Viklad Coal Merchant, Patiala, Vs.
Union of India & Ors [1983] INSC 169 (28 October 1983)
DESAI, D.A.
DESAI, D.A.
REDDY, O. CHINNAPPA (J)
CITATION: 1984 AIR 95 1984 SCR (1) 657 1984
SCC (1) 619 1983 SCALE (2)619
CITATOR INFO :
D 1986 SC 452 (2,5,9,11,17,18) D 1986 SC1527
(24) RF 1986 SC1541 (9)
ACT:
Constitution of India Art. 19(1) (g)-Freedom
to carry on trade or business-To examine whether restriction imposed
reasonable-Court to find out trade affected and keep in view direct impact of
restriction on trade and not ancillary or indirect effect.
Indian Railways Act, 1890-Sec.
27A-Interpretation of- Whether violative of Art. 19(1)(g) of Constitution
Preferential Traffic Schedule laying down priorities for movement of different
goods issued by the Ministry of Railways under sec. 27A-Validity of-Whether
ultra vires sec.
27A-Whether ultra vires Arts. 14 and 19(1)
(g) of the Constitution.
Indian Railways Act, 1890, section
28-Interpretation of-Ministry of Railways order dated April 1, 1972-Whether
violative of sec. 28 and Art. 19(1) (g) of the Constitution.
HEADNOTE:
Section 27 of the Indian Railways Act, 1890
cast a duty on the railway administration to arrange for receiving and
forwarding traffic without unreasonable delay and without partiality. Section
28 prohibited the railway administration from giving undue or unreasonable
preference or advantage to any particular person or railway administration or
any particular description of traffic. Section 27A was inserted in the Act
after 1950 to give power to the Central Government to issue directions for
giving special facilities or preherential treatment in transport of goods or
class of goods consigned to the Central Government or the Government of any
State or of such other goods or class of goods as may be specified in the
order.
The Government of India, Ministry of Railways
issued an order dated April 1, 1972 containing its decision to add an
abbreviation 'GX' below the abbreviation 'G' in the list of abbreviations at
page 14, Chapter VI of the IRCA Alphabetical list of Railway Stations in India
and asking the railway administration to decide and notify the names of
stations to which this new provisions would apply. Putting abbreviation 'GX'
against a station meant that the station was not open for outward booking of
coal, coal shale etc. in wagon loads. Pursuant to this order, the abbreviation
'GX' was appended to all way-side stations in the coal-belt.
Thereafter Government of India, Ministry of
Railways by its order dated April 27, 1972 revised rules 1 and 2 of the Eastern
Railway Coal Traffic Part 1. The revised rules provided inter alia that all
traffic in coal 658 etc. in wagon loads will be loaded only from colliery
sidings, coke oven plant and washeries on the Eastern Railway, but coal in wagons
will not be permitted at the stations serving these colliery washeries. A
further restriction followed with effect from December 4, 1979 when the
Divisional Operating Superintendent, Bilaspur for apparent reasons stopped
booking of coal in smalls including clubbing at all stations of North Eastern
Railway. On February 11, 1980, a telegraphic communication was issued
explaining that coal in wagon-loads can be booked from colliery sidings by the
collieries concerned. Booking of slack coal was wholly stopped as per a phone
call dated April 9, 1981. In exercise of the power conferred by sec.
27A of the Act, Union of India, the Ministry
of Railways issued Preferential Traffic Schedule. The schedule prescribed five
priorities 'A' to 'E' with inter set priorities amongst 'A' to 'E' to be
accorded by the railways for transport of certain goods or class of goods
specified under each category. Different kinds of coal falls under priority 'C'
(iii) which provides for movement of coal from collieries in accordance with programmes
and movements sponsored or recommended by the Coal Controller and/or any
Committee appointed by him and/or the State Government and/or other
recommending authorities and accepted by the Railway Administrations and/or
Director. Movement (Railways), Calcutta, and in accordance with the Zonal
Scheme applicable to each field and the principles of transport rationalisation
in force from time to time.
Priority 'E', a residuary clause again
involves coal from collieries.
The petitioners who were coal merchants,
alleged that sum total of various restrictions including one dated April 1,
1972 introducing abbreviation 'GX' and the Preferential Traffic Schedule
specifying priorities under sec. 27A (1) of the Act in their cumulative effect
imposed a total ban on transport of coal by the Railways, at their instance and
this action was violative of Art. 14 and 19(1) (g) of the Constitution. The
petitioners contended; (1) that the Railway Administration's action of giving
priority to some transporters of coal denying use of its transport facilities
to the petitioners who were similarly situated was discriminatory in character
and hence violative of Art. 14 of the Constitution; (2) the orders dated April
1,1972, December 31, 1980 and April 11, 1981 imposed unreasonable restrictions
on the the freedom of the petitioners to carry on their trade guaranteed by
Art. 19(1) (g); (3) that sec.
27A is violative of Art. 19(1) (g);(4) that
para (iii) of priority 'C' of the Preferential Traffic Schedule in so far as it
permits special facility or preference to individuals or groups of persons
selected by the sponsoring authority or recommending body for transport of coal
is ultrn virea sec.
27A of the Act; (5) order dated April 1,1972
was violative of sec. 28 of the Act and was also violative of Art. 19(1) (g) of
the Constitution.
Dismissing the writ petitions, ^
HELD: Railway is a monopolistic undertaking
in the matter of transport of coal by railways. Barring some tiny dots which
may become visible only by a magnifying glass, the entire railway net work is
nationalised and the railway is a department of the Union of India. It is
therefore, indisputably a State monopoly. A monopoly unless kept within bounds
may prove to be a menace, 659 Therefore, regulatory measures are necessary to
prevent the abuse of monopolistic power. But there is a constitutional check on
the State monopoly, namely, it being State within the meaning of Art. 12 of the
Constitution, all its actions will have to conform to the fundamental rights
enshrined Part III in of the Constitution. Sec. 28 of the Indian Railways Act
seeks to achieve the same result which on the advent of the Constitution, Art.
14 would achieve. But sec. 28 is subject to sec. 27A. If while giving effect to
the orders of the Central Government issued under sec. 27A, priority is
accorded in the matter of transport of goods consigned to Central or State
Government or class of goods specified in the general or special order issued
in this behalf, the action of the railway administration in complying with such
special or general order could not be said as tentamounting to giving undue or
unreasonable preference or advantage to in favour of any particular person or
railway administration and therefore violative of sec. 28. What sec. 28 forbids
is discrimination in the matter of transport of goods against a class but this
is subject to the permissible classification that would be introduced by a
special or general order issued by the Central Government in exercise of the
power conferred by sec. 27A. It may be recalled that the Preferential Traffic
Schedule according Priority 'C' to transport of coal by those mentioned therein
has been issued in exercise of the power conferred by sec. 27A. Therefore, the
submission that petitioners in the matter of transport of coal are similarly
situated with the Central or State Government or transporters given priority by
general or special order issued under sec. 27A cannot be entertained. This is
all the more so because the petitioners are coal merchants who want to
transport their coal by railway for carrying on business in coal and they may
sell the coal to any intending purchaser while those accorded preferential
treatment under Priority 'C' of the Preferential Traffic Schedule are
transporters of coal who have been recognised one year in advance under Zonal
Distribution Scheme as persons who would be transporting the coal to satisfy
fixed goals which subserve needs of the public at large. Classification of
those covered by Priority 'C' and the present petitioners is founded on
intelligible differentia which distinguishes persons or things that are grouped
together from others left out of the group and the differentia has a rational
relation to the object sought to be achieved by the impugned orders.
