Syed Ahmed Aga Vs. State of Mysore
& ANR [1975] INSC 119 (2 May 1975)
BEG, M. HAMEEDULLAH BEG, M. HAMEEDULLAH
KHANNA, HANS RAJ CHANDRACHUD, Y.V.
CITATION: 1975 AIR 1443 1975 SCR 473 1975 SCC
(2) 131
ACT:
Constitution--Articles 19(1) (g), 304(b)
& 32--Whether a 32 petition maintainable to challenge non--compliance with
proviso to Article 304(b)--Mysore Silk Worm Seed & Cocoon (Regulation of
Production, Supply & Distribution) Act.
1960--Amendments whether requires fresh
sanction of the President under Article 304(b)--Increase in quantum of penalty
whether amounts to additional restrictions--Nature of penalty.
HEADNOTE:
The petitioners challenged the validity of
;amendments made to Mysore Silk Worm Seed and Cocoon (Regulation of Production,
Supply and Distribution) Act, 1960, on the ground that the amendments imposed
additional restrictions upon the rights of the petitioners to carry on trade
and business without obtaining the Presidential sanction required by proviso to
Art. 304(b) of the Constitution.
The Principal Act had received the sanction
of the President. The reasonableness of any restrictions either of the.
principal Act or of the amendments has not been challenged. It is not disputed
that the Presidential sanction was not obtained for the amendments.
The respondents contended(1)No petition under
Article 32 of the Constitution can lie to challenge restrictions covered by
Article 304(b), since the freedom of trade envisaged by Article 304(b) is
different from freedom of trade guaranteed by Art. 19(1) (g) (2)The amendments
did not impose additional restrictions on the petitioners' right to carry on
trade and business.
Amendments merely introduced the restrictions
which were contained in the principal Act and the statutory rules made there
under and therefore did not impose any additional restrictions.
Section 12 of the principal Act reads as
under :
"12. Penalties-(1) Any person who
contravenes the provisions of section 3 or 4 shall be punishable with fine
which may extend to one hundred rupees.
(2)any rearer who contravenes the provisions
of section 6 or 7 or any other provision of this Act or any rule, order or
notification made there under, shall be punishable with fine which may extend
to fifty rupees.
(3)Any licensed buyer who contravenes the
provisions of sections 7 or 8 or any other provision of this Act or any rule,
order or notification made there under, shall be punishable with fine which may
extend to two hundred and fifty rupees.
(4)Save as otherwise provided in subsection
(1), (2) and (3), any person who contravenes any of the provisions of this Act
or of any rule. order or notification there under, shall be punishable with
fine which may extend to two hundred and fifty rupees.
(5)(a) Without prejudice to any punishment
under the preceding sub-sections the Director of Sericulture in Mysore may,
after giving a reasonable opportunity to the person concerned to be heard,
suspend or cancel the licence granted to any person for preparing silkworm seed
if such person is convicted at least twice for an offence under this Act.
474 (b)Any person aggrieved by the suspension
or cancellation of a licence under clause (a) may appeal to the Government
within such time as may be prescribed and the decision of the Government on
such appeal shall be final and shall not be called in question in any Court of
Law".
Amendments to section 12 were made by section
7 and 8 of the Amending Act which read as under :"7. Amendment of section
12. In section 12 of the principal Act,(1)in sub-section (1), for the words
"one hundred rupees", the words "two hundred rupees" shall
be substituted;
(2)in sub-section (2), for the words and
figures "section 6 or 7 or any other provision of this Act or any rule,
order or notification made there under, the words, figures, brackets and
letter, "section 6" or clause (a) of subsection (1) of section
7" shall be substituted;
(3)after sub-section (2), the following
subsection shall be inserted. namely :"(2A) Any person who contravenes the
provisions of clause (b) of sub-section (1) of section 7 or sub-section (2) of
that section shall be punishable with imprisonment which may extend to three
months or with fine which may extend to five hundred rupees or with both"
;
(4)for sub-section (3), the following
subsection shall be substituted, namely :"(3) Any person who contravenes
the provisions of section 8 shall be punishable with fine which may extend to
two hundred and fifty rupees" (5)in subsection (4), for the words,
brackets and figure,% "subsections (1). 2) and 3)", the words,
bracket-,, figures and letter "subsections (1), (2), (2A) and (3) shall be
substituted".
" 8. Insertion of new sections 12A and
12BAfter section 12 of the Principal Act, the following sections shall be
inserted, namely :" 12A. Abetment-Whoever abets any offence punishable
under this Act shall be punished with the punishment provided in this Act for
such offence.
