragraph 10(2)(d) of the Sixth Schedule to
the Constitution of India specifically empowers the District Council of an
autonomous district to make regulations prescribing that a nontribal resident
of the District shall not carry on business in any commodity except under a
license issued in that behalf by the District Council. The Sixth Schedule to
the Constitution lays down the policy for the administration of the tribal
areas in the State of Assam. Paragraph 10 is an integral part of this Schedule.
This paragraph is not violative of Arts. 14 and 19(1)(g), nor is it so
Section 3 of the Regulation is in strict
conformity with this paragraph. If paragraph 10 of the Sixth Schedule cannot be
regarded as violative of any provision in the Constitution, it is impossible to
say that s. 3 of the Regulation which is in strict conformity with paragraph 10
is violative of Arts. 14 and 19 (1)(g) of the Constitution.
This conclusion is sufficient to dispose of
the argument based on Arts. 14 and 19(1)(g).
The attack based on Arts. 14 and 19(1)(g)
must fail on other grounds also. For economic and political reasons, our
Constitution has taken special care of the Scheduled Tribes.
One of the guiding principles of State policy
embodied in Art. 46 of the Constitution is that the State shall promote with
special care the educational and economic interests of the weaker sections of
the people and, in particular, the Scheduled Tribes, and shall protect them from
social injustice and all forms of exploitation. Pursuant to this policy, the
Constitution itself has made numerous provisions for the protection of the
Scheduled Tribes. Paragraph 10(2)(d) of the Sixth Schedule is one of such
provisions. Section 3 of the Regulation has been enacted pursuant to the power
conferred by paragraph 10(2)(d)of the Sixth Schedule with the object of
preventing exploitation of the Scheduled Tribes by nontribal traders and
protecting the interests of the Scheduled Tribes. The licensing power is vested
in the District Council which is a high ranking body with legislative, judicial
and executive functions. It is apparent on the face of the Constitution of
which paragraph 10(2)(d) of the Sixth Schedule forms an intergral part and on a
fair reading of s. 3 of the Regulation read in the light of paragraph 10(2)(d)
that the protection of the interests of the Scheduled Tribes is to be the
guiding policy regulating the exercise of the discretion of the District
Council in the matter of granting or withholding trading licenses to nontribal
traders. It is left to the District Council to decide in each individual case
whether the grant of the license would best promote the interests of the
Scheduled Tribes. The restriction imposed by s. 3 on the right of a non-tribal
to carry on business in a tribal area is not arbitrary or unreasonable and is
not violative of Arts. 14 and 19(1)(g).
Another contention of the appellant is that
the licensing authority could refuse to issue license only if it found that the
appellant did not show good conduct and behaviour while in the Mizo Hills, as
stated in condition No. 1 of the temporary trading license. I am unable to
accept this contention. Rules 2 (a), 4, 5 and 7 of the Lushai Hills District
(Trading by non-Tribals) Rules, 1954 made by the Executive Committee of the
District Council with the previous approval of the the Governor of Assam in
exercise of the powers conferred by s. 6 of the Regulation are as follows :
"2. Definition.-In these rules, unless there
is anything repugnant or the context otherwise requires :(a)'Executive
Committee' means the Executive Committee of the Lushai Hills District Council
constituted under the Assam Autonomous Districts (Constitution of the District
Councils) Rules, 1951.
"4. Verification of applicant's
antecedents and character.--The Executive Committee may after making such
enquiries as it deems proper into the antecedents and character of any new
applicant, reject or accept any application, 1025 5.Grant of License.-(1) When
application is accepted a license to trade shall be issued to the applicant
(hereinafter called 'Licensed Trader') after receipt of the fee as specified in
Temporary trade License.-(2)(a). The terms
and conditions of the license as entered on the face of the license as in
Appendix 'A' shall be strictly adhered to by the licensee, and any
contravention thereof shall be punishable under the law for the time being in
(b)No temporary License shall be granted for
a period exceeding one year at any one time.
7.Provision for refusal to renew permanent
license.-Subject to the provisions of section 3 of the Lushai Hills District
(Trading by Non-Tribals) Regulation, 1953, the Executive Committee may refuse
to renew any license granted to the Non-Tribal Traders after the commencement
of the Regulation." The standard terms and conditions of the temporary
license in Form 'T' are as follows :
"1. This license is cancellable or
renewable by the Executive Committee as and when thought fit contingent on good
conduct and behaviour while in Lushai Hills.
2. Trading should be done on cash basis only.
3. The License holder should report without
fail to the Executive Committee on the expiry of the validity of this license,
and submit this license." The Executive Committee of the District Council
is constituted under r. 19 of the Assam Autonomous District (Constitution of
District Councils) Rules, 1951 framed by the Governor of Assam in exercise of
the powers conferred by sub-paragraph (6) of paragraph 2 of the Sixth Schedule
to the Constitution, and is vested, inter alia, with the executive functions of
the District Council.
The validity of the Rules is not in issue. It
is not contended that the Rules are ultra vires the Regulation.
The discretion vested in the licensing
authority by Rules 4, 5 and 7 is not restricted by condition No. 1 of the
The licensing authority may refuse to renew
or to issue the license if it finds that such a course would promote the
interests of the Scheduled Tribes. In the present case, the Executive Committee
found that the maximum limit of nontribal traders had been reached, and in the
interest of the tribals it was not desirable to issue license to more 1026
non-tribal traders. It is neither alleged nor shown that the Executive
Committee discriminated between similarly situated persons.
In the result, the appeal is dismissed.
ORDER In accordance with the Opinion of the
majority, the appeal is allowed with costs.