Those falling within Priority 'C' (iii) would
from a class by themselves and the petitioners clearly stand out of the group.
[679 A-H; 680 A-E] Nav Rattanmal and Ors. v. The State of Rajasthan, [1962] 2
S.C.R. 324 referred to.
Art. 19(1) (g) guarantees to the citizen the
fundamental freedom to carry on any occupation, trade or business. This
fundamental freedom is subject to reasonable restrictions that can be imposed
by law relating to the carrying on by the State, or by a corporation owned or
controlled by the State, of any trade, business, industry or service, whether
to the exclusion complete or partial, of citizens or otherwise. Whenever the
Court is called upon to examine the complaint that restrictions imposed on the
freedom to carry on trade are unreasonable, it is necessary to find out what is
the trade or business of the complainant-petitioner and to what extent the
restriction, if any, is imposed upon the freedom to carry on trade or business
and then to determine whether the restriction is reasonable or otherwise. It is
the direct impact of the 660 restriction on the freedom to carry on trade that
has to be kept in view and not the ancillary or incidental effect of the
governmental action on the freedom to carry on trade.
[682 C-D; F-H] In the instant case, if the
law of demand and supply and non-availability of facility for loading coal in
smalls at wayside stations result in not making available wagons to the
petitioners because of pre-planning and priority it cannot be said that there
has been a total ban on the transport of coal offered by the petitioners by
railways, which would violate the fundamental freedom to carry on their trade
guaranteed to the petitioners under Art. 19(1) (g). If the impugned orders
constitute a restriction on the freedom of carrying on trade, though it is not
considered to be so, the same is reasonable and imposed in larger public
interest. Prima facie it appears that the petitioners' business or trade as
coal merchants is no way interfered with by the railways by not being able to
provide transport facility. Let it not be forgotten that the railway is not the
only means of transport. There are other means of transport by which the coal
can be transported by the petitioners to their respective place where they
carry on their business as the coal merchants. Even assuming that the direct
impact of the policy laid down by the railway administration pursuant to the
orders of the central Government under sec. 27A results in denial of allotment
of wagon to the petitioners, the restriction will none-the-less be reasonable
because petitioners are not wholly denied the allotment of wagons. [681 H; 682
A-B; 683 A-C] A developing country with mixed economy and economic planning
have certain targets to achieve. These targets are planned in advance and the
economic activity is geared to the achievement of these targets. If the
required resources necessary for achieving targets were readily available, no
difficulty would arise. But a developing country has to so distribute its
scarce resources to achieve and accomplish desired targets. This situation is
bound to lead to a gap between the demand and supply of various facilities.
Transport is one such. Once there is a gap
between the demand for transport service offered by the railway and the supply
of the service, the resources being not sufficient to meet with all existing
demands, the scarce resources will have to be equitably distributed keeping in
view the planned target. This equitable distribution would necessitate imposing
of reasonable restrictions and according of priorities. [683 D-F] In the
instant case, coal falls in Priority 'C' (iii) in the Preferential Traffic
Schedule being the Primary source of energy. Planned regulated movement of coal
to meet priority needs if it results in denial of that facility to non-priority
sector could not be rejected as placing an unreasonable restriction on the
fundamental freedom to carry on trade or business. And that is the object
underlying sec. 27A. It is therefore, idle to contend that the section being
violative of Art. 19(1) (g) is unconstitutional. [684 A-B] Annexure 'B' to
Preferential Traffic Schedule sets out the list of sponsoring authorities. The
list shows that the Central and State Governments as well as highly placed
Central and State Government Officers have been appointed as sponsoring
authority in respect of coal required by different area and industries.
661 Again in various States various
sponsoring authorities have been set up by State Government. Power is conferred
on these sponsoring authorities to sponsor persons who would be accorded
priority in transport of coal. These responsible persons and bodies set up in
each State as sponsoring authority are expected to act in a responsible manner
keeping in view the demands of the area and the industry, for coal in each
State. It is, therefore, idle to contend that setting up of sponsoring or
recommending authority in Priority 'C' (iii) of the Preferential Traffic
Schedule is ultra vires sec, 27A of the Act. [684 C-F] The transport of coal is
according to a plan drawn up a year in advance. Further this plan is subject to
the decision of the Standing Linkage Committee. Every meticulous detail is
worked out in advance. A daily loading of maximum number of wagons is
pre-planned. Loading of the wagons with coal at a targeted number daily
requires rotational movement also according to plan. A wagon once loaded with
coal when it moves out to the destination has a certain average return time
stipulated and worked out in advance. In order to give effect to this planned
movement abbreviation 'GX' is devised and appended to all the railway stations
informing the transporters that the station is not open for transport of coal
in wagon loads. Coal in smalls can be offered for transport that is what the
petitioners do not desire. All the regulatory measure clearly indicate that
transport of coal is scientifically planned and devised in advance. All the
impugned orders are made for effective implementation of the planned movement
of coal. If consistent with this planning, the railways have stopped booking of
coal in wagon load from wayside station, it cannot be said that this regulatory
arrangement violates sec. 28 of the Act and also that this action has imposed
such an unreasonable restriction on the fundamental freedom of the petitioners
to carry on their trade as to be violative of Art. 19(1) (g).[685 A-B; F-H]
ORIGINAL JURISDICTION : W.P.Nos.
6822,7350,7351,7457- 58, 7461,7609- 18,7625,7637,7638, 7945, 7966-68, 8003-04,
8007-08, 8068,8078,8088,8196-8220,8358-60, 8361- 63,8378,8505, 8832-33, 8912,
8917, 8918-19,9083,9110,9135- 36/81,13, 36, 112, 159, 969, 2163, 2641, 7089,
7685, 8004, 8119, 8187-88, 9186 & 9187/82, 7462 63/82,7765-
67/81,160,180,1503/82,1919/81,1/82,868,1270,1358,2256, 2272,4051-4052,5123-26,7147/82.
(Under article 32 of the Constitution of
India) Advocates for the Appearing Parties:
S.S. Ray, N.R. Choudhary, K.K. Mohan, S.K.
Sinha, R.C. Kohli, R.S. Sharma, S. Mitter, N.S. Das Bahl, E.C. Agarwala, A.K.
Mitra, H.K. Puri & K. Chatterjee, B. Datta, Rishi Kesh & M. Chopra.,
S.C. Gupta & M. N. Shroff, S.K. Ghosh, D. Goburdhan, P. Mohanty, Abdul
Khader, C. V. Subba Rao & Dalveer Bhandari.
662 The Judgment of the Court was delivered
by DESAI, J. When the hearing in this group of petitions concluded we
pronounced the following order:
"All the Writ Petitions are dismissed
and any interim order in each matter is hereby vacated. In the matters which
are listed as ready, the petitioner shall pay cost to the respondents in one
set in each petition and there will be no order to costs in the matters which
are shown as unready.
Reasons will follow." Here are the
reasons.
The petitioners, in this group of petitions,
under Art. 32 of the Constitution are coal-merchants, who, according to them,
have been denied the use of the railways for transport of coal from various
coalfields and way-side stations to their destinations by the illegal and
unconstitutional action of the railway administration. Constitutional conundrum
invoked by them is the alleged violation of Art.
14 in that while certain transporters of coal
have been accorded priority in the matter of transport of coal such as the
Central and the State Governments and the sponsored and recommended
transporters, the petitioners who are coal merchants were denied equality of
opportunity in the matter of transport of coal by railway. Their further
grievance is that total prohibition of booking and transport of coal as
requested by petitioners, by the railway administration, an instrumentality of the
State envisaged by Art. 12 imposes an unreasonable restriction on their
fundamental freedom to carry on trade guaranteed by Art. 19(1) (g) of the
Constitution and hence impugned orders are invalid.