12B. Certain offenses to be cognizable-The
offenses under sub-section (2A) of section 12 shall be cognizable".
HELD : A citizen is entitled to come to Court
with the allegation that his fundamental right to carry on business or trade is
affected adversely by a provision which does not legally exist. The
restrictions contemplated by Article 304(b) may be of a character different
from those of .in individual citizen's right to trade, but it cannot be denied
that their impact on individual's right is very often direct. [477A-B]
HELD FURTHER: Stringent regulations were
already existing under the principal Act and the rules framed there under.
No additional restriction is imposed by the
Amending Act 4(1). Now section 7(2) merely makes evasion of the requirement to
conduct business in the cocoon market of an area more difficult. [481C-D,
482-D] The amendments to section 12 increase the quantum of penalties. But the
increase in the penalties is such, in view of the change of the value in money,
as not to amount to an appreciable increase in restriction even from the point
of view of a person who wants to break the restrictive laws. Penalties are 475
really part of the procedure for the enforcement of restrictions. They do not
create new offenses. They only make violation of whatever restrictions on trade
and commerce were there more onerous. They, therefore, cannot be looked upon as
Additional restrictions upon freedom of trade and commerce. [484B-D]
HELD FURTHER : Amendments requiring some more
persons to take out licences who may not have been previously covered by
provisions relating to licences does not constitute a real increase in
restriction upon commerce. If the substance of the statutory rule is converted
into a statutory provision. there can hardly be said to be additional
restrictions imposed by the amending Law. What may be a restriction of his
choice, from the point of view of an individual citizen engaged in a trade may
not be a restriction on interstate or intrastate commerce viewed from the angle
of the trade as a hole. It is only an additional restriction from the special
point of view of Art. 304(b) which requires Presidential sanction. [487C-E]
Petition dismissed.
ORIGINAL JURISDICTION : Writ Petitions Nos.
137 and 203 of 1971.
Petitions under Art. 32 of the Constitution
of India.
A. K. Sen, K. R. Choudhuri and K. Rajendra
Choudhary, for the petitioner (In Petition No. 137).
K. K. Chaudhuri and K. Rajendra Chowdhary,
for the petitioner (In petition No. 203).
F. S. Nariman, Additional-Solicitor General
of India and M. Veerappa, for the respondents (In petition No. 137).
M. Veerappa, for respondents (In Petition No.
203).
The Judgment of the Court was delivered by
BEG, J. The two writ Petitions before us under Article 32 of the Constitution
of India by persons carrying on the business of silk worm cocoon rearing and
reeling challenge the validity of various amendments of the Mysore Silkworm
Seed and Cocoon (Regulation of Production, Supply and Distribution) Mysore Act
5 of 1960 (hereinafter referred to as 'the Principal Act') by the Mysore
Silkworm Seed and Cocoon (Regulation of Production, Supply and Distribution)
(Amendment) Act, 1969 (hereinafter called as the 'Amending Act'). The
petitioners alleged that their fundamental rights guaranteed by Art. 19(1) (g)
of the Constitution have been illegally interfered with by these amendments in
so far as the amendments impose additional restrictions upon these rights
without having secured the Presidential sanction required by the proviso to
Article 304(b) of the Constitution.
Article 304 of the Constitution reads as
follows :
"304. Notwithstanding anything in
Article 301 or article 303, the Legislature of a State may by law(a) impose on
goods imported from other States or the Union territories any tax to which
similar goods manufactured or produced in that State are subject, so, however,
as not to discriminate between goods so imported 476 and goods so manufactured
or produced ; and (b) impose such reasonable restrictions on the freedom of
trade, commerce or intercourse with or within that State as may be required in
the public interest :
Provided that no Bill or amendment for the purposes
of clause (b) shall be introduced or moved in the Legislature of a State
without the previous sanction of the President".
It will be seen that Article 301 of the
Constitution provides "Subject to the other provisions of this Part,
trade, commerce and intercourse throughout the territory of India shall be
free". Article 302 limits the powers of Parliament to impose
"restrictions on the freedom of trade, commerce or intercourse between one
State and another or within any part of the territory of India", to such
restrictions "as may be required in the public interest".
Restrictions falling under Art. 304(b) must
not only be reasonable but are expressly required to be in public interest. It
is in order to ensure that purposes of Art.
