Bishambhar Dayal Chandra Mohan &
Ors Vs. State of Uttar Pradesh & Ors [1981] INSC 189 (5 November 1981)
SEN, A.P. (J) SEN, A.P. (J) ISLAM, BAHARUL
(J)
CITATION: 1982 AIR 33 1982 SCR (1)1137 1982
SCC (1) 39 1981 SCALE (3)1685
CITATOR INFO :
F 1982 SC1016 (13,14) R 1985 SC 660 (25) RF
1987 SC 741 (16)
ACT:
Uttar Pradesh Food Grains Dealers (Licensing
and Restriction on Hoarding) Order, 1976 and Uttar Pradesh Food Grains
(Procurement and Regulation of Trade) Order, 1978, clause (4) as amended by
Notification No. P-XXIX-Food-5-5- (42)/80 dated April 21,1981-Teleprinter
Message issued by the State Government dated March 31, 1981 regarding
enforcement of the Orders-Constitutional validity of- Articles 14, 19(1)(g),
162, 300A and 301 of the Constitution of India.
Constitution of India, Article
32-Jurisdiction of the Supreme Court to investigate into facts, explained.
Words and phrases-"Law" occurring
in Article 300A "at any time" and "reasonable restriction",
meaning of.
HEADNOTE:
In exercise of the powers vested under the
Essential Commodities Act, 1951, the State Government of Uttar Pradesh issued
two orders, namely (1) the Uttar Pradesh Food Grains Dealers (Licensing and
Restriction on Hoarding) Order, 1976 and (2) the Uttar Pradesh Food Grains
(Procurement and Regulation of Trade) Order 1978. By its tele-printer message
dated March 31, 1981 to all the Regional Food Controllers, the State Government
issued certain further instructions for effective enforcement of the two Orders
and in particular regulating the inter-district and outside the State-movement
of wheat by traders on private account. By a Notification No.
P-XXIX-Food-5-5(42)/80 dated April 21,1981, clause (4) of the 1978 Order, was
amended providing that no wholesale dealer, commission agent, or a retailer
shall have in stock wheat more than 250 quintals, 250 quintals and 20 quintals
respectively, at any time, since it was of opinion that it was necessary or
expedient so to do for securing the equitable distribution and availability of
foodgrains at fair prices.
Pursuant to the powers vested in them, the
Senior Marketing Inspector and the Chief Marketing Inspector, Agra, intercepted
and seized the trucks laden with wheat of the petitioners who are wholesale
dealers of foodgrains from the Union Territory of Delhi and the States of
Punjab and Haryana at the check post at Saiyan on the border between the States
of Uttar Pradesh and Madhya Pradesh, and after bringing them back to the
purchase point at Agra unloaded the wheat from the said trucks. While the
petitioners moved an application for the release of the seized wheat before the
Additional District Magistrate (Civil Supplies), Agra, the Marketing Inspectors
not only lodged First Information 1138 Reports but obtained an interim order on
May 23, 1981 for the sale of the seized wheat as it was subject to speedy and
natural decay. The seized wheat had been purchased by the State Government on
Government account at the procurement price and the sale proceeds were credited
into the treasury.
The petitioners challenged the teleprinter
message dated March 31, 1981 and the Notification dated April 21, 1981 on the
following grounds: (1) The Notification fixing the maximum limit of wheat
permitted to be possessed by a wholesale dealer at 250 quintals, at a time, is
an unreasonable restriction on the freedom of trader guaranteed under Article
19(1)(g) of the Constitution; (2) there is no distinction made between a
wholesale dealer and a commission agent in as much as the maximum limit of
wheat allowed to be possessed by them is the same, i.e., 250 quintals at a time
and the fixation of such limit in the case of a wholesale dealer is arbitrary,
irrational and irrelevant and thus violative of Article 14 of the Constitution;
(3) the instructions conveyed by the State Government by its teleprinter
message dated March 31, 1981, placing restrictions on movement of wheat by
traders on private account from the State of U.P. to various other States and
on inter-district movement of wheat within the State, were violative of their
fundamental rights under Article 19(1)(g) and Article 301 of the Constitution;
(4) the seizure of the consignments of the wheat, while they were in transit in
the course of inter-State trade and commerce from the Union Territory of Delhi
and the States of Punjab and Haryana to various destinations in the States of
Maharashtra and Madhya Pradesh, was without "the authority of law"
and in violation of Article 300A of the Constitution; (5) the restriction must
be by "law" or by an "order" having the force of law and
not by recourse to the executive authority of the State under Article 162 of
the Constitution, that is, by an executive action. The teleprinter message of
the State Government dated March 31, 1981 on the basis of which the seizures
were effected in truth and substance, had no legal sanction and cannot be
construed to be a notified order within the meaning of sub-section (1) read
with sub-section (5) of section 3 of the Essential Commodities Act; it was
nothing but an executive direction. No executive action which operates to the
prejudice of the citizens can be taken without the authority of law. The
seizures effected were not in compliance with the instructions contained in the
teleprinter message and not for breach of the two control Orders and,
therefore, it was nothing but a "colorable exercise" of power. The
real purpose of the seizure was procurement of wheat in furtherance of the
directives of the Central Government without any legal sanction, since the
farmers were not willing to sell their wheat at the procurement price; and (6)
under sub-section 2(ii) of section 6A of the Act there being no control price
for wheat, the wheat should have been sold by public auction by the Additional
District Magistrate while passing an interim order.
Dismissing the petitions, the Court
HELD: 1:1. The restriction imposed by the
State Government on wholesale dealers of wheat is neither arbitrary nor is of
an excessive nature beyond what is required in the national interest. To check
speculative tendencies of the wholesale traders and others who manipulate the
market by withholding stocks of a commodity and to obviate blackmarketing, the
stock limit of wheat was fixed for wholesale dealers at 250 quintals at a time,
as in the case of a commission agent, the underlying idea being that the
wholesale dealers should be allowed to 1139 continue their trading activities
within reasonable limits.
The fixation of stock limit at 250 quintals
implies that wholesale dealers can have at any time, in stock, a wagon- load of
wheat. The words "at any time" mean "at any given time",
which means that a wholesale dealer should not have in stock more than 250
quintals at a time. But there is nothing to prevent a wholesale dealer from
entering into a series of transaction during the course of the day. [1173 A- E]
1:2. The State Government had adopted various measures in the interest of the
general public for the control of production, supply and distribution of, and
trade and commerce in, essential commodities. The Order fixing a stock limit
introduces a system of checks and balances to achieve the object of the
legislation, that is, to ensure equitable distribution and availability of
essential commodities at fair prices. Looking to the prevailing conditions, the
imposition of such restrictions satisfies the test of reasonableness. The
fixation of such stock limit is not arbitrary or irrational having no nexus to
the object sought to be achieved and is, therefore, intra vires of Article 14.
The limitation imposed fixing a stock limit
for a wholesale dealer at 250 quintals is also a reasonable restriction within
the meaning of Article 19(6) of the Constitution.
[1174 A-D] 2:1. The teleprinter message No.
PP-1061/XXIX.Food-5 dated 31st March, 1981 was in the nature of executive
instruction of the State Government to the Regional Food Controllers of the
various regions to be more vigilant and to secure due observance of the control
orders. [1156 B, E- F, 1163 C] 2:2. The instructions conveyed by the State
Government by the impugned teleprinter message imposing the requirement for the
making of an endorsement by the Deputy Marketing Officer or the Senior
Marketing Officer or the physical verification of stocks of wheat during the
course of transit, are not a 'restriction' or an 'intrusion' on the fundamental
right to carry on trade or business guaranteed under Article 19(1)(g) or on the
freedom of trade, commerce and intercourse under Article 301. These are nothing
but regulatory measures to ensure that the excess stock of wheat held by a
wholesale dealer, commission agent or a retailer is not transported to a place
outside the State or from one district to another. Even if these requirements
are considered to be a 'restriction' on inter-State or intra- State trade, that
is, across the State or from one part of the State to another, the limitation
so imposed on the enjoyment of the right cannot be considered to be arbitrary
or of an excessive nature and thus violative of Article 19(1)(g) or Article 301
of the Constitution. There being no ban on the export of wheat from the State
of Uttar Pradesh to various other States or from one district to another within
the State, subject to the making of an endorsement by the Deputy Marketing
Officer or the Senior Marketing Officer concerned, the Petitioners who are
wholesale dealers of foodgrains in the State of Uttar Pradesh are, therefore,
free to carry on their business within the permissible limits, that is, they
may carry on their trade or business or enter into inter-State or intra-State transactions
of wheat subject to the stock limit of 250 quintals, at a time.
[1174 D-H, 1175 A-B] 2:3. The teleprinter
message dated March 31, 1981 was a direct sequel to the Centre's directives
contained in its earlier teleprinter message and intended or meant to achieve
three main objectives, namely, (i) to provide price support in wheat to
purchasers with a view to sustain, maintain and maximise the pro- 1140 curement
of wheat; (ii) to prevent hoarding and black- marketing; and (iii) to provide
for equitable distribution and availability of wheat at fair prices. The
directions were obviously meant to subserve the object of the legislation and
were in public interest. The State Government was committed to provide price
support in wheat to producers and hence to maximise procurement of wheat, there
is nothing unusual on the State Government issuing such executive instructions.
[1156 E-F, 1160 D-E] 2:4. Even assuming that the impugned teleprinter message
is not relatable to the control Orders, the State Government undoubtedly could,
in exercise of the executive power of the State, introduce a system of
verification on movement of wheat from the State of Uttar Pradesh to various
other States at the check post on the border and place restrictions on
inter-district movement of wheat by traders on private account within the
State. [1156 E-F] Ram Jawaya Kapur v. State of Punjab [1955] 2 SCR 225 and
Naraindas Indurkhya v. State of Madhya Pradesh & Ors., [1974] 3 SCR 624,
explained and followed.