There are different petitioners from
different areas voicing their grievance against action of different zonal
railway administrations but the running thread in the catalogue of grievances
is the same and therefore a few representative facts to appreciate the
contention as set out in Civil Writ Petition No. 8003-04 by M/s Raniganj Coal
Corporation & Ors. May be briefly enumerated. This petition is adopted as
representative for the additional reason that a very comprehensive counter
affidavit has been filed in it on behalf of the respondents.
663 Petitioners aver that they are coal
traders and undertake supply of coal and coke throughout India but in
particular in the States of Punjab, Haryana and the Union Territory of Delhi.
They carry on the additional business of supplying slack coal purchased from
private collieries situated in the State of Meghalaya. In order to move coal
from the collieries to consumers, petitioners have to transport coal from
various stations served by North-Eastern Frontier Railways (Meter gauge) New
Gauhati and Badarpur Ghat in Silchar District in the State of Assam and
Meghalaya. For the purpose of transporting coal they have to indent wagons as
they want to transport coal in wagon-loads as the expression is understood in
contra-distinction to smalls and clubbing. They submit indent for wagons
according to the procedure prescribed in the relevant rules.
Petitioners aver that prior to April 1, 1972,
there was no restriction on booking of coal in wagon-loads. The Govt. of India,
Ministry of Railways issued an order dated April 1,1972 which reads as under:
"Government of India (Bharat Sarkar)
Ministry of Railways (Rail Mantralaya) Railway Board No. TCR/1510/71 New Delhi
dated 1st April 1972 12th Chaitra, 1894 The General Manager 11, India Railways
The Railways Board have decided that in the list of abbreviations at page-14
Chapter VI of the IRCA Alphabetical list of Railway Stations in India
(corrected upto 31.3.79) an additional entry below the abbreviations 'G' should
be incorporated as under:
GX-Open for goods, traffic of coal descriptions
excluding livestock, horse, large animals such as camels, elephants etc.
carriages on their wheels and motor cars but not open for outward booking of
coal, coal shale, lignite, patent fuel, shoft coke and hard coke in wagon
loads.' 664 The Railway Administrations are hereby directed to decide and
notify the names of stations to which this new provisions would apply and
advise the General Secretary, I.R.C.A. accordingly.
The General Secretary I.R.C.A. On receipt of
the advice from the Railway Administrations should arrange to issue the
necessary corrections, to the alphabetical list of Railway Stations.
Sd/- P.N Kalra, Dy. Director, Traffic (Rates)
Rly. Board, New Delhi, dated Ist April 72/12 Chaitra 64" This is one of
the impugned orders in these petitions.
The abbreviation IRCA used in the impugned
order means Indian Railway Conference Association ('IRCA' of short). The IRCA
has compiled and issued an alphabetic list of All India Railway Stations and by
a suitable abbreviation as shown against the name of each railway station
indication is given about the facilities for traffic both goods and passenger
available at different stations. As per the impugned order when abbreviation
'GX' is appended to any railway station it would inter-alia mean that the station
is not open for outward booking of coal, coal-shale etc. in wagon-loads. It
appears that the abbreviation 'GX' has been appended to all way-side stations
in the coal-belt, consequently no railway station in the coal-belt would be in
a position to book coal in wagon-loads from each such station. Consequent upon
the issuance of the impugned notification, the Govt. of India revised Rule
302(i) of the Goods Tariff No. 33 Part I issued by IRCA. Further, the Chief
Commercial Superintendent, Eastern Railway by a circular dated April 15, 1972
informed the station superintendents and station-masters of all the stations
served by the Eastern Railway that the entry 'GX' should be appended to all the
stations within its jurisdiction. Thereafter Govt. of India, ministry of
Railways by its order dated April 27, 1972 issued an order revising Rule 1 and
2 of the Eastern Railway Coal Traffic Part I as under:
"All Traffic in coal, coal-shale,
lignite, patent fuel, soft coke and hard coke in wagon loads will be loaded only
from Colliery sidings, coke oven plants and washe- 665 ries on the Eastern
Railways. Though invoices may be issued as from the stations serving these
colliery washeries and coke oven plants, loading of coal in wagons will not be
permitted at those stations. Loading and booking of coal is also not permitted
from any other station on the Eastern Railway. This traffic will be booked
under the following forms of invoices:- a) "Weight only" invoices
showing the weight and rate but not the calculated freight.
b) "Paid" invoices.
c) "To pay" invoices.
2. Coal will be booked under "Paid"
invoices only on the written request of the sender despatching the coal and
provided the freight is tendered at the time of dispatch.
Wagons will be allotted only an availability
and will be subject to observe of priority and other Rules that are in
force." A further restriction followed when the Divisional operating
Superintendent, Bilaspur for apparent reasons stopped booking of coal in smalls
including clubbing at all stations of North-Eastern Railway. This restriction
came into force on December 4, 1979. On February 11, 1980 a telegraphic
communication was issued explaining that coal in wagon-loads can be booked from
colliery sidings by the coalieries concerned. In other words, the coalieries
booking the wagon must specify its name in the indent Booking of slack coal was
wholly stopped as per a phone call dated April 9, 1981. Petitioners further
contend that Union of India, Ministry of Railways has issued Preferential Traffic
Schedule in exercise of power conferred by sec. 27A of the Indian Railways Act,
1890 ('Act' for short). This Preferential Traffic Schedule provides for
preferential treatment in transport of goods from various stations. It provides
five inter se priorities A to E. Different kinds of coal falls under priority
'C' (III) which reads as under:
(iii) Coal from collieries in accordance with
commodity quotas laid down from time to time for/certain types 666 of coal
and/or in accordance with programmes and movements sponsored or recommended by
the Coal Controller and/or any Committee appointed by him and/or the State
Governments and/or other recommending authorities and accepted by the/Railway
Administrations and/or Director, Movement (Railways), Calcutta, and in
accordance with the Zonal Scheme applicable to each field and the principles of
transport rationalisation in force from time to time. A list of sponsoring
authorities authorised to sponsor coal movements in this item is given in
Annexure 'B'.
Note-(a) Coal in the above item C(iii) means
"Coal as defined in Colliery Control Order." (b) Besides the
sponsoring authorities mentioned in Annexure 'B' movement of Coal may be
sponsored by "any other authority who may be appointed by the Government
from time to time." (c) Recommendation for allotment of wagons by a
sponsoring authority or acceptance of recommendations or issue of sanction by
the Railway Administration/Director, Movement (Railways) does not guarantee
allotment/supply of wagons. Allotment/supply of wagons would be regulated
according to the availability of Coal/transport and according to operational
exigencies from time to time. Allotment/supplies of wagons may be cancelled or
reduced by Director, Movement (Railways).
(d) The period of validity of programmes/sanctions
for rakes/piece-meal movement may be laid down from time to time by Railway
Administration/Director, Movement (Railways). The validity of programme/
sanction does not guarantee allotment/supply of wagons.
(e) Inter se seniority of the class of
consumers would be laid down from time to time by Railway
Administration/Director, Movement (Railways) and may be 667 altered/modified
from time to time. Within the same class or category of consumers seniority may
be fixed from time to time depending upon the operational and other
considerations. Railway Administration/Director, Movement (Railway) may permit
distress allotments/supply of wagons when considered necessary. Nothing laid
down herein shall be considered as contrary to notes (a) to (b) appearing under
Priority 'E'." Priority 'E' also includes coal from collieries in
accordance with targets laid down from time to time from the different fields
and in accordance with the zonal scheme applicable to each field and the
principle of transport rationalisation already in force. Petitioners contend
that sum total of various restrictions including one dated April 1, 1972
introducing abbreviation 'GX' and the Preferential Traffic Schedule specifying
priorities under section 27A of the Act in their cumulative effect impose a
total ban on transport of coal by the Railways, at their instance and this
action is violative of Art. 14 and/19(1) (g) of the Constitution.