304(b) are satisfied that a bill in a State
Legislature has to obtain the previous sanction of the President. It is worth
remembering that Art. 255 of the Constitution provides for a retrospective
curing of the defect of want of previous sanction by the president so that,
where this requirement has been overlooked before an enactment,. public
interest may not suffer by any want of sanction.
The only question, on merits, which has been
argued before its on. behalf of the petitioners is : Do the changes introduced
by the Amending Act amount to such additional restrictions as to require the
sanction of the President even though the Principal Act bad received such
sanction at the appropriate stage ? The reasonableness of any restrictions, new
or old, has not been challenged before us.
All that is urged is that the additional
restrictions introduced by the Amending Act were bound to obtain the previous
sanction of the President before they are introduced in, the form of, a Bill in
the Legislature of a State because that is the Constitutional mandate.
As the restrictions covered by Article 304(b)
have to be those on "freedom of trade and commerce", which is a
broader and somewhat different concept than that of an individual citizen's
freedom to trade and carry on business, guaranteed by Article 19(1)(g), a
preliminary objection has been raised, on behalf of the State of Mysore, that
no petition under Article 32 of the Constitution can lie to challenge such
restrictions as they could not be on rights guaranteed by Article 19(1) (g).
Reliance was placed on Ram Chandra Pillai & Ors. v. State of Orissa &
Ors., (1) where there is an observation indicating that the petitioner under
Article 32 could not rely upon the guarantee of freedom of interstate or
intra-State trade, embodied in Article 301 of the Constitution. because it is
not a fundamental (1)[1956] S.C.R. 28.
477 right conferred by Part III of the
Constitution which can be enforced by a petition under Article 32". That
was a case relating to a pre-Constitution enactment so that Article 305 of the
Constitution was held to provide a complete answer to the petitioners' claim.
We do not think that the mere fact that the legality of an enactment is
challenged for noncompliance with the proviso to Article 304(b) of the,
Constitution would take away the character or substance of a petitioner's claim
when a citizen comes to Court with the allegation that his fundamental right to
carry on business or trade is affected adversely by a provision which does not
legally exist. No doubt the restrictions contemplated by Article 304(b) may be
of a character different from those on an individual citizen's rights to trade
but it cannot be denied that their impact on individual rights is often very
direct. The stage for considering the reasonableness of a direct or indirect
restriction of a fundamental right arises only where the restriction is
otherwise valid. As this Court has repeatedly held, restrictions which have no
authority or sanction of law to back them would, per se, be bad restrictions.
The question of reasonableness of a restriction on individual rights to carry
on trade could only arise where the purported law does not fail on other tests.
Learned Counsel for the petitioners had
relied upon the case of Himmatlal Harilal Mehta v. the State of Madhya Pradesh
& Ors.,(1) where a reference was made to Mohd. Yasin v. The Town Area
Committee Jalalabad & Anr.(2 ) He also urged, on the strength of District
Collector of Hyderabad and Ors. v.
M/s. Ibrahim & Co. etc., (3) that Article
301 of the Constitution guarantees not merely freedom of trade and commerce in
the abstract. In other words, individuals affected by the violation of the
guarantees under Articles 301 and 304 could also complain, at the same time, of
infringement of their right guaranteed under Article 19(1) (g) of the
Constitution provided a breach of the former involves violation of the latter
also as it would ordinarily do. Therefore, we overrule the preliminary
objection.
The State of Mysore has tried to justify the
want of Presidential sanction to amendments on the ground that they do not
impose additional restrictions but are covered by the objects and the
provisions of the Principal Act which had already obtained the Presidential
sanction at the appropriate stage. Indeed, the amendments, it was urged, merely
gave an enacted form to what were previously statutory rules validly made under
the authority conferred by Section 18 of the Principal Act. This Section
provides as follows :
" 1 8. Power of Government to make
rules. . .
(1) The Government may subject to the
condition of previous publication, by notification, make rule to carry out the
purposes of this Act.
(1) [1954] S.C.R. 1122.
(2) [1952] S.C.R. 572..
(3) [1970] 3 S.C.R. 498.