3:1. The State Legislature is competent to
enact a law on the subject covered by Entry 33, List III, regulating trade and
commerce in, and the production, and supply and distribution of
"foodstuffs". The Essential Commodities Act, 1955 was enacted by
Parliament in exercise of concurrent jurisdiction under Entry 73, List II, of
the Seventh Schedule to the Constitution as amended by the Constitution (Third
Amendment) Act, 1954. The exercise of such concurrent jurisdiction would not
deprive the State Legislature of its jurisdiction thereunder. The executive
power of the State which is coextensive with the legislative power is subject
to the limitation contained in Article 162 which directs that in any matter
with respect to which the legislature of a State and Parliament have power to
make laws, the executive power of the State shall be subject to, and limited
by, the executive power expressly conferred by the Constitution or by any law
made by Parliament upon the Union of authorities thereof. [1158 F-H, 1159 A-B]
3:2. The State in exercise of its executive powers is charged with the duty and
the responsibility of carrying on the general administration of the State. So
long as the State Government does not go against the provisions of the
constitution of any law, the width and amplitude of its executive power cannot
be circumscribed. If there is no enactment covering a particular aspect,
certainly the Government can carry on the administrative directions or
instructions, until the legislature makes a law in that behalf. Otherwise the
administration would come to a standstill. [1157 B-C] 3:3. The executive power
of "search and seizure" is a necessary concomitant of a welfare
State. It tends to promote the well being of the nation. Many questions arising
in the field of search and seizure are factual in nature, involving varying
degrees of difference among the infinitely diverse facts. It is a limitless
area where not only every factual variation presents a new constitutional
question, but it is a peculiar field in which the decisions of courts do not
help in clarifying the law. The decisions in the field are of little
precedental value, because the more the cases that are decided the more issues
arise, through possible factual variation. [1159 B-E] 1141 4:1. The
quintessence of the Constitution is the rule of the law. The State or its
executive officers cannot interfere with the rights of others unless they can
point to some specific rule of law which authorises their acts. [1161 A] State
of Madhya Pradesh v. Thakur Bharat Singh, [1967] 2 SCR 454, Satwant Singh
Sawhney v. Dr. Ramarathnam, Assistant Passport Officer, Government of India,
New Delhi & Ors., [1967] 3 SCR 525 at 542; Smt. Indira Nehru Gandhi v. Shri
Raj Narain, [1976] 2 SCR 347 at 524, reiterated.
4:2. The Essential Commodities Act, 1955 is a
"law" within the meaning of Article 302 of the Constitution imposing
reasonable restrictions on the right to carry on trade and commerce as
guaranteed by Article 19(1)(g) and Article 301 of the Constitution. The object
of the Act is to provide, in the interest of the general public for the
control, production, supply and distribution of, and trade and commerce in,
certain essential commodities. [1161 D-E]
5. From the point of view either of Entry 54
List II or of Article 301 of the Constitution, the State Legislature is
competent to set up the check posts and barriers on the State's borders,
designed and meant to prevent evasion of sales tax and other dues. Just as
inter-State trade and commerce must pay its way and be subject to taxation,
persons engaged in inter-state trade or commerce are equally subject to all
regulatory measures. The check posts or barriers set up by the State Government
under section 28 of the U.P. Sales Tax Act, 1948, which is legally accepted as
valid and also considered not a restriction or impediment to the freedom of
trade, commerce and intercourse granted under Article 301 of the Constitution,
can certainly be utilised as a machinery for due observance of the laws, for
example, for verification and control of movement of wheat by traders on
private account from the State of Uttar Pradesh to various other States.
[1159 F, 1160 B-D] 6:1. The fundamental right
to carry on trade or business guaranteed under Article 19(1)(g) or the freedom
of inter-State trade, commerce and intercourse under Article 301 of the Constitution,
has its own limitations. The liberty of an individual to do as he pleases is
not absolute. It must yield to the common good. Absolute or unrestricted
individual rights do not and cannot exist in any modern State. There is no
protection of the rights themselves unless there is a measure of control and
regulation of the rights of each individual in the interests of all. Whenever
such a conflict comes before the Court, it is its duty to harmonise the
exercise of the competing rights. The Court must balance the individual's
rights of freedom of trade under Article 19(1)(g) and the freedom of
inter-State trade and commerce under Article 301 as against the national
interest. Such a limitation is inherent in the exercise of those rights. [1164
E-H] 6:2. Under Article 19(1)(g) of the Constitution, a citizen has the right
to carry on any occupation, trade or business and the only restriction on this
unfettered right is the authority of the State to make a law imposing
reasonable restrictions under clause (6). [1165 A] 6:3. The expression
"reasonable restriction" signifies that the limitation imposed on a
person in enjoyment of the right should not be arbitrary or of an excessive
nature, beyond what is required in the interests of the public. The test of
reasonableness, wherever prescribed, should be applied to each individual 1142
statute impugned, and no abstract standard, or general pattern of
reasonableness can be laid down as applicable in all cases. The restriction
which arbitrarily or excessively invades the right cannot be said to contain
the quality of reasonableness and unless it strikes a proper balance between
the freedom guaranteed in Article 19(1) (g) and the social control permitted by
clause (6) of Article 19, it must be held to be wanting in that quality. [1165
B-D] 6:4. Several steps taken, in the instant case, like prevention of movement
of stock of wheat to various other States, movement of wheat from one district
to another within the State only after the verification of the transaction and due
endorsement by the Deputy Marketing Officer or the Senior Marketing Officer
concerned and also the physical verification at the check post on the State's
borders etc. were designed to prevent a price rise in wheat in the State of
Uttar Pradesh and to prevent outflow of wheat from the State to various other
States and from one district to another district within the State. The whole
object was to ensure that the wholesale dealers in foodgrains did not corner
stocks of wheat for the purpose of speculation, and hence the steps taken were
reasonable and in the interests of the general public. If, therefore, the
seizure can be justified on the basis of any valid law, it cannot be held to be
illegal. [1165 D-H] 7:1. Article 301 imposes a limitation on all legislative
power in order to secure that trade, commerce and intercourse throughout the
territory of India shall be free. Although Article 301 guarantees that trade,
commerce intercourse throughout the country shall be free, the right to carry
on inter-State trade and commerce may be subject to reasonable restrictions in
the interests of the general public. [1165 A, 1166 A, C] 7:2. The word 'free'
in Article 301 does not mean freedom from laws or from regulations. Article 301
guarantees freedom of trade, commerce and intercourse throughout the country
from any State barriers. The whole object was to bring about the economic unity
of the country under a federal structure, so that the people may feel that they
are members of one nation. One of the means to achieve this object is to
guarantee to every citizen in addition to the freedom of movement and residence
throughout the country, which is achieved by Article 19(1)(d) and (e) is the
freedom of movement or passage of commodities from one part of the country to another.
This freedom of trade, commerce and intercourse throughout the country without
any "State barriers" is not confined to inter-State trade but also
including intra-State trade as well. In other words, subject to the provisions
of Part XIII, no restrictions can be imposed upon the flow of trade, commerce
and intercourse, not only between the State and another, but between any two
points within the territory of India whether any State border has to be crossed
or not. [1166 D-H] 7:3. The regulatory measure or measures imposing
compensatory taxes do not come within the purview of the restrictions
contemplated by Article 301. The regulatory measures should, however, be such
as do not impede the freedom of trade, commerce and intercourse. [1166 H, 1167
A] 8:1. In view of the provisions of clause (3) of the 1976 Order read with
clauses (4) & (6) of the 1978 Order, the validly seized excess stock of
wheat lying with such dealer, that is, a wholesale dealer, commission agent or
a retailer, in truth and substance, became their "unlicensed stock".
Here, if really the Delhi traders had purchased the excess stock of wheat from
wholesale dealers, com- 1143 mission agents or retailers in the State of Uttar
Pradesh, as is alleged, it is possible to contend that there was a
contravention of the provisions of clause (4) of the 1978 Order. The question
whether the seizure was for any contravention of any order issued under section
3 of the Act has to be determined by the Additional District Magistrates (Civil
Supplies), Agra, on the evidence adduced by the parties before him. The facts
being controverted, the petitioners have no right to relief under Article 32 of
the Constitution. [1168 D-H, 1169 A-B] 8:2. Supreme Court can neither act on
documents which are yet to be proved nor can they pronounce upon the
genuineness of the transactions covered by them or record any finding on the
basis of the documents when the facts are in dispute. [1169 E] 8:3. Normally,
it is not the function of Supreme Court to investigate into facts in proceedings
under Article 32 of the Constitution when they are controverted with a view to
discerning the truth. The matter must, in a situation like this, be left to the
fact-finding body. For the establishment of their right to relief under Article
32, the petitioners must establish the necessary facts before the said
Additional District Magistrate in the proceedings under section 6A of the Essential
Commodities Act. If they fail to get relief in such proceedings, their obvious
remedy lies in a suit for damages for wrongful seizure. [1171 A-C] 9:1. The
State Government cannot while taking recourse to the executive power of the
State under Article 162 of the Constitution deprive a person of his property.
Such power can be exercised only by authority of law and not by a mere
executive fiat or order. Article 162 being subject to other provisions of the
Constitution, is necessarily subject to Article 300A. [1169 F-G] Wazir Chand v.
The State of Himachal Pradesh, [1955] 1 SCR 408; Bishan Das and Others v. The
State of Punjab and Others, [1962] 2 SCR 69, referred to.
9:2. The word 'law' in the context of Article
300A must mean an Act of Parliament or of a State Legislature, a rule, or a
statutory order, having the force of law, that is positive or State-made law.
[1169 G-H] 9:3. The effect of the Constitution (Fourth) Amendment Act, 1955, is
that there can be no 'deprivation' unless there is extinction of the right to
property. Here, no doubt, the wheat had to be sold, as it was subject to speedy
and natural decay, but the petitioners are entitled to the sale proceeds, if
ultimately it is found by the Additional District Magistrate (Civil Supplies),
Agra, that there was no contravention by them of an order issued under section
3 of the Act. It is true that the seizure was with intent to confiscate under
section 6A of the Act, but that would not make the seizure illegal, if,
ultimately, it is found that there was contravention of an order issued under
section 3 of the Act. If the facts were not in controversy and if the
petitioners were able to prove that there was wrongful seizure of wheat by the
State Government of Uttar Pradesh at the check post of Saiyan on the border,
while in transit, in the course of inter-State trade and commerce from the
Union Territory of Delhi, perhaps, they would be entitled to the return of the
seized wheat, or, in the alternative, to the payment of price thereof. [1170
D-H, 1171 A] 1144 9:4. The question that the seizures were in reality for
procurement of wheat in furtherance of the directive of the Central Government,
and not for breach of the two Control Orders and, therefore, were nothing but a
'colourable exercise of power', is dependent on facts to be found on investigation.
Further, the question that there being no control price for wheat, the wheat
should have been sold by public auction, is again a question that must be
raised before the Additional District Magistrate (Civil Supplies), Agra, in the
proceedings pending before him under section 6A of the Act. [1171 C-D]
ORIGINAL JURISDICTION:
Food Grains Matters.