A very detailed affidavit has been filed on
behalf of the respondents. Some of its highlights may be noticed.
Indian Railway net-work serve 7000 railway
stations, scores of divisions and 9 zones. In such an extensive net- work, all
kinds of facilities by their very nature cannot be provided at all stations,
nor can all kinds of traffic be lifted and moved from all stations. The
Railways, have therefore to plan and rationalise movement of various
commodities from various loading points to various destinations and in various
directions. It is said that till recently coal was the primary source of
energy. It being an important commodity it has to be accorded such high
priority being the primary source of energy, that a senior officer called
Director, Movement (Railways) is posted with headquarters at Calcutta and he
controls and co-ordinates all movements of coal by rail. As far back as 1945,
the Govt of India by its resolution No. Coal 119 (1) dated December 4, 1945
appointed a Committee called the Indian Coalfields Committee which submitted
its report in 1946. Amongst various other recommendations, the Committee
suggested that in view of the shortage of transport, it is imperative that
increased attention be given to zonal 668 distribution of coal. If further
notices that coal is invariably transported in full wagon-loads and at times dispatched
from depot stations in full train loads and therefore if any general revision
of freight is undertaken in consequence of increased cost of operation of the
railways, the preferential treatment now accorded to coal should be maintained.
Statistical data relied upon in the report was annexed to the
counter-affidavit. It is averred that railway has to rationalise movement of
coal because daily on an average 10,000 wagons are required for movement and
transport of coal all over the country. In order to explain why booking of coal
from way-side stations is prohibited, it is averred that the Director, Movement
(Railways) assesses the likely availability of wagons in a coming year for the
movement of coal. After ascertaining the available capacity he advises Central
Govt. and various State Govts. with a request to sponsor coal traffic as per
the requirement and policies. The whole programme of transport of coal from
coalfields and coalieries to various points in India is worked out in advance
keeping in view the daily despatch of loaded wagons and return of empty wagons
so as to be available for daily requirement of empty wagons.
A chart is annexed to this counter-affidavit
in which the average loading of coal in wagons per day is set out. In a letter
dated December 21,1981 by the Director, Movement (Railways) to Chairman of the
Railway Board, it is stated that coal loading the month is 10,478 per day
compared to 10,121 wagons per day during October, 1981. A comparative breakage
of loading during some months has been set out showing the number of wagons
indented, the number of wagons allotted and the number of wagons loaded and the
percentage of loading against offer. It is also stated in the counter-
affidavit that the Department of Coal, in the Ministry of Energy has set up a
standing linkage committee whose functions to assess and link the requirements
to particular sources of coal so as to provide this primary energy material to
establishments like the Railways, Thermal Power Stations, Fertiliser Plants,
Cement Plants, Steel Plants, Textile factories, Chemical Industries and like.
The Committee assesses the requirements of various industrial units, consumers
establishments and other consumers located in different parts of the country
and thereafter taking into account the production programme of various
collieries, it links the requirements of various consuming units to different
individual coal-fields, and this linkage is reviewed from time to time as the
situation may necessitate.
The availability of wagons is an integral
part of this linkage programme. After specifying these facts, it is averred
that this annual allotment drawn in advance 669 cannot be disturbed by casual
indent for transporting coal.
It is further averred that the railway is a
carrier which has to chop its own priority programmes keeping in view the
public interest of rushing various commodities to different parts of the
country. If in the process some individuals may not get a change to transport
their commodities, the action of the railway administration is neither
violative of Art.
14 or 19 (1) (g) of the Constitution.
There are some averments in the
counter-affidavit casting some doubt about the trade carried on by the
petitioners but we consider the same irrelevant for the purpose of disposing of
these petitions.
A number of learned counsel addressed the
Court on different facets of almost the same identical contentions.
We would, however, only deal with the basic
contentions raised in these petitions.
At the outset, a brief reference to some of
the provisions of the Act would facilitate the examination of the contentions
canvassed before us. Sec. 27 of the Act casts a duty on the railway
administration to arrange for receiving and forwarding traffic without
unreasonable delay and with out partiality. Sub-sec. 1 of sec. 27 reads as
under:
"27). Duty of railway administrations to
arrange for receiving and forwarding traffic without unreasonable delay and
without partiality:- (1) Every railway administration shall, according to its
powers, afford all reasonable facilities for the receiving, forwarding and
delivering of traffic upon and from the several railways belonging to or worked
by it and for the return of rolling-stock." Sec. 27-A which was introduced
by the Amending Act No. 11 of 1950, confers power on the Central Govt. to give
directions in regard to transport of goods by railway administration.
It reads as under:
"27 A. Power of Central Government to
give directions in regard to transport of goods by railway administration-(1)
The Central Government may, if in its opinion it is necessary in the public
interest so to do, by general or special order, direct any railway
administration- 670 (a) to give special facilities for, or preference to, the
transport of any such goods or class of goods consigned to the Central
Government or to the Government of any State or of such other goods or class of
goods, as may be specified in the order;
(b) to carry any goods or class of goods by
such route or routes and at such rates as may be specified in the order.
(2) Any order made under sub-section (1)
shall cease to have effect after the expiry of six months from the date
thereof, but it may be renewed from time to time.
(3) Notwithstanding anything contained in
this Act, every railway administration shall be bound to comply with any
direction given under sub-section (1). any action taken by a railway
administration in pursuance of any such direction shall not be deemed to be a
contravention of Section 28." Section 28 prohibits giving undue preference
by railway administration. It reads as under:
"28. Prohibition of undue preference:-A
railway administration shall not make or give any undue or unreasonable
preference or advantage to, or in favour of, any particular person or railway
administration, or any particular description, of traffic, in any respect
whatsoever, or subject any particular person or railway administration or any
particular description of traffic to any undue or unreasonable prejudice or
disadvantage in any respect whatsoever." In exercise of the power
conferred by Sec. 27A Central Govt. issued Preferential Traffic Schedule
directing that all railway administrations shall give special facilities for or
preference to the transport of goods or class of goods specified in the Schedule
to the order. Amongst Priority 'A' to 'E' there is inter se priority and when
under one Priority various goods or class of goods are clubbed together they
have inter se priority amongst themselves. Coal falls under 671 Priority 'C'.
Coal has to be moved from collieries in accordance with commodity quotas laid
down from time to time for certain types of coal and/or in accordance with
programmes and movements sponsored or recommended by the Coal Controller and/or
any Committee appointed by him and/or the State Governments and/or other
recommending authorities and accepted by the Railway administrations and/or
Director, Movement (Railways), Calcutta and in accordance with the Zonal Scheme
applicable to each coal-field from time to time. A list of sponsoring authorities
authorised to sponsor coal movements under priority C(iii) is set out in
Annexure 'B' to the Schedule. The expression 'coal' has the same meaning as
defined in the Colliery Control order. There is a further provision under Item
(iii) that besides the sponsoring authority mentioned in Annexure B, movement
of coal may be sponsored by 'any other authority who may be appointed by the
Govt. from time to time." Sec. 27 provides for smooth flow of traffic
throughout the length and breadth of the country. The expression 'traffic' is
defined to include rolling stock of every description as well as passengers,
animals and goods. A duty is cast on every railway administration to afford
reasonable facilities for receiving, forwarding and delivering of traffic upon
and from several railways belonging to or worked by it and for the return of
rolling stock. This is necessary because the railway net work is divided into
various railway such as Western Railway, Central Railways, meaning zonal
railway administration and prior to nationalisation of the railways different
companies operated different railways. Sec. 27 was enacted in the last decade
of 19th Century when different companies had set up the railway net work in
different parts of the country. In order to provide for smooth flow of traffic
thwarting the railway administrations creating their own preferences,
throughout the length and breadth of the country it was made obligatory by Sec.
