P.P. ENTTERPRISES V. UNION OF INDIA
& ORS [1982] INSC 37 (16 March 1982)
MISRA, R.B. (J) MISRA, R.B. (J) FAZALALI,
SYED MURTAZA
CITATION: 1982 AIR 1016 1982 SCR (3) 510 1982
SCC (2) 33 1982 SCALE (1)184
ACT:
Sugar (Control) order 1966, clause 5 read with
order No. G.S.R. 410C E/Ess. Com./Sugar dated 14-7-1980-order prescribing
maximum quantity of sugar (Vacuum Pan Sugar) and Khandsari (open Pan Sugar) to
be kept in stock, whether violative of Articles 14 and 19(1)(g) of the
Constitution and also ultra vires section 3 of the Essential Commodities Act.
1955.
HEADNOTE:
In exercise of powers conferred by section 3
of the Essential Commodities Act, 1955, Sugar Control order 1966 was issued by
the Government of India, Ministry of Agriculture Clause 5 of that order
empowered the Central Government to issue directions, inter alia, to recognised
dealers regarding production, maintenance of stock, storage, sale, grading,
packing, making weighment, disposal, delivery and distribution of sugar.
By order No. GSR-410-E/Ess. Com/Sugar dated
14-7-1980, the Central Government issued directions to the effect that no
recognised dealer shall keep in stock at any time (a) Vacuum pan sugar in
excess of, (i) in Calcutta and other extended area recognised dealers who
import sugar from outside West Bengal, 3500 quintals; other recognised dealers
250 quintals; (ii) in other places in cities and towns with a population of one
lakh or more 250 quintals and with a population of less than one lakh 100
quintal and (b) Khandsari (open pan sugar) 250 quintals. Further no recognised
dealer shall hold any stock of vacuum pan sugar or khandsari (open pan sugar)
for a period exceeding 10 days from the date of receipt by him of such stock of
sugar or khandsari.
The recognised dealers, there-fore, assailed
the constitutional validity of the said order on three grounds:
(I) the impugned order is not covered by
section 3 of the Essential Commodities Act and is ultra vires (2) the impugned
order imposes unreasonable restrictions on the right of the petitioners to
carry on their trade and so it is violative of Article 19 (1) (g) of the
Constitution: (3) the impugned order is also violative of Article 14 of the
Constitution for two reasons: (a) the petitioners have been singled out for
hostile treatment from other dealers of sugar at Calcutta: (b) the impugned
order is unreasonable and impracticable.
Dismissing the petitions, the Court
HELD: 1, The order dated 14-7-1980 is not
ultra vires section 3 of the Essential Commodities Act, 1955. The expression
"to secure their equitable 511 distribution and availability at fair
prices", is wide enough to cover the impugned order Likewise, the
expression "storage and distribution" used in clause (d) of
sub-section (2) of section 3 of the essential Commodities Act, 1955 should be
given a liberal construction to give effect to the legislative intent of public
welfare. Sugar, which term includes khandsari, is an essential commodity and
over the years it has become a scarce commodity. In the public interest it
became essential to pass the order to secure its equitable distribution and
availability at fair prices. To that end it became 'necessary to prevent
hoarding and black- marketing. [515 F-H, 516 A-E]
2. Restrictions put by the impugned order can
by no means be said to be unreasonable. It is only regulatory and not
prohibitory. The direction enjoined recognized dealer not to keep sugar in
stock at any time in excess of the quantity specified therein. It only seeks to
regulate the limit of storage of sugar and does not prohibit its storage.
By the Impugned order the Central Government
sought to prevent hoarding and black-marketing, and to ensure equitable
distribution and availability of sugar at fair prices in the open market.[516
E, 519 D] A person has a right to carry on any occupation, trade or business
and the only restriction on this unfettered right is the authority of tho State
to make a law imposing reasonable restrictions under clause (6). The expression
reasonable restrictions' signifies that the limitation imposed on a person in
eojoyment of that right should not be arbitrary or of an excessive nature
beyond what is required in the interest of the public. No cut and dry test can
be applied to each individual statute impugned, nor an abstract standard or
general pattern of reasonableness can be laid down as applicable in all cases.
The Supreme Court in each case has to strike a proper balance between the freedom
guaranteed by Article 19 (1) (g) and the social control permitted by clause (6)
of Article - 19. [516 B-D] State of Mysore v. H. Sanjeeviah, [1967] 2 SCR 360,
explained and distinguished.
M/s. Laxmi Khandsari & Ors. v. State of
U.P. & Ors., [1981] 2 SCC 609, followed.