A. Movement by Road:
(a) WP. Nos.2907-2908,3234,
3238-39,3164,3254, 3630- 31,3686, 3783, 3816, 4816, 4929-31, 4836-38, 4996-
5001, 5051-54, 5089-93, 5136-46, 5247, 3160, 3634, 4494,4616,4967, 5362-71,
5416-20, 5447-50,5716-17, 5840,6015,6587-89 & 6609-14/81.
(b) WP. Nos. 5062,5157-58,5451 &
5615-17/81.
(c) WP Nos. 5097,5042, 5098, 5017, 5214 &
6135-36/81 & 7003/81.
(d) WP. Nos.3421, 3407, 3408-13, 3422, 3536,
3561-64, 5238,13824, 5466, 5544, 6009, 6130-31, 6572-74 & 6582-83/81.
(e) WP. Nos. 4904-4905, 5080, 5094, 5239-45,
5358-59, 5395, 5483, 5484-88, 5489-92, 5734-39, 6584-86 & 6817-21/81.
(f) WP. Nos.4960-62, 4958-59, 5129-33,
5219-20, 5331- 33, 5518-19, 5526, 5428-31 & 5527/81.
(g) WP. Nos. 4526, 4926, 4995, 5046, 5048-50,
5100, 5101, 5136-46,5402-11, 5436-38, 5560, 5520-21, 5562,5558, 5556,
5559,5550,5546-47, 5552, 5555, 5553-54,5511, 5482, 5618-19,5809-20,6132-33,
6244, 6273-75,6267-72, 5512-14, 5515,6570 and 5562/81, 7027-29 and 7032-34/81.
(h) WP.
Nos.5221,5380-83,5129-33,5421-22,5440, 5507- 10, 5662, 5806-5807, 6245, 6246,
6265, 6398 and 6684/81.
1145 (i) WP. Nos. 3592, 3353, 5396, 6016,
6247-48, 6616, 6668 and 6798/81.
(j) WP. Nos.5003, 4453,
4455-56,5346-48,4955,5082-89, 5577-80, 5581 and 5724/81.
(k) WP. Nos.3489 and 4293/82.
(l) WP. No. 4818/81.
(m) WP. Nos.2916,2932,3242,
3297-3302,3334-43, 3475, 4098-4100, 4136, 4304, 4187, 4777, 5007-17,5027- 34,
5352-55, 5473-79, 5604-5608, 5740-42, 5743-44, 5821, 6012-13 and 5583-92/81.
(n) WP Nos. 5391 and 5525/81.
(o) WP No. 5443/81.
(p) WP. Nos. 5444,5663 and 6266/81.
(q) WP. No. 5464/81.
(r) WP. Nos. 5451 and 5564-66/81.
(s) WP. No. 5807/81.
(t) WP. Nos.5571-75, 5622-29 and 6014/81.
(u) WP. Nos.5718-19/81 and 6943/81.
(v) WP. No. 5568-69/81.
B. Restriction on Quantum of Food-Grains
which can be held:
(a) WP. Nos. 2932, 3776-3780, 4140-45,
4326-28, 4876- 4902, 4670-78 and 5473-79/81.
(b) WP. No. 5480/81.
(c) WP. Nos. 4955-56,5330,5392,3823 and
6278/81.
(d) WP. Nos. 5529-30/81.
(e) WP. Nos.5531-32/81.
1146 (f) WP. Nos. 5841-50/81.
(g) WP. Nos. 5656-58/81.
(Under Article 32 of the Constitution of
India) Hari Sarup, M.N. Phadke, Soli J. Sorabjee, J.P.
Goyal and C.M. Lodha, (M/s. B. Datta, R.A.
Gupta, Miss Kamini Jaiswal, Rajiv Dutta, Manoj Swarup and Miss Lalita Kohli,
R.S. Sharma, R.K. Jain, Pankaj Jain, P.K. Jain, K.K. Jain, K.B. Rohatgi, B.R.
Kapur, B.S. Tawakley, S.R. Srivastava, N.N. Sharma, A.K. Goel, Mitter and
Mitter and Co., S.K. Jain, Rajesh Jain, Mukul Mudgal, M. Qamaruddin, Mrs. M.
Qamaruddin, Anis Suhrawardhy, A.P. Mohanty, K.K. Gupta, Ravi Prakash Gupta,
C.K. Ratnaparkhi, S.C. Birla, M.C. Dhingra, and S.K. Gambhir for the appearing
Petitioners.
G.N. Dikshit, O.P. Rana, Mrs. Shobha Dixit,
R.N. Poddar, G. Gopalakrishan, A.V. Rangam, B.D. Sharma, D.P. Mohanty and A.
Shroff for the Respondents.
The Judgment of the Court was delivered by
SEN, J. The issue in this and the connected 505 petitions under Art. 32 of the
Constitution is of far- reaching significance. It raises questions of the
highest importance as to the scope and extent of the executive power of the
State under Art. 162 of the Constitution, in relation to regulation and control
of trade and commerce in food- stuffs. It necessarily involves a claim by the
petitioners who are wholesale dealers of foodgrains that the exercise of such
governmental power conflicts with the rule of law and is in flagrant violation
of the freedom of trade, commerce and intercourse guaranteed under Art. 301 of
the Constitution and the fundamental right to carry on trade and business
guaranteed under Art. 19 (1) (g) of the Constitution. These petitions fall into
two distinct and separate categories, one by the wholesale dealers of foodgrains
from the Union Territory of Delhi and the neighbouring States of Punjab and
Haryana, and the other by the wholesale dealers of foodgrains from the State of
Uttar Pradesh.
1147 The short question that falls for
consideration in some of the writ petitions by wholesale dealers of foodgrains
from the Union Territory of Delhi and the State of Punjab and Haryana is
whether the action of the State Government of Uttar Pradesh in setting up
check-posts on its borders and the stoppage and seizure of wheat in transit
through the State of Uttar Pradesh during the course of inter-State trade and
commerce to various destinations in the States of Madhya Pradesh and
Maharashtra at the check-post at Saiyan on the border between the States of
Uttar Pradesh and Madhya Pradesh on the strength of its instructions conveyed
by its teleprinter message dated March 31, 1981, was in violation of Art. 301
of the Constitution.
In a majority of the writ petitions by
wholesale dealers from the State of Uttar Pradesh, two questions arise, (1)
whether Notification No. P-XXIX-Food-5-5 (42)/80 dated April 21, 1981, issued
by the State Government of Uttar Pradesh, in exercise of the powers conferred
by s. 3 read with s. 5 of the Essential Commodities Act, 1955 (hereinafter
referred to as the Act), by which cl.4 of the Uttar Pradesh Foodgrains
(Procurement and Regulation of Trade) Order, 1978, has been amended, providing
that no wholesale dealer, commission agent or retailer shall have in stock
wheat more than 250 quintals, 250 quintals and 20 quintals respectively, at any
time, Infringes the fundamental right to carry on trade or business guaranteed
under Art. 19 (1) (g) and (2) whether the governmental instructions conveyed by
its teleprinter message dated March 31, 1981, placing restrictions on movement
of wheat by traders on private account from the State of Uttar Pradesh to
various other States and on inter-district movement of wheat within the State,
were in breach of the fundamental right under Art. 19 (1) (g) read with Art.
301 of the Constitution.
The following are the facts and circumstances
so far as necessary to show as to how the legal questions are presented. It
would be convenient first to deal with the writ petitions filed by the
whole-sale dealers of foodgrains from the Union Territory of Delhi and the
States of Punjab and Haryana seeking a declaration that the impugned action of
the State Government of Uttar Pradesh in setting up check-posts on the borders
of the State and directing seizure of wheat in transit through the State, on
the strength of the impugned teleprinter message, conflicted with the
guarantees of inter-State trade and commerce dealt with by Art, 301 of the
Constitution.
1148 Facts in all these cases are more or
less similar. The petitioners who are wholesale dealers of foodgrains from the
Union Territory of Delhi and the States of Punjab and Haryana allege that
between April 29-30, 1981, they, acting as commission agents, purchased wheat
from the open market in Delhi and elsewhere and dispatched the same by trucks
to various destinations in the State of Maharashtra and to some places in the
State of Madhya Pradesh. According to them, the trucks laden with wheat were
accompanied by relative bills, goods receipts, inter-State transit passes etc.,
duly crossed the check-post at Faridabad and were also allowed to cross the
check-post at Kotwan on the border between the Union Territory of Delhi and the
State of Uttar Pradesh and were on their way to their respective destinations.
They allege that the Senior Marketing Inspector, Agra, intercepted the trucks
in question at the check-post at Saiyan on the border between the State of
Uttar Pradesh and Madhya Pradesh between April 30, 1981, and May 2, 1981. The
seized trucks were brought back to the purchase point at Agra and the wheat was
unloaded. Thereupon, the petitioners rushed to Agra and made an application on
May 4, 1981, under s.6A read with ss. 3 and 7 of the Act before the Additional
District Magistrate (Civil Supplies), Agra, for the release of the seized wheat.
In the said application, the petitioners, inter alia, claimed and unequivocally
stated that there was no ban on export of wheat from the Union Territory of
Delhi to other States, that the wheat in question was neither purchased at
Agra, nor was it being transported from Agra to any other district in Uttar
Pradesh, that Agra was a place in transit, and that the instructions of the
State Government contained in the impugned teleprinter message dated March 31,
1981 did not constitute a validly notified order under sub-s. (5) of s. 3 of
the Act.
The Chief Marketing Inspector, Agra, had in
the meanwhile seized 42 trucks laden with wheat either at the check-post at
Saiyan or at Agra and lodged first information reports at the Saiyan police
station or at the Civil Lines police station in respect of the consignments
alleging that the movement of wheat was in contravention of the impugned
teleprinter message and was therefore seized, and in three of them it was
alleged that the wheat had been purchased at Agra. On the report of the Chief
Marketing Inspector, the Additional District Magistrate (Civil Supplies), Agra
drew up proceedings under s. 6A of the Act and directed the police to complete
the investigation within 15 days.
1149 On May 23, 1981, the Additional District
Magistrate (Civil Supplies), Agra under sub-s. (2)(i) of s. 6A of the Act
passed interim orders for the sale of the seized wheat as it was subject to
speedy and natural decay, at the request of the Senior Marketing Inspector,
similar to the one reproduced below:
These proceedings under s.6A of the Essential
Commodities Act started on the report of SMI Saiyan dated 30.4.1981 (Paper No.