478 (2)In particular and without prejudice to
the generality of the foregoing power, such rules may provide for(a) the duties
and powers of officers authorised to enforce the provisions of this Act and the
manner of constitution of market committees and the powers and duties of such
committees;
(b) the qualifications of persons who produce
or prepare silkworm seed for rearing of silkworms and other persons to whom
licences under this Act may be granted;
(c) the grant of licences and the imposing of
conditions in respect of the same and fees for the grant of such licence;
(d) the sanitary and other conveniences that
should be provided for at the production and distribution centers of silkworm
seed ;
(e) the grant of duplicate licences and the
renewal of licences and fees for the same ;
(f) appeals from any order under this Act,
the authority to which such appeals shall lie, the time within which such
appeals should be made and the procedure for dealing with such appeals ;
(g) the forms of licences to be granted,
returns to be submitted and accounts to be maintained under this Act;
(h) the fee payable by the licensed buyer in
respect of cocoons purchased by him in the cocoon market, such fee not
exceeding two per cent of the purchase price;
(i) the particulars to be furnished by any
person of the occurrence of silkworm disease in silkworm or silkworm seed, and
the steps to be taken for the prevention or eradication of such disease;
(j) generally regulating the procedure to be
followed in proceedings under this Act;
(k) any other matter which may be prescribed
under this Act.
(3)All rules made under this Act shall he
laid as soon as may be after they are made before each House of the State
Legislature while it is in session for a total period of thirty days which may
be comprised in one session of in two or more sessions and if before the expiry
of the said period, either House of the State Legislature makes any
modification in any rule or directs that any rule shall not have effect and if
the modification or direction is agreed to 479 by the other House, the said
rule shall thereafter have effect, ,only in such modified form or be of no
effect, as the case may be;
so however that any such modification or
annulment shall be without prejudice to the validity of anything previously
done under that rule." The argument before us on behalf of the State is
that no amendments falling beyond the purview of the Principal Act and the
rules framed there under were made, and, therefore, no fresh restrictions could
be said to have been introduced by change of form or even ,of some substance of
those restrictions because they were all, in any due, within the purposes of
the Principal Act which had already received Presidential sanction.
According to the State, the Principal Act was
introduced principally with the object of improving and maintaining the quality
of silk which is manufactured and, in order to be able to do this, it was
submitted, it was necessary to keep a record of all those who breed silkworms
in the State of Mysore so that a watch may be kept over the genetic purity of
silkworms. It was stated that there is no control over pierced cocoons which
become useless for purposes of reeling. Hence, "cocoon" is defined in
the Act as a product of mulberry silkworms "either green or stifled, dried
or in any other state or condition, but does not include pierces cocoon".
Anyone wanting to use silk for purposes other than reeling could use pierced
cocoons. The " cocoon market" is defined in Section 2(b) of the
Principal Act as a market established under Section 10 which provides that the
Government may, for regulation and distribution of silkworm seed, by
notification, specify the places at which cocoon markets, market yards, and
stores may be located, fix the sericulture areas to be served by each cocoon market
where silkworm cocoon produced by such areas may be sold, and assign zones and
markets in which any licensed buyer may carry on his business. It is also
provided in Section 10 that all transactions in the cocoon market shall be by
open auction on payment of cash, Silkworm are defined as mulberry silkworms.
Silkworms seeds are defined as cocoons of all kinds (excluding cross-breed
cocoons) used or reared for purposes of production. A rarer is a person defined
as engaged in rearing silkworms for the production of silkworm cocoons, whether
for reproduction or reeling. The preamble of the Act shows that it is intended
to consolidate the laws "providing for the regulation, of the production,
supply, and distribution of silkworm seed and cocoon in the State of Mysore it
is urged on behalf of the State that the whole object of this machinery of
regulation and control of production, supply, and distribution of silkworm seed
and cocoons was that, by ensuring the high standard of purity and quality of
Mysore silk, to promote the business and trade of the Mysore State in silk
products, and, thereby, to contribute to the growth and freer flow of trade. It
is stated by the petitioner-, themselves that almost 7 per cent of the
population of Mysore State is en-aged in various processes connected with the
480 rearing of silkworms and reeling of silk,and that over two lakh acres of
land in Mysore State are under mulberry cultivation and mulberry is used
exclusively to feed silkworms. The raising and maintenance of the quality of
silk was, it was submitted, both in the interests of the trade insilk products
and in public interest.
In order to carry out the purposes of the
Principal Act, Sections 3 to 9 had,even before its amendments, laid down as
follows "3. Regulation of production, etc., of silkworm seed .... No
person shall produce, prepare, store, transport, sell or otherwise distribute
or dispose of silkworm seed, except under and in accordance with the terms and
conditions of a licence granted under this Act.
4. Regulation of rearing .... (1) No person
shall rear silkworms from silkworm seed other than silkworm seed obtained from
a person who holds a licence under this Act.
(2)The Government may by notification direct
that in any specified area no silkworm other than silkworm of specified race
shall be reared and that such silkworm shall be reared from silkworm seed
obtained from specified sources. On the issue of such notification, no person
shall rear in such specified area any other race of silkworm or obtain silkworm
seed from any other source.