3. The order is not violative of Article 14
of the constitution. The fixation of limits for storing sugar in Calcutta and
other places is not arbitrary but is based on reasonable classification. The
government is the best judge of the situation in a particular State and what
quantity of sugar will meet the exigencies of the situation at a particular
place is purely a governmental function. For one, Calcutta serves as a feeder
line to meet the requirements of sugar to the eastern part of the country, and
therefore, the stocks of sugar to be held by the dealers in Calcutta are not
required for consumption in Calcutta alone. Besides, Calcutta being far away
from the sugar manufacturing units in Bihar and Uttar Pradesh, from where bulk
of supplies are obtained, sugar is transported by the wholesale dealers in
railway wagons which take sometime unusually longer time in transit. These and
various other factors have been taken into consideration by the Government
while fixing the storage limits of sugar for the dealers in Calcutta. [519 F-
H, 520 A] 512 The fact that over the years sugar has become a scarce commodity
and people have to purchase it even at a prohibitive price, the dealers would
be able to sell the sugar in their stock without difficulty at any time at the
prevalent market price. In a rare exceptional case there may be some hardship
on that score but it cannot be said, on that account, that the order is
violative of Article 14 of the Constitution. In such cases, we hope and trust that
the concern ed Government would allow a reasonable time within which the
dealers could dispose of the excess quantity of sugar, if any. [520 G, 5 21
A-C] Suraj Mal Kailash Chand & Ors. v. Union of India & Anr., Writ
Petitions Nos. 8334-48 of 1981 decided on September 25, 1981 (unreported case):
Bishambhar Dayal Chandra Moharl & ors, etc. v. State of Uttar Pradesh &
Ors.
etc. Writ Petitions Nos. 2907-2908 of 1981
and connected writ petitions (a group of SOS writ petitions) decided on
November S, 1981, followed.
ORIGINAL JURISDICTION: Writ Petition Nos.
3846/81, 6454-55/80, 230-249, 502-510, 524, 726-27, 777-96, 803, 1069,
1207-09,1326,439-40,1607,1691-93,1702,1703-7,1734.36, 1737 40, 1759-72,
1789-90, 1879, 1946-47, 1948, 1959, 1972- 97, 2012-17, 2027-39, 2076, 2077-78,
2125-83, 2194-95, 2204- 11, 2284-2326, 2361-62,2363-64, 2365-2404,2405-26,
2444-58, 2459-88,2497-2501, 2503-05,2513-19, 2520-25,2542-73, 2597,
2616-41,2642-48, 2661-63, 2665-66,2698-2700, 2702-21, 2723- 26, 2730-44
2756-62, 2766-76, 2779-2802,2803-15, 2818-26, 2847-55, 2856-67, 2885-96, 2897
98, 2912-15,2917-26, 2968- 76, 2980-3001, 3002-46, 3047-52, 3070-87, 3088-3102,
3165- 3205, 3210-17, 3259-64, 3268-77, 3286, 3305-11, 3312- 22,3325,3346,
3355,3357-70, 3371-91, 3403, 3477-82,3484-88, 3492-3504,3505-15,
3516,3517-34,3560, 3572-79, 3637, 3693- 3730, 3732-36, 3757-75,
3899-3912,4053-69,4192-4229, 4261,4329, 4495, 4496-4508,4606-09,
4617-21,4622-69, 4846- 75, 4978-86, 5218,5349, 5533-43, 5597-5609, 5623,
5626-42, 5728, 5746, 6577-81, 6814, 6934-42,7203, ,217-20,7409,7454- 56,7484,
7641,7659,7773,7943, 7944, 8084,8089, 8090, 8192,8195, 8201, 8431, 8436, 8834,
8862, 8878-81, 8924 & 8979 of 1981.
(Under Article 32 of the Constitution) Shanti
Bhushan, V.M. Tarkunde, P.A. Francis and G.N. Dikshit.
R.K. Jain, P.B. Jain, Pankaj Kaira, S.
Mittar, M.G.
Gupta, J B.R. Kapoor, Miss, Bhajan Ram
Rakhyani, S.R.
Srivastava, B.V. Tawakley, Shobha Dikshit, B.
Dutta, B.D.
Sharma, Miss A. Subhashini, 513 N.N. Sharma,
T.C Sharma, A. Ghosh, S.V. Tambwekar and Girish Chandra for the appearing
parties. A The Judgment of the Court was delivered by MISRA J. In exercise of
powers conferred by section 3 of the Essential Commodities Act, 1955, Sugar
Control order 1966 was issued by the Government of India, Ministry of
Agriculture. Clause S of that order empowered the Central Government to issue
directions, inner alia, to recognised dealers regarding production, maintenance
of stock, storage, sale, grading, packing, making weighment, disposal, delivery
and distribution of sugar.