1) whereby it was brought to the notice of this Court that truck nos..... were
caught carrying 120 quintals.....of wheat respectively beyond Saiyan border
outside the State in contravention of the orders issued by the Government vide
telex No. 1061/29-Food-5 dated 31.3.1981 F.I.R. was lodged at P.S. Saiyan in
respect of the above contravention.
Notice under s. 6B of the EC Act was issued
to the O.Ps..... who were driving the trucks at the time of search and seizure.
Replies were filed by the owners of the wheat
contending that the said rules were not part of any Control Order under Section
3 of the EC Act nor they had any legal sanction for want of publication in the
Official Gazette. The O.Ps. have pleaded that they were taking their goods in
transit through Agra and in fact the movement of wheat so made by them was
inter-state movement which was not banned by the Central Government or State
Government.
I heard the learned counsels on behalf of the
O.Ps. and the learned PO as well. In these proceedings final orders cannot be
passed at this stage as the matter is still under investigation.
PO directed to put up progress of
investigation within 15 days from now.
In the meanwhile I order that the wheat
seized by SMI Saiyan be got purchased at the Official Price so that the same
does not get damaged. The sale proceeds be got deposited in Government Treasury
under proper Head of Account.
1150 This interim order is being passed under
sub-s.
(2) (i) of s.6A of the Essential Commodities
Act, 1955.
File be put up after 15 days along with
report of prosecuting office regarding progress of investigation.
Sd/- N.N. Varma Addl. Collector, Agra
23.5.1981 The seized wheat has been purchased by the State Government on
Government account at the procurement price and the sale proceeds credited into
the Treasury.
The State Government has filed a
counter-affidavit of the Chief Marketing Officer, Lucknow, in all these cases
as also the affidavits of the Senior Marketing Inspectors at Agra controverting
the allegations made by the petitioners.
It is stated that the source of the power to
effect the seizure was not the impugned teleprinter message, but the power of
search and seizure conferred on an Enforcement Officer under cl. 6 of the U.P.
Foodgrains Dealers (Licensing and Restriction on Hoarding) Order, 1976 and
under cl.6 of the Uttar Pradesh Foodgrains (Procurement and Regulation of
Trade) Order, 1978 (hereinafter called the 1976 Order and 1978 Order
respectively), both of which were issued by the State Government, in exercise
of the powers under s. 3 of the Act, read with Government of India, Ministry of
Agriculture (Department of Food) Notification No. G. S.R. 888 dated June 28,
1961, No. GSR 316 (E) dated June 20, 1972, No. GSR 452 (E) dated October 25,
1972, No. GSR 168 (E) dated March 13, 1973 and No. GSR 800 dated June 9, 1978
respectively, since it was of opinion that it was necessary or expedient so to
do for securing the equitable distribution and availability of foodgrains at
fair prices.
The State Government contends that the
impugned teleprinter message dated March 31, 1981 was in the nature of an
executive instruction issued by the State Government under its undoubted powers
under Art. 162 of the Constitution for the due observance of the provisions of
the two Control Orders. It is said that no person can carry on business in
foodgrains as a dealer or as a commission agent except under and in accordance
with the terms and conditions of a valid licence issued in that behalf under
cl. 4 of the 1976 Order.
It is also said that no wholesale dealer,
commission agent or trader can have in stock more than 250 quintals, 250
quintals and 20 quintals respectively, at any time. It is asserted that the
State Government has the right to set up check-posts for the purpose of
verification so that there is no contravention of the provisions of the two
Control Orders, particularly with a view to ensure that excess quantity of
wheat is not transported in violation of the 1978 Order to other districts or
other States.
The State Government in the counter-affidavit
of the Chief Marketing Officer, Lucknow, specifically denies the allegations
made by the petitioners that the 42 trucks laden with wheat seized at the
check-post at Saiyan on the border between the States of Uttar Pradesh and
Madhya Pradesh or at Agra were in transit during the course of inter-State
trade and commerce.
With regard to the seizure of the wheat, it
is averred in para 13 of the counter-affidavit:
"The correct fact is that the authority
on the bona fide apprehension that the wheat so moved actually was purchased
from the State of Uttar Pradesh from nearby places and the same was being moved
to other States on the garb of outside wheat. It is submitted that such traders
who are exporting wheat alleged to have purchased from places other than the
State of Uttar Pradesh and were/are carrying the same to other States, have
only to satisfy the authorities concerned of the bona fides of such
transactions. However there is no ban on such movement from one State to
another." As regards the check-posts, it is submitted that the State
Government is committed to provide price support in wheat to farmers at Rs. 130
per quintal. This commitment also involves purchase of wheat directly from the
farmers without interference from traders/middlemen, who try to purchase wheat
from the farmers at lower prices and sell the same at Government purchase
centres with substantial profits. Such transactions are effected in fictitious
names.
This not only frustrates the procurement
policy of the Government but also prejudicially and financially affects the
producers' interests. In para 5 it is accordingly averred:
"In order to curb the above tendencies
and preventing the activity of traders/middlemen the State Government have
provided a simple system of verifying all transactions by traders.
1152 This procedure involves getting all
transactions of wheat verified by the Deputy Regional Marketing Officer
indicating inter alia the name of the persons to whom the stocks are sold,
their licence numbers etc.
and quantum of stocks sold, price paid etc.
This process will make it simultaneously very difficult for traders to buy at
low price from farmers and resell at high prices at the Government purchase
centres." As regards the impugned teleprinter message it was stated that
it was issued by the State Government in order to sustain and maintain and
maximise the procurement of wheat by introducing a system of verification at
the check- posts.
The State Government contests the right of
the petitioners falling in the first category, that is, wholesale dealers of
wheat from the Union Territory of Delhi and the States of Punjab and Haryana,
to relief under Art.
32 of the Constitution who question the
legality and propriety of the seizures. It is a matter for investigation which
is pending before the Additional District Magistrate (Civil Supplies), Agra
and, according to it, the question cannot be decided without full investigation
into facts.
In support of the writ petitions, learned
counsel appearing for the petitioners have, in substance, urged three grounds.
(1) There was nothing to prevent the State Government from making a law placing
reasonable restriction on the freedom to carry on any occupation, trade or
business guaranteed under Art. 19(1) (g) read with Art. 19(6) of the
Constitution, or on the freedom of trade, commerce and intercourse, throughout
the territory of India, guaranteed under Art. 301 of the Constitution, but the
restriction must be by "law" or by an "order having the force of
law" and not by recourse to the executive authority of the State under
Art. 162 of the Constitution, i.e., by an executive action.
(2) The seizure of the consignments of the
wheat, while they were in transit in the course of inter-State trade and
commerce from the Union Territory of Delhi and the States of Punjab and Haryana
to various destinations in the States of Maharashtra and Madhya Pradesh, was without
the "authority of law" and in violation of Art. 300A of the
Constitution.
The seizure of the wheat being wrongful, the
petitioners were entitled to an appropriate writ, direction or order for the
return of the seized wheat or the price thereof. (3) The impugned teleprinter
message of the State Government dated March 31, 1981 on the basis of which the
seizures were effected, in truth and 1153 substance, had no legal sanction and
cannot be construed to be a notified order within the meaning of sub-s. (1)
read with sub-s. (5) of s. 3 of the Act; it was nothing but an executive
direction. No executive action which operates to the prejudice of a citizen can
be taken without the authority of law. It was asserted that the seizures
effected were in compliance of the instructions contained in the impugned
teleprinter message and not for breach of the two Control Orders and therefore
it was nothing but a "colourable exercise" of power. The real purpose
of the seizure was procurement of wheat in furtherance of the directives of the
Central Government, without any legal sanction since the farmers were not
willing to sell their wheat at the procurement price.
Learned counsel for the petitioners also
challenge the action of the Additional District Magistrate (Civil Supplies)
Agra in passing an interim order in terms of sub- s. (2) (i) of s. 6A of the
Act for the sale of the seized wheat on Government account and for the sale
proceeds to be credited into the treasury in an appropriate Head of Account; it
is urged that under sub-s. (2) (ii) of s. 6A of the Act there being no control
price for wheat, the wheat should have been sold by public auction.
In reply, learned counsel for the State has
repelled all these contentions. It is submitted that the source of power to effect
the seizure was not the impugned teleprinter message, but the two Control
Orders issued under s. 3 of the Act. He asserted that the wheat in question was
not being transported during the course of inter-State trade and commerce from
the Union Territory of Delhi and the States of Punjab and Haryana to various
other States. The wheat had in fact been purchased at Agra and was being lifted
from the State of Uttar Pradesh and had, therefore, to be seized at the
check-post at Saiyan and at Agra. He points out that under cl. 3 of the 1976
Order, no person can carry on business as a dealer or commission agent, except
and in accordance with the terms and conditions of a licence issued in that
behalf by the licensing authority. According to him, the seized wheat had been
purchased at Agra in the course of trade, and they were not isolated
transactions and, therefore, the Delhi traders committed contravention of cl.
3 of the 1976 Order. It is also pointed out
that cl. 4 of the 1978 Order, as amended, provides that no person who is a
wholesale dealer, commission agent or retailer shall have in stock wheat in
quantities exceeding 250 quintals, 250 quintals and 20 quintals at a time. It
is further pointed out, cl. 14 of the 1976 Order, and cl. 6 1154 of the 1978 Order
confer the power of search and seizure on an enforcement officer or the
licensing authority or any other officer authorised by the Government in that
behalf, and the expression "enforcement officer" defined in cl. 2 (e)
of the former Order and cl. 2(d) of the latter, includes the Chief Marketing
Inspector. According to the learned counsel the Government instructions
conveyed in the impugned teleprinter message is merely in the nature of an
executive instruction for the enforcement of the two Control Orders.
In support of the contentions, he also relies
on the executive power of the State under Art. 162 of the Constitution. In the
premises, the contention on behalf of the State is that the question whether
the seized wheat was liable to be confiscated or not under s. 6A of the Act,
was a matter pending adjudication before the Additional District Magistrate
(Civil Supplies) Agra. That depends on whether or not there was contravention
by the petitioners of any of the Order issued under s. 3 of the Act and, therefore,
cannot be determined without full investigation into the facts.