27 that every railway railway administration shall afford reasonable facilities
for receiving, forwarding and delivering traffic and for return of the rolling
stock. Sec. 27-A was introduced in 1950 with a view to conferring power on the
Central Govt. to give directions in regard to transport of goods by railway
administration. In 1950 railways were the primary carriers of passengers and
goods throughout the length and breadth of the country. Road transport was then
in its infancy and river navigation was practically unknown. On the advent of
the independence and as a result of planned economy, there was a spurt in
industrial activity with the result that demand from the railways for 672
rolling stock escalated. Various projects were being set up in different parts
of the country which necessitated uninterrupted flow of goods for speedy
completion of the projects. By 1950, Constitution became operative. Art. 14
loomed larged so that unless a specific power was taken for serving larger
public interest, the railways, an instrumentality of the State would be guilty
of violating Article 14 if it did not afford the same facility for transport of
goods by individuals against the state requirements as also priority
requirements. In order to arm the Central Govt. with power to give directions
for according special facilities, or preferential treatment in transport of
goods or class of goods consigned to the Central Govt. or the Govt. of any
State or of such other goods or class of goods as may be specified in the
order, Sec. 27A was introduced in the Act. It also conferred power on the Central
Govt. to give directions for the same purpose of carrying goods or class of
goods by such route or routes and at such rates as may be specified in the
order. The life of an order giving such facilities or preferential treatment
was to be initially for a period of 6 months but it can be renewed from time to
time. Sec. 28 prohibited giving of undue or unreasonable advantage or
preference by the railway administration in the matter of transport of goods in
favour of any particular person or railway administration or particular
description of traffic. The scheme that emerges from the combined reading of
Secs. 27, 27-A and 28 is that the railway administration on their own shall not
impede free flow of traffic and return of rolling stock. Power was conferred on
the Central Govt. for according special facilities or preferential treatment in
the matter of transport of goods both in respect of consignees as well as class
of goods, if in its opinion, it is necessary in the public interest to do so.
However, Sec. 28 in the absence of general or special order in this behalf by
the Central Government under Sec. 27A denied to the railway administration
power to accord any undue or unreasonable preference or advantage in favour of
any particular person or any other body. The preferential treatment in the
matter of transport of goods can be accorded not by the railway administration
on its own which it is prohibited from doing by Sec. 28 but it is under an
obligation to do so if the Central Govt. gives a direction by general or
special order in public interest. In short, undue preference by railway
administration is statutorily prohibited but preferential treatment in respect
of goods or class of goods can be accorded if the Central Government by a
special or general order in public interest so directs.
673 Armed with the power conferred by Sec.
27A the Central Government has issued what is called Preferential Traffic
Schedule. It prescribed five priorities 'A' to 'E' with inter se priorities
amongst 'A' to 'E' to be accorded by the railways for transport of certain
goods or class of goods specified under each category. A brief reference to
various Priorities 'A' to 'E' would at a glance show how the priorities have
been determined in public and national interest. The General Order No. 68
directs that in exercise of the powers conferred by Sec. 27A of the Act, the
Central Government directs that all Railway Administrations shall give special
facilities for or preference to the transport of goods class of goods specified
in the schedule to this order. Goods included in Priority 'A' cover all moves
of immediate and operational nature ordered by the Quarter Master General's
Branch through Milrail, which will be marked 'Immediate' in respect of
Personnel, Vehicles and Stores, Military Special trains and immediate
operational demands. Demands of the Military have been accorded the highest
priority for the security of the nation. Priority 'B' includes foodgrains,
fertilisers, edible groundnut cake, Iron and Steel etc. Next to national
security hunger has been given priority. Priority 'C' includes inter alia coal
from collieries. Coal has till recently been the primary source of energy and
yet it receives its place in Priority 'C'. Energy thus gets Priority 'C'.
Priority 'D' includes raw materials and finished product from Asbestos Cement
Industry, Cotton seed, foodstuffs such/pulses, fresh dates, perishable
commodities subject to quota etc. Priorities 'E' is practically a residuary
clause which again involves coal from collieries is accordance with the targets
laid down from time to time from the different fields and in accordance with
the zonal scheme applicable to each field and the principle of transport
rationalisation already in force but not falling within Priority 'C' (iii).
In the backdrop of this legal position, we
may now turn to the contentions raised on behalf of the petitioners.
1. Railway being a common carrier and by Sec.
28 of the Act being statutorily prohibited from giving undue preference by
arbitrarily picking and choosing some out of those seeking to use its services
and facilities its action of giving priority to some transporters of coal
denying use of its transport facilities to the petitioners who are similarly
situated is discriminatory in character and hence violative of Art. 14.
2. Impugned orders such as one dated April 1,
1972, December 31, 1980 and April 11, 1981 in their cumulative effect have
imposed a total ban on the transport of coal offered by the petitioners by the
Railway and thereby imposed unreasonable restrictions on the fundamental
freedom of the petitioners to carry on their trade guaranteed by Art. 19(1)(g)
and hence they are unconstitutional.
3. If upon its true construction, Sec. 27A
enables the Central Government to impose a total ban on transport of coal
offered by the petitioners who are traders in coal, it (Sec. 27A) is violative
of Art. 19(1)(g) and hence unconstitutional.
4. In any view of the matter, Para (iii) of
Priority 'C' of the Preferential Traffic Schedule issued by the Government of
India in exercise of the power conferred by Sec. 27A in so far as it permits
special facility or preference to individuals or groups of persons selected by
the Sponsoring Authority or recommending body for transport of coal is ultra
vires Sec. 27A of the Act.
5. Order No. TO(g) 1510/71 dated April 1,
1972 introducing abbreviation 'GX' and appending to all railway stations
denoting that each such station is not open for outward booking of coal, coal
shale, lignite, patent fuel soft coke and hard coke in wagon loads is violative
Sec. 28 because thereby the railway administration has subjected the
petitioners as well as the coal offered for transport to an undue and
unreasonable prejudice or disadvantage in the matter of coal transport.
6. At any rate, total stoppage of booking of
coal from wayside stations and colliery sidings unless the collieries in their
own name book the wagons imposes a total ban on transport of coal offered by
the petitioners and therefore, the order dated April 1, 1972 introducing 'GX'
abbreviation and appending it to all railway stations is violative of Art.
19(1)(g). We shall deal with these contentions seriatim.
675 Re Ground 1: Railway is a common carrier
and being State owned it is subject not only to the provisions of the Act but
also the fundamental rights guaranteed by Part III of the Constitution. However
much before the advent of the Constitution when different Railways were owned
by incorporated companies, Sec. 28 of the Act precluded the different railway
administrations from granting undue preference to any particular person or any
particular traffic or to any particular railway administration, or subject
anyone to any undue or unreasonable prejudice or disadvantage in the matter of
transport of goods or passengers. Railway being a Stale monopoly, to checkmate
its monopolistic power in the larger public interest it has to be subjected to
regulatory measures. Simultaneously it became necessary to arm Central
Government with power to direct railway administrative to give preference in
the matter of transport of the goods of the Government, Central or State or
specified goods to meet the demands of various regions as well as needs of
Government. Intention was to classify government in a class by itself for the
purpose of Art. 14. To meet the challenge of Art. 19 (1) (g) the Central
Government was armed with power to accord priority in transport of goods in
larger public interest. Soon after the advent of the Constitutions, to arm the
Central Government with requisite power to direct the railway administration to
give special facilities for or preference to the transport of any such goods or
class of goods consigned to the Central Government or to the Government of any
State or such other goods or class of goods as may be specified in the order,
Sec. 27A was introduced in the Act which enabled it by a general or special
order to direct the railway administration to grant special facilities for or
preference to the transport of goods. Such a general or special order can be
issued by the Central Government if in its opinion it is necessary in the
public interest to do so.