By Order No. GSR-410-E/Ess. Com./Sugar dated
the 14th of July, 1980 the Central Government issued the following directions:
"In exercise of the powers conferred by
clause 5 of the Sugar (Control) order, 1966, and in supersession of the order
of the Government of India in the Ministry of 'Agriculture (Department of Food)
No. GSR-60 (e)/Ess. Com./Sugar, dated the 26th February, 1980, the Central
Government hereby directs that no recognised dealer shall keep in stock at any
time- (1) Vacuum pan sugar, in the places mentioned below, in excess of the
quantities mentioned against each- (i) in Calcutta and extended area- (a)
recognised dealers who import sugar from outside West Bengal-3,500 quintals,
(b) other recognised dealers-250 quintals;
(ii) in other places- (a) in cities and towns
with a population of one lakh or more-250 quintals;
(b) in other towns with a population of less
than one lakh-100 quintals.
514 (2) Khandsari (open pan sugar) in excess
of 250 quintals.
Provided that no recognised dealer shall hold
any stock of Vacuum pan sugar or Khandsari (open pan sugar) for a period
exceeding ten days from the date of receipt by him of such stock of sugar or
Khandsari. . .
Provided further that nothing in this order
shall apply to the holding of stocks of sugar- (i) on Government account; or
(ii) by the recognised dealers nominated by a State Government or an officer
authorised by it to hold such stock for distribution through fair price shops;
or (iii) by the Food Corporation of India.
Explanation:-For the purpose of this order,
"Calcutta and extended area" means the areas specified in the
Schedule to the notification of the Government of West Bengal No. 7752
F.S./14-R-92/61, dated the 16th December, 1964." The petitioners in this
groups of petitions, who are dealers in sugar, seek to challenge the
constitutional validity of the- said order on three grounds; (I) the impugned
order is not covered by section 3 of the Essential Commodities Act and is Ultra
vires; (2) the impugned order imposes unreasonable restrictions on the right of
the petitioners to carry on their trade and so it is violative of Article
19(2)(g) of the Constitution; (3) the impugned order is also violative of
Article 14 of the Constitution for two reasons: (as the petitioners have been
singled out for hostile treatment from other dealers of sugar at Calcutta, (b)
the impugned order is unreasonable and impracticable.
Shri Shanti Bhushan, senior counsel appearing
in one of the petitions viz., Writ Petition No. 3846 of 1981, took up the first
point and urged that the impugned order is not covered by any of the clauses of
section 3 of the Essential Commodities Act.
Section 3 of the Essential Commodities Act,
1955, insofar as it is material for the purposes of this case, reads:
515 "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 prohibition the
production, supply and distribution thereof and trade and commerce therein (2)
With prejudice to the generality of the powers conferred by sub-section (1), an
order made thereunder may provide- (a) .......... (b) ..........
(c)............
(d) for regulating by licences, permits or
otherwise the storage, transport, distribution, disposal, acquisition, use of
consumption of, any essential commodity." The language of section 3 (1)
coupled with clause (d) of subsection (2) of section 3 is wide enough to cover
the impugned order. Section 3 (1) authorises the Central Government to pass an
order for regulating or prohibiting the production, supply and distribution of
an essential commodity and trade and commerce therein if it is of opinion that
it is necessary or expedient to do so for securing the equitable distribution
and availability. at a fair price of the essential commodity. The same power
has been made more specific by clause (d) of sub-section (2) of section 3,
which provides for regulating by licences. permits or otherwise, the storage,
transport, distribution, disposal, acquisition, use or consumption of, any
essential commodity.
Sugar, which term includes khandsari, is an
essential commodity and over the years it has become a scarce commodity. In the
public interest it became essential to pass the impugned order to secure its
equitable distribution and availability at fair prices. To that end it became
necessary to prevent hoarding and black-marketing. The expression "to
secure their equitable distribution and availability at fair prices" is
wide enough to cover the impugned order. Likewise, the expression "storage
and distribution" used in clause (d) of sub-section (2) of section 3
should be given a liberal construction to give effect to the legislative intent
of public welfare. So construed, the impugned order is fully pro- 516 tected
and is not ultra vires section 3 of the Essential Commodities Act, 195 5.
This leads us to the second contention,
namely, the impugned order being violative of Article 19 (1) (g) of The
Constitution inasmuch as it imposed unreasonable restriction on the right of
the petitioners to carry on trade or business.