The Inter-Zonal Wheat (Movement Control)
Order, 1976, issued by the Central Government, in exercise of the powers
conferred by s. 3 of the Act has been rescinded with effect from April 13,
1977. The result of this is that the whole country constitutes a single zone
for free movement of wheat except in such States where an order is issued under
s. 3 read with s. 5 of the Act, placing a ban on export of wheat such as in the
State of Rajasthan. Admittedly, the State Government of Uttar Pradesh has not
issued any order under s. 3 read with s. 5 of the Act, placing a ban on export
of wheat from the State or any restriction on inter-district movement of wheat
within the State. The State Government does not contest this position and
indeed, the Chief Marketing Officer in his counter-affidavit states:
"The State of Uttar Pradesh has not
banned the movement of wheat outside the State or from one district to another
district within the State. It is submitted that such traders who are
transporting wheat alleged to be purchased from a place other than the State of
Uttar Pradesh and were/are carrying the same to other States other than Uttar
Pradesh have only to satisfy the authorities concerned of the bona fides of the
transactions. However, there is no ban on such movement from one State to
another." 1155 The impugned teleprinter message dated March 31, 1981 runs
as follows:
"For:
Regional Food Control,
Agra/Bareilly/Dehradun/Faizabad/Gorakhpu/Jhansi/Haldwani/Kanpur /Meerut /Varanasi
Lucknow (by Hand) From: Secretary (Food) Lucknow.
No. TP-1061/XXIX-Food-5 Dated: Lucknow:
March 31, 1981.
Refer Tel TP-712/XXIX-Food-5-5(1)/81 of 9th
March 1981 regarding renewal of and issue of new licences to dealers(,)
Government committed to provide benefits of support price to producers hence to
ensure that maximum quantity of wheat is purchased by agencies (.) Para (.)
After careful consideration Government have decided that with effect from first
April 1981 till thirtieth June 1981 no repeat no fresh licences are to be
issued to any person who wish to deal in wheat, wheat products or both as
wholesaler commission agent retailer (.) Para (.) Government have also decided
that during April 1981 to June 1981 movement of wheat by traders on private
account to outside district shall be regulated only on the endorsement of
Deputy Regional Marketing Officer concerned and hitherto this power being
exercised by Senior Marketing Inspector shall not repeat not be used by them
(.) Para (.) At the same time easy availability of wheat in open markets is to
be ensured(.) Keeping all the relevant factors in view endorsement by Dy.
R.M.O. should be made judiciously on genuine and bonafide grounds(.) Para(.)
Dy. RMO will send daily report to RFC of the cases in which such permission is
granted or endorsement made(..) RFC will compile and send weekly report to
Government(.) Permission to be given very sparingly and general impression made
should be that they will not gain by doing any trading in wheat(.) Visit Mandis
regularly and check quantities lying in traders premises(.) Presence of large
stocks with trade means staff 1156 is not during their job properly(.) Inform
all concerned immediately for strict compliance(.) Dated: Lucknow; March 31,
1981 Sd/- M. Subrahmanyam Secretary Food & Civil Supplies Sec. 5 U.P.
Secretariat, Lucknow." There can be no doubt that the aforesaid
teleprinter message was in the nature of executive instructions of the State
Government to the Regional Food Controllers of the various regions to secure
compliance with the orders. It may be mentioned that the State Government was
committed to provide price support in wheat to producers and hence to maximise
procurement of wheat, issued instructions that no fresh licences till June 30,
1981 were to be granted to any person who wished to deal in wheat, wheat
products, or both, as well as a wholesale dealer, commission agent or a
retailer. It further conveyed the policy decision of the Government that during
April 1981 movement of wheat by traders on private account to outside districts
shall be regulated only on the endorsement of the Deputy Marketing Officer
concerned and not by the Senior Marketing Inspectors as hitherto before. The
Government also directed the Regional Food Controllers to ensure easy
availability of wheat in open market. As regards the making of endorsement,
they were advised that the powers should be exercised with due circumspection.
They were also asked to visit the mandis and keep a constant vigil on the
stocks lying with the traders. There appears to be nothing unusual on the State
Government issuing such executive instructions.
Even assuming that the impugned teleprinter
message is not relatable to the two Control Orders, the State Government
undoubtedly could, in exercise of the executive power of the State, introduce a
system of verification on movement of wheat from the State of Uttar Pradesh to
various other States at the check-posts on the border and place restrictions on
inter-district movement of wheat by traders on private account within the
State. The executive power of a modern State is not capable of any precise
definition. In Ram Jawaya Kapur v. State of Punjab, Mukherjea, C.J., dealt with
the scope of Arts. 73 and 162 of the Constitution. The learned Chief Justice
observed that neither of the two Articles contains any 1157 definition as to
what the executive function is or gives an exhaustive enumeration of the
activities which would legitimately come within its scope. It was observed:
"Ordinarily the executive power
con-notes the residue of governmental functions that remain after legislative
and judicial functions are taken away". It is neither necessary nor
possible to give an exhaustive enumeration of the kinds and categories of
executive functions which may comprise both the formulation of the policy as
well as its execution.
In other words, the State in exercise of its
executive power is charged with the duty and the responsibility of carrying on
the general administration of the State. So long as the State Government does
not go against the provisions of the Constitution or any law, the width and
amplitude of its executive power cannot be circumscribed. If there is no
enactment covering a particular aspect, certainly the Government can carry on
the administration by issuing administrative directions or instructions, until
the legislature makes a law in that behalf. Otherwise, the administration would
come to a standstill.
In Ram Jawaya Kapoor's case (supra) it was
contended that the executive power of the State did not extend to the carrying
on of trade of printing, publishing and selling of text-books for schools
unless such trade was authorised by law. In repelling the contention,
Mukherjea, C.J. speaking for the Court, observed :
Our Constitution, though federal in its
structure, is modelled on the British Parliamentary system where the executive
is deemed to have the primary responsibility for the formulation of
governmental policy and its transmission into law though the condition
precedent to the exercise of this responsibility is its retaining the
confidence of the legislative branch of the State. The executive function
comprises both of the determination of the policy as well as carrying it into
execution. This evidently includes the initiation of legislation, the
maintenance of order, the promotion of social and economic welfare, the
direction of foreign policy, in fact the carrying on or supervision of the
general administration of the State.
The learned Chief Justice then went on to
observe :
The Indian Constitution is a written
Constitution and even the legislature cannot override the fundamental rights
1158 guaranteed by it to the citizens. Consequently, even if the acts of the
executive are deemed to be sanctioned by the legislature, yet they can be
declared to be void and in-operative if they infringe any of the fundamental
rights of the petitioners guaranteed under Part III of the Constitution. On the
other hand, even if the acts of the executive are illegal in the sense that
they are not warranted by law, but no fundamental rights of the petitioners
have been infringed thereby, the latter would obviously have no right to
complain under article 32 of the Constitution though they may have remedies
elsewhere if other heads of rights are infringed.
In Naraindas Indurkhya v. State of Madhya
Pradesh & Ors Bhagwati, J., speaking for the Court, reiterated the
principles laid down by Mukherjea, C.J. in Ram Jawaya Kapur's case (supra) and
held that the State Government could act in exercise of the executive power of
the State under Art. 162 of the Constitution in relation to any matter with
respect to which the State Legislature has power to make laws even if there was
no legislation to support such executive action. There is no denying the fact
that the State Legislature is competent to enact a law on the subject covered
by Entry 33, List III, which reads:
33. Trade and commerce in, and the
production, supply and distribution of,- (b) foodstuffs, including edible
oilseeds and oils.
The Essential Commodities Act, 1955 was
enacted by Parliament in exercise of concurrent jurisdiction under Entry 33
List III of the Seventh Schedule to the Constitution as amended by the
Constitution (Third Amendment) Act, 1954. The exercise of such concurrent
jurisdiction would not deprive the State legislature of its jurisdiction
thereunder. The State legislature, therefore, could still make a law on the
subject regulating trade and commerce in, and the production, supply and
distribution of 'foodstuffs' and the only question that would arise is one of
repugnancy dealt with in Art. 254 of the Constitution.
The executive power of the State being
co-extensive with its legislative power under Entry 33, List III, it relates to
all matters covered by the subject 'foodstuffs', 1159 trade and commerce in,
and the production, supply and distribution thereof. This is, of course,
subject to the limitation contained in Proviso to Art. 162 which directs that
in any matter with respect to which the legislature of a State and Parliament
have power to make laws, the executive power of the State shall be subject to,
and limited by, the executive power expressly conferred by the Constitution or
by any law made by Parliament upon the Union or authorities thereof.
This leads us to another aspect of the
problem of considerable difficulty and importance. The subject 'search and
seizure', is a field which has not come before the court with considerable
frequency, but this is a hard fact of life which the citizen does encounter
very often. The executive power of 'search and seizure' is a necessary
concomitant of a welfare State. It tends to promote the well being of the
nation. Many questions arising in the field of search and seizure are factual
in nature. They involve varying degrees of difference among the infinitely
diverse facts. Every factual variation presents not only a new problem, but
also a new constitutional question. It is a limitless area in which different
issues may arise with vast variations of facts which are involved in each
individual case. This is, indeed, a peculiar field in which the decisions of
courts do not help in clarifying the law. The decisions in the field are of
little precedential value because, the more the cases that are decided, the
more new issues arise, through possible factual variations.
The check-posts and barriers on the borders
of the State of Uttar Pradesh are set up under s. 28 of the U.P.
Sales Tax Act, 1948 and are designed and
meant to prevent evasion of sales tax and other dues. The constitutional
validity of s. 28 and its cognate provisions, ss. 28A to 28C has, rightly, if
we may say so, not been challenged before us. From the point of view either of
Entry 54, List II, or of Art. 301 of the Constitution, there is no question of
any lack of competence in the State legislature to set up the checkposts and
barriers on the State's borders. These provisions, read with the requirements
of r. 83(4) of the U.P. Sales Tax Rules, 1948 require that the owner, driver or
any other person in-charge of the vehicle or vessel shall, in respect of such
goods carried in the vehicle or vessel as are notified under sub-s. (1) of s.
28A, carry with him, a declaration in Form XXXI, a certificate in Form XXXII, a
transit pass in Form XXXIV in duplicate, cash memo, bill of sale or challan and
a trip-sheet in triplicate. The factual existence of these check- 1160 posts or
barriers on the State's borders is not denied, nor their legality challenged.