Now indisputably the goods consigned to the
Central Government or to Government of any State must obviously have a priority
over what we may loosely describe as private transporters, because it is
well-settled that the Central or the State Government is in a class by itself.
This view is founded on the assumption that all activities of the State are in
public interest in the sense that they are either undertaken on behalf of the
public or that the loss or gain arising from them falls upon the public (See
Nav Rattanmal and Others v. The State of Rajasthan.(1) The goods consigned to
the Central or the State Government are, unless shown to the contrary necessarily
to be 676 used to carry on governmental activity undertaken for the benefit of
public or to sub serve some public interest and which may as well include the
efficient administration of the governmental agencies. Sec. 27A also confers
power to direct any railway administration to give special facilities for or
preference to the transport of goods or a class of goods as may be specified in
a general or special order that may be issued in this behalf. The Central
Government is better equipped to know what class of goods are required to be
sent to any particular area expeditiously to meet some shortage, or for
national security or to meet and emergency or any natural or man-made
catastrophy so as to accord special treatment in the matter of transport. See. 28
can be said to some extent to be a corollary to Sec. 27 A in as much as the
railway administration on its own is prohibited from giving undue or
unreasonable preference or advantage to, or in favour of, any particular person
or railway administration, or any particular description of traffic, in any
respect whatsoever, or subject any particular person or railway administration
or any particular description of traffic to any undue or unreasonable prejudice
or disadvantage in any respect whatsoever. To repeat railway being a State
monopoly undertaking, it had to be statutorily controlled from abusing its
monopolistic character by prohibiting it from giving any undue or unreasonable
preference or advantage or acting in any manner which would evidence undue or
unreasonable prejudice or disadvantage in any respect whatsoever. Equality
guaranteed be Art. 14 is translated into statutory provision in Sec. 28. A
State monopoly like the railway administration cannot be trusted to act fairly
and that is the object underlying Sec. 28. If everyone was to get equal
facility for transport of his goods by railway without anyone claiming priority
or anyone having power to grant preference or special facility, in an emergency
this equal opportunity would create a havoc.
Therefore on the other hand, the Central
Government to meet the needs of the country arising in any eventuality can give
directions for giving special facilities for or preference to the transport of
goods or any class of goods. In the absence of power such as conferred by Sec.
27A, floods, draughts, national security requirements, unscrupulous hoarders,
artificial shortages materials for national projects in a country of the
dimensions of India cannot be effectively and adequately tackled. This is the
genesis of the power conferred by Sec. 27A.
Armed with the power conferred by Sec. 27A
the Central Government has issued Preferential Traffic Schedule.
Priorities 'A' 677 to 'E' therein set out in
the matter of transport of goods by railway clearly manifests a public policy
framed to sub-serve public interest. Coal the primary source of energy has been
relegated below the military requirement (Priority 'A') and foodgrains and
fertilisers, Iron and Steel material for wagon building, seeds etc. (Priority
'B') and then comes the primary source of energy in Priority 'C' Coal. Does
this priority manifest undue preference prohibited by Sec. 28 or a general
order issued by the Central Government in public interest? Let one confusion be
cleared at the outset. Submission that there is virtually a total embargo on
the transport of coal by railway at the instance of the present petitioners or
others similarly situated is substantially incorrect.
Throughout the hearing of these petitions, it
was pepeated ad nauseum that cumulative effect of all orders, including the
impugned order dated April 1, 1972, is to impose a total ban on the transport
of coal offered by the petitioners. As will be presently pointed out, this
statement is unfounded in facts and presents a distorted picture in the matter
of transport of coal by railways.
Priority 'C' (iii) which deals with coal
provides for transport of coal from collieries to various parts in India.
It was subjected to varying constructions. It
has been extracted earlier. In order to be eligible for obtaining allotment of
wagon under Priority 'C', it is necessary for the person indenting the wagon to
satisfy the various conditions specified therein. They are: (i) that the coal
is to be loaded from the collieries; (ii) that the coal to be loaded is in
conformity with the commodity quotas laid down from time to time for certain
types of coal and/or in accordance with the programmes and movements sponsored
or recommended by the Coal Controller and/or any Committee appointed by him;
(iii) or it is sponsored or recommended by the State Government and/or other
recommending authorities and accepted by the Railway Administrations; (iv) or
it is sponsored or recommended by Director, Movement (Railways), Calcutta: (v)
and it must be in accordance with the Zonal Scheme applicable to each field and
the principles of transport rationalisation in force from time to time. In
order to comply with the preconditions for eligibility under Priority 'C', a
list of sponsoring authority authorised to sponsor coal movements is drawn up
and is set out in Annexure 'B' to the Preferential Traffic Schedule. These
general conditions are further subject to Notes A to E. Why such 678 an
exhaustive and detailed provision is made is not difficult to answer? Coal
forms 32% of the total transport of goods handled by the Railways. On an
average, more than 10,000 wagons will have to be allotted daily for transport
of coal Coal being a primary source of energy used by heavy industries,
electricity generating plants, steel plants as also cooking fuel used in the
remotest parts of the country, it is necessary to handle its transport with
scientific precision. Therefore, there is a prior planning about a year in
advance drawn up by the Director, Movement (Railways) setting out Zonal Scheme
of distribution applicable to each coal-field and the principles of transport
rationalisation in force from time to time. The purpose underlying setting up
of sponsoring and recommending authorities is to ascertain the needs of various
regions of the country who in their respective regions would be in close and
intimate contact with the consumers of coal both industrial and individual.
Even though power has been conferred on them to sponsor or recommend indenting
of wagons of coal from collieries this network of sponsoring and recommending
authorities are subject to the Zonal Scheme applicable to each coal field and
the principles of transport rationalisation in force from time to time. The
nerve centre is the Director, Movement (Railways) of all the activities
connected with transport of coal. In addition to this the Government has set up
a Standing Linkage Committee in the Department of coal in the Ministry of
Energy. This Committee assesses the link and requirement of particular source
of coal. The Committee keeps in view the requirements of such major industries
and establishments using coal like the Railways, thermal power stations,
fertiliser plants, cement plants steal plants, textile factories, chemical
industries and the like. This very narration would show that if there is
disturbance in regular supply of coal to this priority sector resulting in
their closure, there would be a ripple effecting various ancillary industries
creating a major dislocation in in the national economy and escalating haunted specter
of layoff and unemployment. That is why planning is undertaken every year in
advance and but for any emergency it is considered inadvisable to disturb the
advance Planning because any such disturbance results in serious dislocation of
this primary source of energy being distributed all over the country keeping in
view national priorities.
With this background, it is not difficult to
appreciate the various orders issued by the Railway Administration and the
Central Government regulating the movement of coal.