5. Regulation of possession of silkworm seed
.... No person shall be in possession of silkworm seed unless(a) he is a
rearer; or (b) he holds a licence granted under this Act; or (c) he is
authorised in writing by the prescribed officer to possess silkworm seed.
6. Regulation of disposal of silkworm
cocoons.-No rearer shall dispose of or agree to dispose of or in pursuance of
an agreement entered into, make delivery of silkworm cocoons for reeling or for
reproduction except to persons holding a licence under this Act.
7. Regulation of sale or purchase of silkworm
cocoons for reeling. In any area in which a cocoon market is established under
this Act, no rearer shall sell or agree to sell, and no licensed buyer shall
purchase or agree to purchase silkworm cocoons, for reeling, except in such
cocoon market, and except in accordance with such conditions and in such manner
as may be prescribed.
8. Regulation of reeling.-No person shall
carry on the business of reeling silkworm cocoons unless he holds a licence
granted under this Act.
481
9. Application for licence.-Every person who
desires to obtain a licence under this Act shall make an application to the
Licensing Authority in such form as may be prescribed." We find that, as
regards regulation of rearing, Section 4(1) is reframed by the Amending Act, so
that now it reads as follows No person shall engage in the rearing of silkworms
for the production of silkworm cocoons except under and in accordance with the
terms and conditions of a licence granted under this Act".
On behalf of the State, it is pointed out
that the amended Section 4(1) does not amplify the restrictions which had to be
read with Section 3 of the Principal Act set out above and the detailed
provisions of Rules 3, 4, and 5 read with definitions given. After going
through these rules, the validity of which was not challenged, we are satisfied
that no additional restriction is imposed by the Amending Section 4(1).
We may here indicate the already stringent regulation
or restrictions existing under the Principal Act and the rules framed there
under which were not challenged. Rule 3(1) contained a prohibition against
rearing silkworms by any person from silkworm seed other than silkworm seed
obtained from a seed preparer licensed under these rules. Rule 3(2) imposed a
duty upon a person who obtains silkworm seed from a licensed seed preparers to
preserve the bill and the egg sheets issued by the licensed seed preparer in
respect of the silkworm seed supplied by such seed preparers so that, when so
required by an officer, it could be produced before him. Rule 4(1) prescribed
the application form for licensing to be filled in and submitted by Rearers and
seed preparers. Rule 5 provided for the grant of various licences after
satisfying the licensing authorities of the qualifications of the applicant. It
also enable the licensing authority to refuse licenses to limit the number of
seed preparers in an area. The reason for the refusal of the grant of the
licence by the licensing authority had to be communicated to the unsuccessful
applicant. Buying of cocoons for reeling had to be licensed. Section 8 read
with Rule 5(b) lays down that no person could carry on "the business of
reeling silkworm cocoons" without a license.
Section 6, set out above, prohibited
disposals and deliveries of silkworm cocoons for reeling and for reproduction
except to persons holding licences under the Act.
Section 7 prohibited, in cocoon market areas,
the rears of silkworm cocoons from selling or agreeing to sell and licensed
buyers from purchasing or agreeing to purchase silkworm cocoon for reeling
except in the cocoon market of the area. It is difficult for us to see bow the
mere change of wording in Section 4(1) of the Act had really amplified or
increased the restrictions already there.
Section 4 of the Amending Act amends Section
6 of the Principal Act by omitting words : "for reeling or for
reproduction." Section 5 of the Amending Act says 482
5. "Substitution of new section for
section 7.For section 7 of the Principal Act, the following section shall be
substituted, namely "7. Regulation of sale or purchase of silkworm cocoons
for reeling. (1) In any area in which a cocoon market is established under this
Act,(a) no rearer shall sell or agree to sell ;
and (b) no person shall purchase or agree to
purchase, silkworm cocoons except in such cocoon market and except in
accordance with such conditions and in such manner as may be prescribed.
(2)After a cocoon market is established for
any area, no person shall except in such cocoon market, use or permit the use
or assist in the use of, any building, room, tent, enclosure, vehicle, vessel
or place in such area for the sale or purchase of silkworm cocoons or in any
manner aid or abet the sale or purchase of silkworm cocoons".
Here also we are unable to find any substance
in the grievance that there has been any significant increase in restrictions.
The new Section 7(2) merely makes evasion of the requirement to conduct
business in the cocoon market of an area more difficult.