It is not suggested that the setting up of these check-posts is a restriction
on the freedom of trade, commerce and intercourse guaranteed under Art. 301 of
the Constitution, or is such as directly and immediately restricts or impedes
the free flow or movement of goods. It is also not suggested that these
regulatory measures in setting up the check-posts on the State's borders are
such as impede freedom of trade, commerce and intercourse. Just as inter-State
trade and commerce must pay its way and be subject to taxation, persons engaged
in such inter-State trade or commerce are equally subject to all regulatory
measures. There is no reason why the check-posts or barriers set up by the
State Government under s. 28 of the U.P. Sales Tax Act, 1948, cannot be
utilised as a machinery for due observance of the laws, e.g. for verification
and control of movement of wheat by traders on private account from the State
of Uttar Pradesh to various other States.
The instructions conveyed by the State Government
by the impugned teleprinter message dated March 31, 1981, were a direct sequel
to the Centre's directives contained in its earlier teleprinter message. It was
intended and meant to achieve three main objectives, namely, (1) to provide
price support in wheat to purchasers with a view to sustain, maintain and
maximise the procurement of wheat; (2) to prevent hoarding and black marketing;
and (3) to provide for equitable distribution and availability of wheat at fair
prices. These directions were obviously meant to subserve the object of the
legislation and were in public interest.
These cases were argued with much learning
and resource particularly with reference to the rule of law and the consequent
limitations on the executive power of the State under Art. 162 to 'trench' upon
the fundamental right to carry on trade or business guaranteed under Art. 19
(1) (g) and the freedom of trade, commerce and intercourse throughout the
territory of India guaranteed under Art. 301 of the Constitution. It necessarily
involves a claim by the State that the measures taken by the State Government
by the impugned teleprinter message were nothing but regulatory measures to
ensure that the excess stock of wheat held by a wholesale dealer, commission
agent or a retailer is not transported to a place outside the State or from one
district to another within the State and therefore were not a 'restriction' on
the fundamental right to carry on trade or business guaranteed under Art. 19
(1)(g) or on the freedom of trade, commerce and intercourse under Art. 301.
1161 The quintessence of our Constitution is
the rule of law. The State or its executive officers cannot interfere with the
rights of others unless they can point to some specific rule of law which
authorises their acts. In State of Madhya Pradesh v. Thakur Bharat Singh, the
Court repelled the contention that by virtue of Art. 162, the State or its
officers may, in the exercise of executive authority, without any legislation
in support thereof, infringe the rights of citizens merely because the
legislature of the State has power to legislate in regard to the subject on
which the executive order is issued. It was observed:
"Every act done by the Government or by
its officers must, if it is to operate to the prejudice of any person, be
supported by some legislative authority." The same principle was
reiterated by the Court in Satwant Singh Sawhney v. Dr. Ramarathnam, Assistant
Passport Officer, Government of India, New Delhi & Ors, and Smt. Indira
Nehru Gandhi v. Shri Raj Narain.
There can be no doubt that the Essential
Commodities Act, 1955, is a 'law' within the meaning of Art. 302 of the
Constitution imposing reasonable restrictions on the right to carry on trade
and commerce as guaranteed by Art.
19(1)(g) and Art. 301 of the Constitution.
The object of the Act is to provide, in the interests of the general public,
for the control, production, supply and distribution of, and trade and commerce
in, certain essential commodities. To appreciate the points involved, it is
necessary to set out the material statutory provisions. Sub-s. (1) of s. 3 of
the Act provides as follows:
"3(1). If the Central Government is of
opinion that it is necessary or expedient so to do for maintaining or
increasing supplies of any essential commodity or for securing their equitable
distribution and availability at fair prices, or for securing any essential commodity
for the defence of India or the efficient conduct of military operations, it
may, by order, provide for regulating or prohibiting the production, supply and
distribution thereof and trade and commerce therein.
1162 Sub-s. (2) thereof provides that without
prejudice to the generality of the powers conferred by sub-s. (1) an order made
there under may provide for any of the matters enumerated therein. Sub-s. (5)
provides that any order made under this section shall in the case of an order
of a general nature or affecting a class of persons, be notified in the
Official Gazette. By virtue of the delegation of powers under s. 5 of the Act
the State Government in relation to such matters and subject to such conditions
as may be specified, may exercise the powers of the Central Government under s.
3 Clause (j) of sub-s. (2) of 3 provides that the Central Government or the
State Government, as the case may be, may by order provide:
"For any incidental and supplementary
matters, including, in particular, the entry, search or examination of
premises, aircraft, vessels, vehicles or other conveyance and animals, and the
seizure by a person authorised to make such entry, search or examination......'
Sub-ss. (1) and (2) of s. 6A of the Act, insofar as material, provide as
follows:
"6A(1). Where any essential commodity is
seized in pursuance of an order made under section 3 in relation thereto, a
report of seizure shall, without unreasonable delay, be made to the Collector
of the district or the Presidency-town in which such essential commodity is
seized and whether or not a prosecution is instituted for the contravention of
such order, the Collector may, if he thinks it expedient so to do, direct the
essential commodity so seized to be produced for inspection before him, and if
he is satisfied that there has been a contravention of the order, may order
confiscation of- (a) the essential commodity so seized;
6A(2). Where the Collector, on receiving a
report of seizure or on inspection of any essential commodity under sub-s. (1),
is of the opinion that the essential commodity is subject to speedy and natural
decay or it is otherwise expedient in the public interest so to do, be may- (i)
order the same to be sold at the controlled price, if any, fixed for such
essential commodity under this Act or under any other law for the time being in
force; or 1163 (ii) where no such price is fixed, order the same to be sold by
public auction:
Provided that in case of foodgrains, the
Collector may, for its equitable distribution and availability at fair prices,
order the same to be sold through fair price shops at the price fixed by the
Central Government or by the State Government, as the case may be, for the
retail sale of such foodgrains to the public." Learned counsel for the State
Government, in all fairness, does not assert that the impugned teleprinter
message having regard to the requirements of sub-s. (5), has the effect of a
notified Order under s. 3 of the Act placing a ban on export of wheat from the
State or imposing a restriction on inter-district movement of wheat. It is
submitted that it only conveyed the instructions of the State Government
requiring the Regional Food Controllers to be more vigilant to secure due
observance of the laws. The question still remain whether the instructions
conveyed by the teleprinter message had the force of law.
It is therefore to be considered whether the
instructions conveyed by the State Government by the impugned teleprinter
message were relatable to the two Control Orders and therefore could be
considered to be 'law' or an order having the force of law placing reasonable
restriction on the freedom to carry on any occupation, trade or business
guaranteed under Art. 19(1)(g) read with Art.
19(6) of the Constitution or on the freedom of
trade, commerce and intercourse throughout the territory of India guaranteed
under Art. 301 o the Constitution. It is further to be considered whether the
seizure of wheat in transit was with authority of law.
It is submitted that although the impugned
teleprinter message dated March 31, 1981 was in the nature of executive
instructions of the State Government to the Regional Food Controllers of the
various regions to secure compliance with the two Control Orders, it had the
force of law. It is pointed out that under licence conditions Nos. 11, 12 and
13 of the licence issued in Form B under cl. 4 of the 1976 Order, a dealer is
required to comply with any direction that may be given by the State Government
in regard to purchase, sale or storage for sale of foodgrains, to furnish such
information relating to his business as may be demanded of him and to carry out
such instructions as may, from time to time, be given, 1164 by the State
Government or the licensing authority, and to give all facilities at all reasonable
times, to the enforcement officer or the licencing authority or any officer
authorised by him or the State Government for the inspection of the stocks etc.
It is further pointed out that the State Government of Uttar Pradesh has by
Notification No. P-XXIX-Food-5-5(42)/80 dated April 21, 1981, in exercise of
the powers conferred by s. 3 read with s. 5 of the Act, with the prior
concurrence of the Central Government, issued the Uttar Pradesh Foodgrains
(Procurement and Regulation of Trade) (First Amendment) Order, 1981. By cl. 2
thereof, a new cl. 4 has been substituted in the 1978 Order by which the stock
limit of dealers in foodgrains has been re-fixed, as it was of the opinion that
it was necessary and expedient so to do for securing equitable distribution and
availability of wheat at fair prices. The new cl. 4 provides that no wholesale
dealer, commission agent or retailer, shall have in stock, wheat more than 250
quintals, 250 quintals and 20 quintals respectively, at any time. The re-
fixation of the stock limit of whole sale dealers at 250 quintals, at any time,
is to ensure that wholesale dealers in the State of Uttar Pradesh do not try to
corner stocks of wheat for purposes of speculation. The submission is that the
State Government without placing any restriction on movement of wheat from the
State of Uttar Pradesh to various other States has virtually frozen the excess
stock of wheat lying with wholesale dealers of foodgrains in the State.
There is, in our opinion, considerable force
in these submissions.
The real question at issue is whether or not
the seizure of wheat was with the authority of law. The fundamental right to
carry on trade or business guaranteed under Art. 19(1)(g) or the freedom of
inter-State trade, commerce and intercourse under Art. 301 of the Constitution,
has its own limitations. The liberty of an individual to do as he pleases is
not absolute. It must yield to the common good. Absolute or unrestricted
individual rights do not and cannot exist in any modern State. There is no
protection of the rights themselves unless there is a measure of control and
regulation of the rights of each individual in the interests of all. Whenever
such a conflict comes before the Court, it is its duty to harmonise the
exercise of the competing rights. The Court must balance the individual's
rights of freedom of trade under Art. 19(1)(g) and the freedom of inter State
trade and commerce under Art. 301 as against the national interest. Such a
limitation is inherent in the exercise of those rights.
1165 Under Art. 19(1)(g) of the Constitution,
a citizen has the right to carry on any occupation, trade or business and the
only restriction on this unfettered right is the authority of the State to make
a law imposing reasonable restrictions under cl. (6). The principles underlying
in cls. (5) and (6) of Art. 19 are now well settled and ingrained in our legal
system in a number of decisions of this Court, and it is not necessary to
burden this judgment with citations. The expression 'reasonable restriction'
signifies that the limitation imposed on a person in enjoyment of the right
should not be arbitrary or of an excessive nature, beyond what is required in
the interests of the public. 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
in all cases.
The restriction which arbitrarily or
excessively invades the right cannot be said to contain the quality of
reasonableness and unless it strikes a proper balance between the freedom
guaranteed in Art. 19(1)(g) and the social control permitted by cl. (6) of Art.
19, it must be held to be wanting in that quality.