679 Railway is a monopolistic undertaking in
the matter of transport of coal by Railways. Barring some tiny dots which may
become visible only by a magnifying glass, the entire railway network is
nationalised and the railway is a department of the Union of India. It is
therefore, indisputably a State monopoly. A monopoly unless kept within bounds
may prove to be a menace. Therefore, regulatory measures are necessary to
prevent the abuse of monopolistic power. The reasons which led to the enactment
of the Monopolies and Restrictive Trade Practices Act may have to be kept in
view even while keeping a watch over the activities of a State monopoly. But
there is a constitutional check on the State monopoly, namely, it being State
within the meaning of Art. 12 of the Constitution, all its actions will have to
conform to the fundamental rights enshrined in Part III of the Constitution.
Part III provides a positive and healthy check on the railway administration.
Sec, 28 of the Act seeks to achieve the same
result which on the advent of the Constitution, Art. 14 would achieve. Sec. 28
undoubtedly prohibits railway administration from giving any undue preference
by arbitrarily picking and choosing some out of those seeking to use its
services and facilities. But Sec. 28 is subject to Sec. 27A. If the railway
administration accords priority in transport of goods by giving special
facilities for or preference to the transport of goods, in compliance with any
general or special order made by the Central Government in the public interest
in this behalf, compliance with such special or general order could never be
attacked as being violative of Sec. 28. Sec. 28 forbids discrimination by
giving undue or unreasonable preference or advantage in respect of any
particular traffic to any particular person or any other railway administration
but this general prohibition against discrimination is subject to the
overriding power conferred on Central Government under Sec. 27A. If while
giving effect to the orders of the Central Government issued under Sec.
27A, priority is accorded in the matter of
transport of goods consigned to Central or State government or class of goods
specified in the general or special order issued in this behalf, the action of
the railway administration in complying with such special or general order
could not be said as tent amounting to giving undue or unreasonable preference
or advantage to or in favour of any particular person or railway
administration. What Sec. 28 forbids is discrimination in the matter of
transport of goods against a class but this is subject to 680 the permissible
classification that would be introduced by a special or general order issued by
the Central Government in exercise of the power conferred by Sec. 27A. It may
be recalled that the Preferential Traffic Schedule according Priority 'C' to
transport of coal by those mentioned therein has been issued in exercise of the
power conferred by Sec. 27A. Therefore, the submission that petitioners in the
matter of transport of coal are similarly situated with the Central or State
Government or transporters given priority by general or special order issued
under Sec. 27A cannot be entertained. This is all the more so because the
petitioners are coal merchants who 'want to transport their coal by railway for
carrying on business in coal and they may sell the coal to any intending
purchaser while those accorded preferential treatment under Priority 'C' of the
Preferential Traffic Schedule are transporters of coal who have been recognised
one year in advance under Zonal Distribution Scheme as person who would by
transporting the coal to satisfy fixed goals which sub-serve needs of the
public at large. For this additional reason the contention of the petitioners
that they are similarly situated with those set out in Priority 'C' (iii)
cannot be entertained.
Classification of those covered by Priority
'C' and the present petitioners is founded on intelligible differentia which
distinguishes persons or things that are grouped together from others left out
of the group and the differentia has a rational relation to the object sought
to be achieved by the impugned orders. Those falling within Priority 'C' (iii)
would form a class by themselves and the petitioners clearly stand out of the
group and for reasons herein stated petitioners could not be said to be
similarly situated with those grouped together in Priority 'C' (iii).
Re Gr. 2: It was next contended that the
impugned orders dated April 1, 1972, December 31, 1980 and April 11, 1981 in
their cumulative effect have imposed a total ban on the transport of coal
offered by the petitioners by the Railways and thereby imposed an unreasonable
restriction on their fundamental freedom to carry on their trade guaranteed by
Art. 19(1)(g) of the Constitution. It is factually incorrect to say that the
impugned orders have in their cumulative effect imposed a total ban on the
transport of coal offered by the petitioners by Railway. Priority 'E' in
Preferential Traffic Schedule provides for transport of coal from collieries in
accordance with the targets laid down from time to time from the different
fields and in accordance with the Zonal Scheme applicable to each field and the
principle of transport rationalisation already in force.
Priority 'C' 681 (iii) caters to transport of
certain types of coal as recommended and sponsored by recommending and
sponsoring authorities. Priority 'E' (ii) caters to a situation where coal is
required to be transported from collieries in accordance with the targets laid
down in advance. Therefore, if the petitioners are unable to obtain any
sponsorship or recommendation for transport of coal by Railway, they may as
well come under Priority 'E' (ii). Assuming they even do not come within the
sweep of Priority 'E' (ii), it is crystal clear that any available wagon after
all priorities are satisfied can be made available to the petitioners. If even
then wagons are not allotted to petitioners, they can complain of violation of
Sec. 28. But it was urged that the Priority 'A' to 'E' have been so
exhaustively drawn up that conceivably not a single wagon would be available
after all the priorities are met with. That may be so but that is unavoidable
when the law of demand and supply operates.
There is always an yawning gap between the
demand for the wagon and the available supply of the same. That situation
itself would justify making of orders under Sec. 27A. If the railways were in a
position to meet with every demand of the wagon for transport of goods, it was
absolutely unnecessary to provide for priority. The very fact that there is a
discernible gap between the demand for the wagons and the supply of the same
that led to the necessity of introducing Sec. 27A and making a general order
drawing up Preferential Traffic Schedule in exercise of the power conferred by
Sec.
27A. Further it was said that coal can be
transported in smalls from certain wayside stations not suffixed with
abbreviation 'GX'. But the petitioners want to transport their coal in wagon
loads. The Railways may not be able to provide wagon from the wayside stations
because each empty wagon at wayside station is accounted for in the daily
supply of wagons approximately 10,000 for transport of coal from colliery
siding to various destinations in the country.
It may be as the petitioners contend that a
loaded wagon may reach a wayside station and is unloaded but the counter-
affidavit shows that each such empty wagon is accounted for, a year in advance
towards supply of more than 10,000 wagons daily to the colliery sidings for
transport of coal. And this pre-planning cannot be disturbed by excluding such
wagons from the calculations about available wagons and hand it over to the
petitioners. There is a further difficulty in making available wagons to the
petitioners. Every small wayside station is not equipped with necessary
equipment for loading of coal. Therefore, if the law of demand and supply, and
non-availability of facility for loading coal in small at wayside stations
result in not making available wagons to the petitioners 682 because of
pre-planning and priority it cannot be said that there has been a total ban on
the transport of coal offered by the petitioners by the railways, which would
violate the fundamental freedom to carry on their trade guaranteed to the
petitioners under Art. 19(1)(g). If the impugned orders constitute a
restriction on the freedom of carrying on trade, though we do not consider it
to be so, the same is reasonable and imposed in larger public interest. The
contention must accordingly be rejected.
Re Gr. 3: It was next contended that if upon
its true construction Sec. 27A enables the Central Government to impose a total
ban on transport of coal offered by the petitioners who are traders in coal,
Sec. 27A would be violative of Art. 19(1)(g) and should be declared
unconstitutional. Art. 19(1)(g) guarantees to the citizen the fundamental
freedom to carry on any occupation, trade or business. This fundamental freedom
is subject to reasonable restrictions that can be imposed by law relating to
the carrying on by the State, or by a corporation owned or controlled by the
State, of any trade, business, industry or service; whether to the exclusion
complete or partial, of citizens or otherwise.
The first question that may be posed in this
context is: what is the trade being carried on by the petitioners? Are they
coal transporters? Is the transport of coal their business ? Or are they coal
merchants who are dealers in coal and for the purpose of carrying on of
business at a certain place they are required to transport coal from the
colliery sidings to their place of business ? Obviously their business is not
transport of coal. Transport is merely incidental to their business, namely,
trade in coal.