A person has a right to carry on any
occupation, trade or business and only restriction on this unfettered right is
the authority of the State to make a law imposing reasonable restrictions under
clause (6). The expression 'reasonable restrictions' signifies that the
limitation imposed on a person in enjoyment of that right should not be
arbitrary or of an excessive nature beyond what is required in the interest of
the public. No cut and dry test can be applied to each individual statute
impugned, nor an abstract standard or general pattern of reasonableness can be
laid down as applicable in all cases. The Court in each case has to strike a
proper balance between the freedom guaranteed by Article 19 (1) (g) and the
social control permitted by clause (6) of Article 19. By the impugned order the
Central Government has only put an embargo on the dealers on keeping sugar in
excess of the quantity specified. It was passed only with a view to prevent
hoarding and black-marketing, and to ensure equitable distribution and
availability of sugar at fair prices in the open market.
Reliance was placed by Shri Shanti Bhushan on
State of Mysore v. H. sanjeeviah.(J) In that Case the State Government of
Mysore had framed rules to regulate the transit of timber, firewood, charcoal
and bamboos from all lands in exercise of powers conferred by section 37 of the
Mysore Forest Act 11 of 1900. By rule 2 framed on October 13, 1952, it was
provided that no person shall import forest produce into, export forest produce
from, or move forest produce within, any of the areas specified in Schedule A
unless such forest produce is accompanied by permit prescribed in rule 3. On
April 15, 1959 the State of Mysore issued a notification adding a proviso to
rule 2 which read as follows:
517 "Provided that no such permit shall
authorise any person to transport forest produce between SUN set and sun-rise
in any of the areas specified in Schedule A." By another notification
dated September 14, 1960 the State Government introduced the second proviso to
rule 2 which read:
"provided further that permission may be
granted to timber merchants on their request to transport timber up to 10 p.m.
(22 hrs) under the following conditions:
(i) the party who wishes to avail of the
concession should pay a cash deposit of Rs. 1000 as security for the compliance
with the timber transit rules as in force;
(ii) that the deposit may be forfeited to
government for breach of any of the conditions of the timber transit
rules." The dealers in timber challenged the two provisos on the grounds
inner alia that they were beyond the rule making authority conferred upon the
State Government by section 37 of the Mysore Forest Act 11 of 1900 and in any
event the provisos imposed unauthorized restrictions on the freedom of trade,
commerce and intercourse. The High Court held that the State Government while
seeking to regulate the transport of timber stopped transport altogether. This
Court upholding the order of the High Court observed:
"Power to impose restrictions of the
nature contemplated by the two provisos to r. 2 is not to be found in any of
the clauses of sub-s. (2) of s. 37. By sub-s. (I) the State Government is
invested with the power to regulate trans port of forest produce "in
transit by land or water." The power which the Stale Government may
exercise is however power to regulate transport of forest produce, and not the
power to prohibit or restrict transport. Prima facie, a rule which totally
prohibits the movement of forest produce during the period between sun-set and
sun-rise is prohibitory or restrictive of the right to transport forest
produce. A rule regulating transport in its essence permits transport, subject
to certain conditions devised to promote trans port." 518 This Court
further observed:
"If the provisos are in truth
restrictive of the right to transport the forest produce, however, good the
grounds apparently may be for restricting the transport of forest produce, they
cannot on that account transform the power conferred by the provisos into a
power merely regulatory." The facts of the present cases are materially
different from the facts of H. Sanjeeviah's case (supra). In that case the
impugned provisos to rule 2 completely prohibited the transport of the forest
produce between sun-set and sun- rise. But in the cases in hand the direction
enjoined a recognised dealer not to keep sugar in stock at any time in excess
of the quantity specified therein. It only seeks to regulate the limit of
storage of sugar and does not prohibit its storage. The case of H. Sanjeeviah,
therefore, is not of much help to the petitioners herein.
In M/s. Laxmi Khandsari & Ors. v. State
of U.P. & ors.(l) this Court made the following observations about
reasonable restrictions on the right conferred by Article 19 (1) (g) of the
Constitution in the following terms:
"As to what are reasonable restrictions
would naturally depend on the nature and circumstances of the case, the
character of the statute, the object which it seeks to serve, the existing
circumstances, the extent of the evil sought to be remedied as also the nature
of restraint or restriction placed on the rights of the citizen. It is
difficult to lay down any hard and fast rule of universal application but in
imposing such restrictions the State must adopt an objective standard amounting
to a social control by restricting the right of the citizens where the
necessities of the situation demand. The restrictions must be in public
interest and are imposed by striking a just balance between the deprivation of
right and the danger or evil sought to be avoided. If the restrictions imposed
appear to be consistent with the directive principles of State policy they
would have to be upheld as the same would be in public 519 interest and
manifestly reasonable. Further, restrictions may be partial, complete,
permanent or temporary but they must bear a close nexus with the object in the
interest of which they are imposed.