The nature of the right alleged to have been
infringed is that wholesale dealers in foodgrains from the State of Uttar
Pradesh or elsewhere are prevented from moving their stock of wheat to various
other States or from one district to another without the transaction being
verified and duly endorsed by the Deputy Marketing Officer or the Senior
Marketing Officer concerned. The other restriction on the enjoyment of their
right placed by the impugned teleprinter message is that there should be
physical verification at the checkposts on the State's borders. These steps
were designed to prevent a price rise in wheat in the State of Uttar Pradesh
and to prevent outflow of wheat from the State to various other States and from
one district to another district within the State. The whole object was to
ensure that the wholesale dealers in foodgrains did not corner stocks of wheat
for the purpose of speculation. It cannot be said that they do not contain the
quality of reasonableness or were not in the interests of the general public.
In judging the validity of these restrictions, the Court has to strike a proper
balance between the freedom guaranteed under Art. 19(1)(g) and the social
control permitted by Art.
19(6).
If, therefore, the seizure can be justified
on the basis of any valid law, it cannot be held to be illegal.
This is equally true of Art. 301. Art. 301
imposes a general limitation on all legislative 1166 power in order to secure
that trade, commerce and intercourse throughout the territory of India shall be
free.
Having placed a general limitation on the
legislative powers of Parliament and the State Legislatures, Art. 302 relaxes
that restriction in favour of Parliament by providing that authority may, by
law, impose such restrictions on the freedom of trade, commerce and intercourse
between one State and another and within any part of the territory of India in
the public interest. Likewise, Art. 304(b) provides that notwithstanding
anything in Art. 301 or Art. 303, a legislature of a State may, by law, 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 purpose of cl. (b) shall be introduced or
moved in the legislature of a State without the previous sanction of the
President. Although Art. 301 guarantees that trade, commerce and intercourse
throughout the country shall be free, the right to carry on inter-State trade
and commerce may be subject to reasonable restrictions in the interests of the
general public.
The word 'free' in Art. 301 does not mean
freedom from laws or from regulations. Art. 301 guarantees freedom of trade,
commerce and intercourse throughout the country from any State barriers. It
declares that subject to the other provisions of Part XIII, trade, commerce and
intercourse throughout the territory of India shall be free. The whole object
was to bring about the economic unity of the country under a federal structure,
so that the people may feel that they are members of one nation. One of the means
to achieve this object is to guarantee to every citizen the freedom of movement
and residence throughout the country. That is achieved by Art. 19(1)(d) and
(e). No less important is the freedom of movement or passage of commodities
from one part of the country to another. The progress of the country as a whole
also requires free flow of commerce and intercourse as between different parts,
without any barrier. This freedom of trade, commerce and intercourse throughout
the country without any 'State barriers' is not confined to inter-State trade
but also includes intra-State trade as well. In other words, subject to the
provisions of Part XIII, no restrictions can be imposed upon the flow of trade,
commerce and intercourse, not only between one State and another, but between
any two points within the territory of India whether any State border has to be
crossed or not.
It is now well settled that the regulatory
measures or measures imposing compensatory taxes do not come within the purview
of the 1167 restrictions contemplated by Art. 301. The regulatory measures
should, however, be such as do not impede the freedom of trade, commerce and
intercourse. It cannot be said that the instructions conveyed by the State
Government by the impugned teleprinter message imposing the requirement for the
making of an endorsement by the Deputy Marketing Officer or the Senior
Marketing Officer or the physical verification of stocks of wheat during the
course of transit, are a 'restriction' on the freedom of trade, commerce and
intercourse within the country, i.e, across the State or from one part of the
State to another. These are nothing but regulatory measures to ensure that the
excess stock of wheat held by a wholesale dealer, commission agent or a
retailer is not transported to a place outside the State or from one district
to another. Even if these requirements are construed to be a 'restriction' on
the inter-State or intra-State trade, the limitation so imposed on the
enjoyment of the right cannot be considered to be arbitrary or of an excessive
nature. Nor can it be said that such restrictions do not satisfy the test of
reasonableness.
The question whether or not the seizure of
the wheat was for contravention of any order issued under s. 3 of the Act is
pending investigation before the Additional District Magistrate (Civil
Supplies), Agra. For the establishment of their rights the petitioners have
still to establish that the wheat in question was bought by them in open market
in Delhi and elsewhere and was being merely transported through the State of
Uttar Pradesh in the course of inter-State trade and commerce. If that be so,
then there was no contravention of any order issued by the Central Government
under s. 3 or by the State Government under s. 3 read with s. 5 of the Act. If,
on the contrary, the wheat had been purchased by them at Agra or nearby places
within the State of Uttar Pradesh, the question would arise whether such
purchase, storage or sale of wheat was in contravention of any of the two
Control Orders. In case there was such contravention of any of the provisions
of the two Control Orders, then there was undoubtedly the power of search and
seizure. The case of the State Government before us was that the source of
power to effect the seizure was the two Control Orders. It was asserted that
the wheat was not being transported during the course of inter-State trade and
commerce from the Union Territory of Delhi to various other States, but had, in
fact, been purchased at Agra and was being lifted from the State of Uttar
Pradesh and had therefore to be seized at the check-post at Saiyan and at Agra.
Under cl. 3 of 1976 Order, no person can carry on business as a 1168 dealer or
commission agent except and in accordance with the terms and conditions of a
licence issued in that behalf by the licensing authority. The term 'dealer' is
defined in s. 2(c) of the Order to mean a person engaged in the business of
purchase, sale or storage for sale of foodgrains.
According to the State, the seized wheat had
been purchased at Agra in the course of trade and they were not isolated
transactions and, therefore, the Delhi traders committed contravention of cl. 3
of the 1976 Order. Cl. 14 thereof confers the power of search and seizure on an
enforcement officer or the licensing authority or any other officer authorised
by the State Government in that behalf. The expression 'enforcement officer' is
defined in cl. 2(e) of that Order and it includes the Chief Marketing Officer
and in that capacity the Chief Marketing Officer, having reason to believe that
contravention of the provisions of the Order had been, was being, or was about
to be committed, had the power to seize the trucks at the check-post at Saiyan
and effect the seizure of the trucks laden with wheat and bring them to the
purchase point at Agra.
Furthermore, under cl. 4 of the 1978 Order,
as amended, no person who is a wholesale dealer, commission agent or a
retailer, shall have in stock wheat in quantities exceeding 250 quintals, 250
quintals and 20 quintals respectively at a time. Cl. 6 confers the power of
search and seizure on an enforcement officer which term as defined in cl. 2(d)
likewise includes the Chief Marketing Inspector, Under cl. 6(d), the Chief
Marketing Inspector, as an enforcement officer, had the power to seize any
article in respect of which he had reason to believe that a contravention of
the Order had been, was being, or was about to be committed. The fixation of
the maximum limits of stocks of wheat at 250 quintals 250 quintals and 20
quintals respectively, which a wholesale dealer, commission agent or a retailer
may hold, at any one time, has necessarily the effect of freezing the excess
stock of wheat lying with such dealer. This also results in preventing the
movement of such excess stock of wheat from the State of Uttar Pradesh to
various other States or from one district to another. The excess stock of wheat
lying with such dealer, that is, a wholesale dealer, commission agent or a
retailer, in truth and substance, became their 'unlicensed stock'. If really
the Delhi traders had purchased the excess stock of wheat from wholesale
dealers, commission agents or retailers in the State of Uttar Pradesh, as is
alleged, it is possible to contend that there was a contravention of the
provisions of cl. 4 of the 1978 Order. The question whether the seizure was for
any contravention of any Order issued under 1169 s. 3 of the Act has to be
determined by the Additional District Magistrate (Civil Supplies), Agra, on the
evidence adduced by the parties before him.
The facts being controverted, the petitioners
have no right to relief under Art. 32 of the Constitution. Each of the
petitioners has filed a sheaf of documents showing that the wheat had been
purchased in the open market in Delhi and elsewhere, that the trucks laden with
their wheat were accompanied by the relevant bills, goods receipts, inter-
State transit passes etc., that the trucks in question were allowed to cross
the check-posts at Kotwan on the border between the Union Territory of Delhi and
the State of Uttar Pradesh. but were seized either at the check-posts at Saiyan
on the border between the States of Uttar Pradesh and Madhya Pradesh or at
Agra, while they were in transit through the State of Uttar Pradesh. It was
also asserted that all the documents were seized and taken away by the Senior
Marketing Inspector, and that he had given an acknowledgment of the same.
Learned counsel appearing for the State vehemently contends that these
documents were not shown to the authorities concerned and it is for the
petitioners to prove these documents before the Additional District Magistrate
(Civil Supplies), Agra, in support of their claim We cannot act on the
documents because the transactions are still to be proved. It is asserted on
behalf of the State Government that such documents could always be brought into
existence, particularly when none of the transactions were effected through a
Bank. This Court cannot obviously pronounce upon the genuineness of the
transactions or record any finding on the basis of the documents when the facts
are in dispute.
There still remains the question whether the
seizure of wheat amounts to deprivation of property without the authority of
law. Art. 300A provides that no person shall be deprived of his property save by
authority of law. The State Government cannot while taking recourse to the
executive power of the State under Art. 162 deprive a person of his property.
Such power can be exercised only by authority of law and not by a mere
executive fiat or order. Art. 162, as is clear from the opening words, is
subject to other provisions of the Constitution. It is, therefore, necessarily
subject to Art. 300A. The word 'law' in the context of Art. 300A must mean an
Act of Parliament or of a State Legislature, a rule, or a statutory order;
having the force of law, that is positive or State made law. The decisions in
Wazir Chand v. The State of Himachal 1170 Pradesh and Bishan Das and others v.
The State of Punjab and others are an authority for the proposition that an illegal
seizure amounts to deprivation of property without the authority of law. In
Wazir Chand's case (supra), the police in India seized goods in possession of
the petitioner in India at the instance of the police of the State of Jammu and
Kashmir. The seizure was admittedly not under the authority of law, inasmuch as
it was not under the orders of any Magistrate; nor was it under ss. 51, 96, 98
and 165 of the Code of Criminal Procedure, 1898, since no report of any offence
committed by the petitioner was made to the police in India, and the Indian
police were not authorised to make any investigation. In those circumstances,
the Court held that the seizure was not with the authority of law and amounted
to an infringement of the fundamental right under Art. 31(1). This view was
reaffirmed in Bishan Das's case (supra).