The only amendments complained of are those
in Section 12 which, in the Principal Act, read as follows :"12.
Penalties.-(1) Any person who contravenes the provisions of Section 3or 4 shall
be punishable with fine which may extend to one hundred rupees.
(2)Any rearer who contravenes the provisions
of Section 6 or 7 or any other provision of this Act or any rule, order or
notification made there under, shall be punishable with fine which may extend
to fifty rupees.
(3)Any licensed buyer who contravenes the
provisions of Section 7 or 8 or any other provision of this Act or any rule,
order or notification made there under, shall be punishable with fine which may
extend to two hundred and fifty rupees.
(4)Save as otherwise provided in subsection
(1), (2) and (3), any person who contravenes any of the provisions of this Act
or of any rule, order or notification there under, shall be punishable with
fine which may extend to two hundred and fifty rupees.
(5)(a) Without prejudice to any punishment
under the preceding sub-sections, the Director of Sericulture in Mysore may,
after giving a reasonable opportunity to the person concerned to be heard,
suspend or cancel the licence granted to any person for rearing 483 silkworm
seed if such person is convicted at least twice for an offence under this Act.
(b) Any person aggrieved by the suspension or
cancellation of a licence under clause (a) may appeal to the Government within
such time as may be prescribed and the decision of the Government on such
appeal shall be final and shall not be called in question in any Court of
law".
Section 7 of the Amending Act lays down
"7. Amendment of Section 12. In Section 12 of the Principle Act,(1)in
subsection (1), for the word,, "one hundred rupees". the words
"two hundred rupees" shall be substituted (2)in sub-section (2), for
the words and figures "section 6 or 7 or any other provision of this Act
or any rule, order or notification made there under", the words, figures,
brackets and letter. "section 6 or clause (a) of subsection (1) of section
7" shall be substituted;
(3)after sub-section (2), the following
sub-section shall be inserted, namely ('-A) All Person who contravenes the
provisions of clause (b) of sub-section (1) of section 7 or sub-section (2) of
that section shall be punishable with imprisonment which may extend to three
months or with fine which may extend to five hundred rupees or with both"
(4)for sub-section (3), the following subsection shall be substituted, namely :"(3)
Any person who contravenes the provisions of section 8 shall be punishable with
fine which may extend to two hundred a nd fifty rupees" (5)in sub-section
(4), for the words, brackets and figures "sub-sections (1), (2) and
(3)", the words brackets, figures and letter "sub-sections ( 1), (2),
(2A) and 3 shall be substituted",.
Section 8 of the Amending Act provides as S.
Insertion of new section 12A and 12B.--After Section 12 of the Principal Act,
the following sections shall be inserted, namely :12A. Abetment.-Whoever abets
any offence punishable under this Act shall be punished with the punishment
provided in this Act for such offence.
484 12B. Certain offenses to be
cognizable.-The offenses under sub-section (2A) of section 12 shall be cognizable".
It was contended that the increase in the
penalties would, in any event, be additional restrictions. Learned Counsel for
the State replied that penalties are merely sanctions provided for enforcing
restrictions and are not additional restrictions on freedom of trade or
commerce. It is true that, even without a change in the nature of violations
punished, those who contravene the provisions of the Act are subjected to
somewhat severe punishment. But, the increase in the penalties is such, in view
of the change in the value of money, as not to amount to an appreciable
increase in restriction even from the point of view of a person who wants to
break the restrictive laws. Penalties are really part of the procedure for the
enforcement of restrictions.
They do not create new offenses. They only
make violation of whatever restrictions on trade and commerce were there more
onerous. We therefore, doubt very much whether they could really be looked upon
as additional restrictions upon freedom of trade and commerce.
We may now refer to the cases cited by
learned Counsel. In Atiabari Tea Co. Ltd. V. the State of Assam & Ors.,(1)
this Court held the Assam Taxation (on goods carried by Roads and Inland
Waterways) Act, 1954, to be void for not having secured the Presidential
sanction under the proviso to Art.
304(b) before it was introduced in the form
of a bill in the State Legislature. In the case before us, the Principal Act
had the sanction of the President and enables orders to be passed which had the
force of law enabling restrictions to be imposed by rules covered by the
purposes of the Act. We have already cited Section 18 of the Principal Act to
show the amplitude of the rule making power which bad the required Presidential
sanction. And, we have found that the amendments before us only varied the form
of restrictiveness without appreciably adding to its content. This case has,
therefore, no application to the situation before us.