Another important test is that restriction
should not be excessive or arbitrary. The court must examine the direct and
immediate import of - the restrictions on the rights of the citizens and
determine if the restrictions are in larger public interest while deciding the
question that they contain the quality of reasonableness. In such cases a
doctrinaire approach should not be made but care should be taken to see that
the real purpose which is sought to be achieved by restricting the rights of
the citizens is sub-served.
At the same time, the possibility of an
alternative scheme which might have been but has not been enforced would not
expose the restrictions to challenge on the ground that they are not
reasonable." Judged in that light and on an overall consideration of the
various aspects of the matter, restrictions put by the impugned order can by no
means be said to be unreasonable.
It is only regulatory and not prohibitory.
We now take up the last contention, namely,
the impugned order being violative of Article 14 of the Constitution. The
learned counsel seeks to invoke Article 14 on two grounds: (1) the impugned
order applies two standards, one for the dealers, at Calcutta, who had been
authorised to keep 3,500 quintals at one time, while the dealers at other
places have been authorised to keep only 250 quintals in cities with a
population of one lakh or more, and only 100 quintals in other towns with a
population of less than one lakh. F The fixation of limits for storing sugar in
Calcutta and other places is not arbitrary but is based on reasonable
classification. The government is the best judge of the situation in a
particular State and that quantity of sugar will meet the exigencies of the
situation at a particular place is purely a governmental function. For one,
Calcutta serves as a feeder line to meet the requirements of sugar to the
eastern part of the country, and therefore, the stocks of sugar to be held by
the dealers in Calcutta are not required for consumption in Calcutta alone
Besides, Calcutta being far away from the sugar manufacturing units in Bihar
and Uttar Pradesh, from where bulk of supplies are obtained, sugar is
transported by the wholesale 520 dealers in railway wagons which take some time
unusually longer time in transit. These and various other factors have been
taken into consideration by the Government while fixing the storage limits of
sugar for the dealers in Calcutta.
His second ground for invoking Article 14 of
the Constitution is that the impugned order is unreasonable and impracticable
in that no dealer can be sure of the sale of sugar on any particular day. If
per chance a dealer is not able to dispose of the excess sugar on a particular.
day he would expose himself to punishment under the Act. No provision has been
made in the order or in the rules for the purchase by the Government of the
excess sugar. For the State it was contended that similar orders with regard to
wheat came up for consideration in this Court in Suraj Mal Kailash Chand Ors.
v. Union of India & Anr., and Bishambhar Dayal Chandra Mohan Ors. etc. v.
State of Uttar Pradesh & ors. etc.(2) when this Court upheld the validity
of these orders. In view of the decision of this Court in those cases it is not
open to Shri Shanti Bhushan to challenge the constitutional validity of the impugned
order.
Shri Shanti Bhushan, however, refutes the
argument and says that those decisions do not stand in the way of the
petitioners. The situation with regard to wheat was quite different inasmuch .
s clause 25 of the impugned order in Sutlaj Mal's case (supra) provided that
the State Government or the Collector or the Licensing Authority may issue
directions to any dealer with regard to purchase, sale, disposal, storage or
exhibition of the price and stock list of all or any of the trade articles. But
there is no such provision in the impugned order in the instant case and,
therefore, the dealers can expose themselves to punishment merely because at
any particular point of time the stock was in excess of the prescribed limits.
Bishambhar Dayal's case (supra) also related to wheat. There was a scheme for
the procurement of wheat by the State Government but there is no such scheme in
respect of sugar. This fact distinguishes the present case for the facts-of the
aforesaid decision.
The argument though attractive cannot be
accepted. Over the years sugar has become a scare commodity and people have to
521 purchase it even at a prohibitive price. In the circumstances it A cannot
be expected that the dealers would not be able to sell the sugar in their
stock. There is absolutely no difficulty in selling the sugar at any time at
the prevalent market price. If in a rare case there is difficulty on that score
we hope and trust that the concerned Government would allow a reasonable time
within which the petitioners are permitted to dispose of the excess quantity of
sugar, if any. In any case, in some given case there may be some hardship but
it cannot be said on that account that the impugned order is violative of
Article 14 of the Constitution.
For the foregoing discussion the writ
petitions must fail. They are accordingly dismissed. In the circumstances of
the case there shall, however, be no order as to costs.
S.R. Petitions dismissed.
Back