The effect of the Constitution (Fourth)
Amendment Act, 1955, is that there can be no 'deprivation' unless there is
extinction of the right to property. It is urged that the seizure of wheat was
not with a view to extinction of the rights of the petitioners, but the
property in the seized wheat was theirs. No doubt, the wheat had to be sold, as
it was subject to speedy and natural decay, but the petitioners are entitled to
the sale proceeds, if ultimately it is found by the Additional District
Magistrate (Civil Supplies), Agra, that there was no contravention by them of
an order issued under s. 3 of the Act. It is not necessary for us to deal with
the question whether an illegal seizure amounts to 'deprivation' of property
within the meaning of Art. 300A for purposes of this case, as the State
Government does not dispute the right of the petitioners to the sale proceeds.
It is true that the seizure was with intent
to confiscate under s. 6A of the Act, but that would not make the seizure
illegal, if, ultimately, it is found that there was contravention of an order
issued under s. 3 of the Act.
If the facts were not in controversy and if
the petitioners were also able to prove that there was wrongful seizure of
wheat by the State Government of Uttar Pradesh at the check-post of Saiyan on
the border, while in transit, in the course of inter-State trade and commerce
from the Union Territory of Delhi, perhaps, they would be entitled to the
return of the seized wheat, or, in the alternative, 1171 to the payment of
price thereof. The State contests the right of the Court to investigate into
the facts, particularly when the matter is a fact in issue in the aforesaid
proceedings before the Additional District Magistrate (Civil Supplies), Agra.
Normally, it is not the function of this Court to investigate into facts in
proceedings under Art. 32 of the Constitution when they are controverted with a
view to discerning the truth. The matter must, in a situation like this, be
left to the fact-finding body. For the establishment of their right to relief
under Art. 32, the petitioners must, in our opinion, establish the necessary
fact before the said Additional District Magistrate in the proceedings under s.
6A of the Act. If they fail to get relief in such proceedings, their obvious
remedy lies in a suit for damages for wrongful seizure.
The question that the seizures were in
reality for procurement of wheat in furtherance of the directive of the Central
Government, and not for breach of the two Control Orders and, therefore, were
nothing but a 'colourable exercise of power', is dependent on facts to be found
on investigation. Further, the question that there being no control price for
wheat, the wheat should have been sold by public auction, is again a question
that must be raised before the Additional District Magistrate (Civil Supplies),
Agra, in the proceedings pending before him under s. 6A of the Act.
Turning to the petitions under Art. 32 of the
Constitution by wholesale dealers of foodgrains from the State of Uttar
Pradesh, learned counsel appearing for these petitioners challenged the
impugned teleprinter message dated March 31, 1981, and the Notification No. P.
XXIX-Food- 5-5(42)/80 dated April 21, 1981, issued by the State Government of
Uttar Pradesh, by which cl. 4 of the Uttar Pradesh Foodgrains (Procurement and
Regulation of Trade) Order, 1978, has been amended, particularly on three
grounds, namely, (1) the impugned notification fixing the maximum limit of
wheat permitted to be possessed by a wholesale dealer at 250 quintals, at a
time, is an unreasonable restriction on the freedom of trade guaranteed under
Art. 19(1)(g) of the Constitution; (2) there is no distinction made between a
wholesale dealer and a commission agent in as much as the maximum limit of
wheat allowed to be possessed by them is the same, i.e., 250 quintals at a time
and the fixation of such limit in the case of a wholesale dealer is arbitrary,
irrational and irrelevant and thus violative of Art. 14 of the Constitution;
and (3) the instructions conveyed by the State Government by its teleprinter
message dated March 31, 1981, placing restrictions 1172 on movement of wheat by
traders on private account from the State of Uttar Pradesh to various other
States and on inter- district movement of wheat within the State, were in
breach of their fundamental right under Art. 19(1)(g) read with Art. 301 of the
Constitution.
The first and second contentions may
conveniently be dealt with together. In order to appreciate these contentions,
it is necessary to state a few facts:
During the year 1979-80, the country was
victim to a very serious drought which affected with Kharif as well as Rabi
crops. The Government of India, therefore, fixed a target of 9.5 million tonnes
of wheat to be purchased in the summer months of 1981 for the national buffer
stock. It fixed the procurement price at Rs. 130 per quintal as against the
support price of Rs. 127 per quintal recommended by the Agricultural Price
Commission to provide a better incentive to the farmers. The procurement was
carried out as a measure of price support without any restriction on movement
from one State to another. However, some of the States were implementing local
laws with regard to ensuring that the private trade adhered to the stock limit
restrictions on them and did not try to corner stocks for speculation purposes.
The original target fixed for procurement was 9.5 million tonnes but at the end
of June, only 6.5 million tonnes had been purchased, leaving a deficit of 3
million tonnes. The result was that the Government of India was thus forced to
buy 1.5 million tonnes of wheat in the world market. The Government's
procurement drive was mainly frustrated by wholesale dealers of foodgrains cornering
the stocks of wheat by paying a price higher than the procurement price to the
farmers.
The imperatives of the situation demanded
that the speculative tendencies of the trade were curbed by strictly enforcing
the stock limits of traders. Under original cl. 4 of the Uttar Pradesh
Foodgrains (Procurement and Regulation of Trade) Order, 1978, a wholesale
dealer, commission agent or a retailer could have in stock wheat not more than
750 quintals, 750 quintals and 100 quintals respectively, at any time. In view
of the worsening situation in the national buffer stock and in the light of the
experience gained during the past few years, the State Government was of the
opinion that it was necessary and expedient to re-fix the stock limits of such
dealers. This was expected to maximise procurement of wheat to meet the
requirement of public distribution, as well as, the buffer stock.
1173 It cannot be asserted that the
restriction imposed by the State Government on wholesale dealers of wheat is
either arbitrary or is of an excessive nature. The fixation of the stock limit
of wheat to be possessed by wholesale dealers, at any time, at 250 quintals is
an important step taken by the State Government to obviate hoarding and
black-marketing in wheat which is in short supply. It is hardly necessary to
emphasise the extent and urgency of the evil sought to be remedied thereby.
Perhaps fixation of the minimum limit of wheat permitted to be possessed by a
wholesale dealer at 250 quintals, at a time, is too low, but the restriction so
imposed cannot be treated to be arbitrary or of an excessive nature, beyond
what is required in the national interest. It is a matter of common knowledge
that wholesale dealers of foodgrains mainly operate in large cities and towns
and have the means and capacity to manipulate the market by withholding stocks
of a commodity. There was need to check such speculative tendencies in the
trade. It was therefore felt expedient to re-fix the stock limit of wheat for
wholesale dealers at 250 quintals at a time, as in the case of a commission
agent. The underlying idea is that the wholesale dealers should be allowed to
continue their trading activities within reasonable limits. The fixation of
stock limit at 250 quintals implies that wholesale dealers can have at any
time, in stock, a wagon-load of wheat. In Krishan Lal Praveen Kumar & Ors.
etc. v. The State of Rajasthan, this Court has interpreted the words 'at any
time' as meaning 'at any given time'. This means that a wholesale dealer should
not have in stock more than 250 quintals at a time. But there is nothing to
prevent a wholesale dealer from entering into a series of transactions during
the course of the day. This Court in Krishan Lal Parveen Kumar's case (supra)
and Suraj Mal Kailash Chand & Ors. v. Union of India & Anr., has upheld
the validity of a similar notification dated March 23, 1981, issued by the
State Government of Rajasthan in exercise of the powers conferred by cl. 18 of
the Rajasthan Trade Articles (Licensing and Control) Order, 1980, fixing the
maximum limit of wheat to be possessed by a dealer at any one time at 200
quintals, on the ground that it is a reasonable restriction by the State
Government within the meaning of Art. 19(6) of the Constitution. In view of
these decisions, it is difficult to conceive as to how the contention based on
Art. 19(1)(g) of the Constitution can survive.
1174 True it is, if the governmental action
is arbitrary or there is no rational nexus to the object sought to be achieved
it is liable to be struck down as violative of Art.
14 of the Constitution. The State Government
has adopted various measures in the interest of the general public for the
control of production, supply and distribution of, and trade and commerce in,
essential commodities. To obviate hoarding and blackmarketing in foodstuffs, it
has promulgated the Order. It introduces a system of checks and balances to
achieve the object of the legislation, i.e., to ensure equitable distribution
and availability of essential commodities at fair prices. It cannot be said
that looking to the prevailing conditions, the imposition of such restrictions
does not satisfy the test of reasonableness.
Nor can it be said that the fixation of such
stock limit is arbitrary or irrational having no nexus to the object sought to
be achieved and is, therefore, violative of Art. 14. On the contrary, the
limitation imposed fixing a stock limit for a wholesale dealer at 250 quintals
is a reasonable restriction within the meaning of Art. 19(6) of the
Constitution.
One further point requires to be noticed. The
contention that the action taken by the State Government in issuing the
impugned teleprinter message amounts to an 'intrusion' on the fundamental right
to carry on trade or business under Art. 19(1)(g) or on the freedom of trade,
commerce and intercourse under Art. 301 of the Constitution appears to be
wholly misconceived. As already stated the instructions conveyed by the State
Government by the impugned teleprinter message imposing the requirement for the
making of an endorsement by the Deputy Marketing Officer or the Senior
Marketing Officer or the physical verification of stocks of wheat during the
course of transit, are not a 'restriction' on the fundamental right to carry on
trade or business guaranteed under Art. 19(1)(g) or on the freedom of trade,
commerce and intercourse under Art. 301. These are nothing but regulatory
measures to ensure that the excess stock of wheat held by a wholesale dealer,
commission agent or a retailer is not transported to a place outside the State
or from one district to another. Even if these requirements are considered to
be a 'restriction' on inter- State or intra-State trade, that is, across the
State or from one part of the State to another, the limitation so imposed on
the enjoyment of the right cannot be considered to be arbitrary or of an
excessive nature and thus violative of Art. 19(1)(g) or Art. 301 of the
Constitution. The State Government in its return has stated that there is no
ban on the export of wheat from the State of Uttar Pradesh to various other
States or from one 1175 district to another within the State, subject to the
making of an endorsement by the Deputy Marketing Officer or the Senior
Marketing Officer concerned. The petitioners who are wholesale dealers of
foodgrains in the State of Uttar Pradesh are, therefore, free to carry on their
business within the permissible limits, i.e., they may carry on their trade or
business or enter into inter-State or intra-State transactions of wheat subject
to the stock limit of 250 quintals at a time.
In the result, the writ petitions must fail
and are dismissed. The stay orders passed by the Court, from time to time,
stand vacated. Formal orders for vacating stay granted in those matters need
not be issued. There shall be no order as to costs.
S.R. Petitions dismissed.
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