The Automobile Transport (Rajasthan) Ltd. V.
the State of Rajasthan & Ors. (2), was relied upon by both sides for the
distinction between mere " regulation" and a restriction contemplated
by Article 304(b) of the Constitution. It was held here that taxation of Motor
Vehicles was a compensatory measure incidental to transport by Motor Vehicles
which did not infringe the guarantee of freedom of trade and commerce conferred
by Art. 301 of the Constitution. The effect of such taxation was held to be too
remote in its effect upon freedom of trade and commerce to be a restriction
contemplated by it. Subba Rao., J., who agreed with the conclusions of three
other learned Judges of this Court so as to form a majority said that the
nature and extent of taxation would have to be carefully scrutinized to
determine whether it amounted to mere regulation or restriction. He observed
(at p. 557) (1) [1961] 1 S.C.R. 809.
(2) [1963] I S.C.R. 471.
485 .lm15 "Of all the doctrines evolved,
in my view, the doctrine of 'direct and immediate effect' on the freedom would
be A reasonable solvent to the difficult situation that might arise under our
Constitution. If a law, whatever may have been its source, directly and
immediately affects the free movement of trade, it would be restriction on the
said freedom".
Subba Rao, J ., summarised the whole law by
formulating the following propositions (at p. 564-565) :
"(1) Art. 301 declares a right of free
movement of trade without any obstructions by way of barriers, interstate, or
intra-State or other impediments operating as such barriers.
(2) The said freedom is not impeded, but, on
the other hand, promoted, by regulations creating conditions for the free
movement of trade, such as, police regulations, provision for services,
maintenance of roads, provision for aerodromes, Wharfs, etc., with or without
compensation (3) Parliament may by law impose restrictions on such freedom in
the public interest ; and the said law can be made by virtue of any entry with
respect where-of Parliament has power to make a law. (4) The State also, in
exercise of its legislative power, may impose similar restrictions, subject to
the two conditions laid down in Art. 304(b) and subject to the proviso
mentioned therein. (5) Neither Parliament nor the State Legislature can make a
law giving preference to one State over another or making discrimination
between one State and another, by virtue of any entry in the Lists, infringing
the said freedom. (6) This ban is lifted in the ease of Parliament for the
purpose of dealing with situations arising out of scarcity of goods in any part
of the territory of India and also in the case of a State under Article 304(b),
subject to the conditions mentioned therein. And (7) the State can impose a
non-discriminatory tax on goods imported from other States or the Union
territory to which similar goods manufactured or produced in that State 'are
subject".
In Khyerbari Tea Co. Ltd. & Anr. V. The
State of Assam, (1) the Assam Taxation (on goods carried by Road or on Inland
Water ways) Act (Assam Act X of 1961), was held to be valid.
It was pointed out here by Gajendragadkar,
J., that, whereas, the ratio of the majority decision in the Automobile
Transport (Rajasthan) case (supra) was that compensatory taxation would be
outside Article 301, and, therefore, of Article 304(b) of the Constitution, in
Atiabari Tea Co's case (supra), the Court had adopted the view that the
compensatory character of a tax may be taken into account in deciding whether
it was a restriction under Article 304(b) which was, reasonable and in public
interest In Khyerbari Tea Co's case (supra), the Court proceeding on the
assumption that the tax was not compensatory upheld its validity, presumably
because it was considered reasonable and in public interest as a restriction.
No such question of reasonableness of any restriction imposed by the Amending
Act before us (1) [1941] 5 S.C.R. 975.
486 has been raised by the petitioners. But,
if the position of even taxation, from the point of view of
"restrictions" contemplated by Article 304(b) of the Constitution
could be doubtful and depended upon its nature and extent and purpose, we think
that there could be no doubt that some additional licensing, at nominal fees
charged presumably to defray the expenses of carrying out the objects of the
Act, could not be held to be anything more than "regulation" in the
cases before us.
The question of regulatory character or
otherwise of amending provisions has arisen only in the course of discussion of
the question whether any new provisions, possibly resulting in requiring some
more persons to take out licenses, who may not have been previously covered by
provisions relating to licensing, would be a "restriction" as
contemplated by Article 304(b). The learned Additional Solicitor General has
contended that such licensing, is necessary even for simply maintaining A
record of those who carry on various activities in connection with the silk
production industry and business so that their purely business and industrial
activities may be watched and the quality and reputation of this industry and
trade of Mysore may be maintained. Such "regulation", it is
contended, ultimately contributes to greater flow and freedom of trade, even if
it involves some inconvenience to those who have to take out license which,
according to rules,. were granted to all those found qualified. We find
considerable weight in these arguments. In any case, we are not satisfied that
there has been a real increase in restriction upon commerce in silkworms and
cocoons by the provisions of the Amending Act which mostly cover what was
already laid down by the statutory rules. If the substance of statutory rules
is converted into statutory provisions there could hardly be said to be an
addition even in "regulation" imposed by the amending law.