Assuming that the Railways have wholly banned
transport of coal offered by the petitioners by wagons could it be said that
the action of the Railways would violate Art. 19(1)(g) in relation to them.
Whenever the Court is called upon to examine the complaint that restrictions
imposed on the freedom to carry on trade are unreasonable, it is necessary to
find out what is the trade or business of the complainant-petitioner and to
what extent the restriction, if any, is imposed upon the freedom to carry on
trade or business and then to determine whether the restriction is reasonable
or otherwise. It is the direct impact of the restriction on the freedom to
carry on trade that has to be kept in view and not the ancillary or incidental
effect of the governmental action on the freedom to carry on trade.
The petitioners are not transporters of coal.
They are coal merchants scattered over various parts in 683 India and now they
complain that they are unable to transport coal because the Railways have so
arranged its priorities in the matter of transport of coal that the petitioners
would never be able to obtain a single wagon for transport of their coal. Prima
facie it appears that the petitioners' business or trade as coal merchant is in
no way interfered with by the railways by not being able to provide transport
facility. Let it not be forgotten that the railway is not the only means of
transport. There are other means of transport by which the coal can be
transported by the petitioners to their respective place where they carry on
their business as the coal merchants. Even assuming that the direct impact of
the policy laid down by the railway administration pursuant to the orders of
the Central Government under Sec. 27A results in denial of allotment of wagon
to the petitioners, the restriction will none-the-less be reasonable because
petitioners are not wholly denied the allotment of wagons.
A developing country with mixed economy and
economic planning have certain targets to achieve. These targets are planned in
advance and the economic activity is geared to the achievement of these
targets, If the required resources necessary for achieving targets were readily
available, no difficulty would arise. But a developing country has to so
distribute its scarce resources to achieve and accomplish desired targets. This
situation is bound to lead to a gap between the demand and supply of various
facilities.
Transport is one such. Once there is a gap
between the demand for transport service offered by the Railway and the supply
of the service, the resources being not sufficient to meet with all existing
demands, the scarce resources will have to be equitably distributed keeping in
view the planned targets.
This equitable distribution would necessitate
imposing of reasonable restriction and according of priorities. Coal as pointed
out earlier being the primary source of energy, the demand for it to keep
wheels of industry rotating is very high and it has to be accorded a fairly
high priority and that is done by the Preferential Traffic Schedule. Only two
other items have a priority over coal and they are in respect of Personnel,
Vehicles and Stores, Military Special trains and immediate Operational demands
that is national security. This does not require any explanation because
national security has the highest priority, and it is accorded Priority 'A'.
Priority 'B' provides for foodgrains, edible oils, goods in connection with
relief and rehabilitation of displaced persons, seeds etc. Hunger has been 684
accorded Priority 'B'. And coal falls in Priority 'C' being the primary source
of energy, Planned regulated movement of coal to meet priority needs if it
results in denial of that facility to non-priority sector could not be rejected
as placing an unreasonable restriction on the fundamental freedom to carry on
trade or business. And that is the object underlying Sec. 27A. It is therefore,
idle to contend that the section being violative of Art. 19(1)(g) is
unconstitutional.
Re Gr. 4: It was next contended that in so
far as Priority C (iii) in the matter of transport of coal from colliery
sidings permits special facility or preference to individuals or groups of
persons selected by sponsoring authority or recommending body for transport of
coal, it is ultra vires Sec. 27A of the Act. One has merely to look at the list
of sponsoring and recommending authority to reject this submission. Annexure
'B' to Preferential Traffic Schedule sets out the list of sponsoring
authorities. It is a long list but a bare perusal of it is sufficient to show
at a glance that Central and State Governments as well as highly placed Central
and State Government Officers have been appointed as sponsoring authority in
respect of coal required by different area and industries. Again in various
States various sponsoring authorities have been set up by State Government.
Power is conferred on these sponsoring authorities to sponsor persons who would
be accorded priority in transport of coal. These responsible persons and bodies
set up in each State as sponsoring authority are expected to act in a responsible
manner keeping in view the demands of the area and the industry, for coal in
each State. It is therefore idle to contend that setting up of sponsoring or
recommending authority in Priority C(iii) of the Preferential Traffic Schedule
is ultra vires Sec. 27A of the Act.
Re Gr. 5: It was next contended that the
Order No. To (g) 1510/71 dated April 1,1972 introducing of abbreviation 'GX'
and appending it to all railway stations has resulted in every such station
being not open for outward booking of coal, coal shale, lignite etc. in wagon
loads and therefore it violates Sec. 28 of the Act because thereby petitioners
are wholly prohibited from transporting their coal by railway and making every
empty wagon available to those covered by Priority C(iii). It was said that the
order dated April 1,1972 has the pernicious tendency of giving undue preference
to Priority 'C'(iii) transporters and subjects petitioners to undue or
unreasonable prejudice or disadvantage, both situations being prohibited by
Sec. 28.
As pointed out earlier, transport of coal is
685 according to a plan drawn up a year in advance. Further this plan is
subject to the decision of the Standing Linkage Committee. Every meticulous
detail is worked out in advance.
A daily loading of maximum number of wagons
is pre-planned.
Loading of the wagons with coal at a targeted
number daily requires rotational movement also according to plan. A wagon once
loaded with coal it moves out to its destination has a certain average return
time stipulated and worked out in advance. There may be dislocations. In order
to meet this eventuality in the counter-affidavit it is stated that no wagon
load of coal can be booked from wayside stations. It can only be booked from
colliery sidings and that ought to be so. To achive this desired end, an
abbreviation 'GX' was devised and appended to all stations. Where a station has
an abbreviation `GX' appended to it, it would mean that the station is not open
for outward booking of coal, coal shale, lignite, patent fuel, soft coke and
hard coke in wagon loads. We fall to see how this regulatory arrangement
violates Sec. 28. In fact, this incidental arrangement helps in smoothly
working the Zonal Distribution Scheme and the planned movement of coal. And it
is not disputed that the coal in smalls, if offered and if the space is
available can be moved from wayside stations. Therefore, we find no merit in
the submission.
Re Gr. 6; It was lastly urged that by
affixing abbreviation 'GX' to all waysides stations, a total ban is imposed on
the transport of coal offered by the petitioners and therefore, the order dated
April 1,1972 is violative of Art. 19(1) (g). It is the same submission slightly
differently clothed. As stated earlier movement of coal is planned and
regulated and no tinkering is permissible.
Petitioners are equally Subject to this
planning and regulated movement. It cannot be tinkered with. To give effect to
this planned movement abbreviation 'GX' is devised and appended to all the
railway stations informing the transporters that the station is not open for
transport of coal in wagon loads. Coal in smalls can be offered for transport
that is what the petitioners do not desire. All regulatory measures discussed
in detail hereinbefore clearly indicate that transport of coal is
scientifically planned and devised in advance. All the impugned orders are made
or effective implementation of the planned movement of coal. If consistent with
this planning, the railways have stopped booking of coal in wagon load from
wayside station, it cannot be said that this action has imposed such an
unreasonable restriction on the fundamental freedom of the petitioners to carry
on their trade as to be violative of Art. 19(1) (g).
686 We cannot part with this judgment without
recording our uninhibited appreciation of thorough study of the knotty issues,
research and analysis of historical background, and scientific and painstaking
presentation of the facts and issues of law involved in these petitions by Shri
Gupta learned counsel, who appeared for the various railway administrations.
The intense labour put in by him in collecting the most useful material and
elucidating the same before the Court in a very able manner helped us
considerably in disposing of these petitions.
These are the reasons which persuaded us to
make the order set out at the commencement of the judgment.
H.S.K. Petitions dismissed.
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