Punjab Traders & Ors Vs. State of
Punjab & Ors [1990] INSC 292 (18 September 1990)
Thommen,
T.K. (J) Thommen, T.K. (J) Singh, K.N. (J) Kuldip Singh (J)
CITATION:
1990 AIR 2300 1990 SCR Supl. (1) 499 1991 SCC (1) 86 1990 SCALE (2)603
ACT:
East
Punjab Molasses
(Control) Act, 1948--Ss. 2(c) 2(f), 3, 3A, 4, 6. 8 & 13--Clarificatory
amendment of by East Punjab Molasses (Control) Amendment Act,
1973--Constitution- al validity of.
Constitution
of India: Articles 304(b) proviso, 305 &
366(10)-East Punjab Molasses (Control) Act,
1948--Existing Law--Clarificatory amendment of by East Punjab Molasses
(Control) Amendment Act, 1973--Previous sanction of Presi- dent-- Whether
mandatory.
HEAD NOTE:
The
East Punjab Molasses Control (Amendment) Act, 1973 substituted the definition
of "molasses" in section 2(c) of the East Punjab Molasses (Control)
Act, 1948 to mean "the mother liquor produced in the final stage of
manufacture of sugar or khandsari sugar". The unamended section 2(c) had
hitherto referred only to sugar. Consequent changes were also made in other
provisions of the Principal Act to give effect to the amendment.
The
appellants-dealers in khandsari molasses aggrieved by the expanded definition
of molasses challenged the con- stitutionality of the Amendment Act, 1973 on
the ground that it had imposed direct and immediate restrictions upon their
trade and commerce unsupported by the previous sanction of the President of
India in terms of Article 304(b) of the Constitution.
The
High Court dismissed the writ petition holding that the appellants were not
shown to have been aggrieved solely by reason of the amendment on the view that
their business had been in equal measure controlled by the Principal Act
itself.
In
this appeal by special leave, the appellants reiter- ated their contentions
advanced before the High Court. For the respondents it was contended that the
provisions of the Amendment Act, 1973 were regulatory measures enacted to
facilitate trade and therefore they did not come within the ban of the proviso
to clause (b) of Article 304 to require the previous sanction of the President.
500
Dismissing the appeal, the Court,
HELD:
1. The main object of the Amendment Act, 1973 was to clarify that the Principal
Act applies in equal measure to a khandsari unit as it does to any other sugar
factory.
It was
always well understood in trade that khandsari sugar was also sugar and that
any reference to sugar, in the absence of specific exclusion or qualification,
was capable of equal application to sugar of all kinds including khand- sari.
The Act did not become applicable to the appellants only as a result of the
amendment. Even though persons who dealt with the statute may have understood
its provisions in a restricted sense, such mistaken construction of the stat- ute
did not bind the Court so as to prevent it from giving it its true
construction. [316A-C] The Trustees of the Clyde Navigation v. Laird &
Sons, 8 AC 658, 670 and National & Grindlays Bank Ltd. v. The Munic- ipal Corporalion
of Greater Bombay, [1969] 1 SCC 541, re- ferred to.
2. The
Principal Act being an "existing law" within the meaning of Article
366(10) read with Article 305 of the Constitution, and the provisions of the
Amendment Act being clarificatory, the previous sanction of the President was
not required. [316D-E] Syed Ahmad Aga v. Stale of Mysore, [1975] Suppl. SCR
473, referred to.
CIVIL
APPELLATE JURISDICTION: Civil Appeal No. 1372 of 1980.
From
the Judgment and Order dated the 19.5. 1980 of the Punjab and Haryana High Court in C.W.P. No.
1378 of 1973.
G.L. Sanghi,
Vivek Gambhir, Dhruv Mehta, S.K. Gambhir and Surender Karnail for the
Appellants.
C.M. Nayar
for the Respondents.
The
Judgment of the Court was delivered by THOMMEN, J. This appeal by special leave
arises from the Judgment of the Punjab & Haryana High Court in Civil Writ
Petition No. 1378 of 1973. The appellants in the writ peti- tion challenged the
constitutionality of the East Punjab Molasses (Control) Amendment 501 Act. 1973
(hereinafter referred to as the "Amendment Act, 1973") on the ground
that the said amendment had not re- ceived the previous sanction of the
President of India in terms of Article 304(b) of the Constitution. The High
Court dismissed the writ petition holding that the appellants were not shown to
have been aggrieved by the impugned amendment.
The
Amendment Act. 1973 amended the provisions of the East Punjab Molasses
(Control) Act. 1948 (East Punjab Act No. 11 of 1948) (hereinafter referred to
as the "Principal Act"). as it stood at the relevant time. The
Principal Act had been earlier amended in 1950. 1957. 1964 and 1968. It was
subsequently amended in 1976. The appellants have.
however.
challenged only the Amendment Act, 1973 and have significantly not challenged
the earlier or subsequent amendments. Rejecting the appellants' contentions. the
High Court observed:
....
We have very carefully gone through the petition and we have asked the learned
counsel for the petitioners to point out any averment from the petition. to
show that the petitioners were dealing with molasses which were not covered
under the definition of molasses given in the unamended Act. but arc covered
within the definition of molasses under the Amending Act. No such averment has
been made ..... The grievance of the petitioners that they have been made
subject to the provisions of the Act in view of the Amending Act. thus does not
stand substantiated from the averments made in the petition ..