Learned Counsel for the petitioner cited
Hughes and Vale Proprietary Ltd. v. State of New South Wales & Ors. (1),
where provisions of the State Transport (Co-ordination) Act, of the State of
New South Wales, requiring applications to be made for licences, which may be
granted or refused by an official in the exercise of an uncontrolled
discretion, and of all provisions consequential thereto, in so far as they were
sought to be applied to public Motor Vehicles operating in the course of or for
the purposes of inter-State trade, were held to be invalid for a contravention
of Section 92 of the Constitution of Commonwealth of Australia. This section,
as we know, provides that "trade, commerce and inter-course, among States
whether by means of internal carriage or motor navigation shall be absolutely
free".
Here, the Privy Council discussed a large
number, of cases which had a bearing on the interpretation of Section 92 of the
Australian Constitution, including Commonwealth of Australia v. Bank of New
South Wales (2) case, where it was observed at page 31 1) " Every case
must be judged on its own facts and in its own setting of time and
circumstances and it may be that (1) [1955] A.C. 241. [1950] A.C. 235,311.
487 in regard to some economic activities and
at some stage of. social development it might be maintained that prohibition
with a view to State monopoly was the only practical and reasonable manner of
regulation, and that interstate trade, commerce and intercourse thus prohibited
and thus monopolized remained Absolutely free".
The Privy Council after quoting this passage
said "As to the passage in the judgment of the Board in the Bank case upon
which counsel for the respondents particularly relied, their Lordships
accept-without qualification everything that was said by the Board in the Bank
case, but they are not aware of any circumstances in the present case giving
rise to the situation contemplated in that passage".
Thus, even if we were to apply the test of
regulation to distinguish it from restriction which may be deduced from Hughes'
case (supra) it will be seen that a decision on it depends upon the
circumstances to which a legislative measure is meant to apply and its
consequences. In the case before us, the amendments did not, in our opinion, go
beyond a regulation which was fully authorised by the language of the
provisions of the Principal Act. Even any Additional licensing involved did not
go beyond the purview of the provisions of the Principal Act and by the rules
framed there under. The mere change in form, from statutory rules to statutory
provisions, could hardly constitute even additional "regulation". It
is only an additional "restriction" from the special point of view of
Article 304(b) which requires Presidential sanction.
Although, a petition under Article 32
alleging infringement of the fundamental right guaranteed under Article 19(1)
(g) of the Constitution would lie, yet, it has to be remembered that it cannot
be allowed until such an infringement, falling outside Article 19(6) of the
Constitution, has been established. Now, as we have mentioned earlier, learned
Counsel for the petitioners stated that no question about reasonableness of any
restriction was being raised by them before us. They rested their case solely
on the want of Presidential sanction to Additional "restrictions" on
freedom of business, trade, and commerce which are not, as we have indicated
earlier, to be equated with a mere reduction of the area of freedom of choice
of those who arc engaged or who want to engage in a business or trade. The
passage cited in Hughes' case (supra), from the Bank of New South Wales case
(supra) makes that clear. In other words, an allegedly additional restriction
on trade and commerce is to be judged from a broader and more general angle of
the freedom of a, particular trade. What may be a restriction of his choice,
from the point of view of an individual citizen engaged in a trade, may not be
a restriction on interstate or intra-State commerce viewed from the angle of
the trade as a whole. Even if we could not, as we did not, find any additional
restrictions on the silkworm and silk production business and industry in the
amendments, the petitioners could show that they were unduly hampered by the
impugned amendments from carrying on their business 10 SC/75-32 488 or trade by
some unreasonable restrictions on their fundamental rights as individuals
engaged in silk production industry or business. But, if that was their
grievance, they had to demonstrate an unreasonableness of restrictions upon
their activities falling outside Article 19(6) before they could succeed. They
have not even attempted to do that. It is evident that they could not do so
because the licensing fees for various activities to be licensed is quite
nominal and they have not been denied any licences they wanted.
Consequently, we dismiss these petitions with
costs.
C.M.P. No. 1929 of 1975 (in Writ Petition No.
137 of 1971) is also dismissed as not pressed.
Petitions dismissed P.H.P.
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