The
appellants admitted before the High Court that, apart from the Principal Act,
as enacted in 1948. being an 'existing law'. and therefore beyond challenge. none
of its provisions could be regarded as an unreasonable restriction on the
freedom of trade. commerce and intercourse. The appellants, however. contended
that the impugned provisions inserted in 1973 were null and void for the reason
that the restrictions so introduced had not received the previous sanction of
the President.
Section
2 of the Principal Act was amended in 1973 to define 'molasses' as well as 'khandsari
unit'. By this amendment, a new definition of 'molasses' was substituted in the
place of the original definition [See Clause (c)].
Clause
(f) of Section 2 was added to define a 'khandsari unit'.
502
Section 3 of the Principal 'Act empowered the Controller to "direct the
owner or occupier of a sugar factory or any other person" to furnish
returns of the stock of molasses in his possession. This Section was amended in
1973 to bring a khandsari unit or distillery within the statutory ambit.
Section
3(A) had been added in 1964. to empower the Control- ler to direct the owner or
occupier of a sugar factory or distillery, or any other person permitted to
store and preserve molasses, to construct tanks for the storage of molasses.
This Section was amended in 1973 to bring a khand- sari unit within its ambit.
Section
4 of the Principal Act says that no person shall, without a permit issued by
the Controller, move molasses by road, rail, river or by any other means or
sell or otherwise dispose of molasses to any person other than the Government
or a person licensed by the Government in this regard. It also authorises the
Controller to direct the owner or occupier of a sugar factory to supply
molasses of specified quantity and quality to such persons as the Con- troller
may direct. This section was amended in 1964 to provide that no person shall
store or preserve molasses without the Controller's permit. It was further
amended in 1973 to bring a khandsari unit within the ambit of the controller's
power to direct supply of molasses.
Section
5 of the Principal Act empowers the Government to regulate prices from time to
time and prescribes the manner in which molasses has to be graded, marketed,
packed or stored for sale. It was amended in 1976 in certain re- spects which
are not material. Section 6 provides for the imposition of penalty in the event
of contravention of any provision of the Act. The Section was substituted in
1964- for the original Section. It was amended in 1973 in certain respects.
Section 7 of the Principal Act refers to liability for breaches by corporation
or company. This Section has not undergone any change. Section 8 of the
Principal Act provid- ed that no court should take cognizance of any offence
punishable under the Act except on a report made by the Controller. This
section was substituted in 1964- to provide for the exercise of supervision and
control by the Control- ler over sugar factories through subordinates. It was
amend- ed in 1973 by including a khandsari unit within its ambit.
Section
9 of the Principal Act provided for power of entry and seizure. It was
substituted in 1973 by a new section with certain changes which are immaterial.
Section 10 of the Principal Act provided for the procedure of seizure. It was
substituted by a new section in 1973, but the changes are not material. Section
11 deals with the delegation of pow- ers. It has not undergone any change. Section
12 of the Principal Act deals with the power of the Govern- 503 ment to exempt
any area or person from the provisions of the Act. This Section was amended in
1973 to empower the Govern- ment to exempt any kind of molasses from the
provisions of the Act. Section 13 of the Principal Act deals with the rule
making power of the Government. It was amended in 1973 to include khandsari
unit or distillery within the scope of that Section. These are the changes made
in the Principal Act.
The
substantial change introduced by the Amendment Act, 1973 is in the substituted
definition of 'molasses' so as to include within its meaning mother liquor
produced in the final stage of manufacture of sugar or khandsari sugar.
The
appellants being dealers in khandsari molasses are stated to be aggrieved by
the expanded definition of 'mo- lasses'. 'Molasses' was defined under the unamended
Section 2(c) of the Principal Act as follows:
"2(c)
'Molasses' means the heavy, dark coloured residual syrup drained away in the
final stage of the manufacture of sugar by vacuum pans or in open pans in sugar
factories either from sugarcane or by refining gur; when such syrup has a
density of not less than 75 degrees brix and a for- mentable sugar content (expresent
as reducing sugars) 19 per cent. ' ' This definition was substituted by the
Amendment Act, 1973 as follows:
"2(c)
'molasses' means the mother liquor produced in the final stage of manufacture
of sugar or khandsari sugar, by vacuum pans or in open pans, from sugarcane or gur,
with or without the aid of power." The new definition of 'molasses' under
the amendment provi- sion specifically refers to khandsari sugar, apart from
sugar, while the unamended section 2(c) referred only to sugar. Section 2(f),
as introduced by the Amendment Act, 1973 defines 'khandsari unit' as follows:
"2(f)
'khandsari unit' means any premises, including the land, godowns or out-houses
appurtenant thereto, wherein, or in any part of which a manufacturing process
con- 504 nected with the production of khandsari sugar from sugar- cane or gur
in open pans is carried on with or without the aid of power." The
'occupier of a khandsari unit' is defined as "a person who has control
over the affairs of a khandsari unit". The definition of sugar factory'
has not undergone any change, and it reads as follows:
"2(d)
'sugar factory' means any premises, including the land, godowns or outhouses
appurtenant thereto, whereon twenty or more workers are working, or were
working on any day of the preceding twelve months, and in any part of which a
manufacturing process connected with the production of sugar by means of vacuum
pans or in open pans is being carried on or is ordinarily so carried on, with
the aid of power." The main object of the Amendment Act, 1973 is to
clarify that the Principal Act applies in equal measure to a khand- sari unit
as it does to any other sugar factory.
The
contention is that the provisions of the Amendment Act, 1973. though not in
themselves unreasonable restric- tions, nevertheless bring the appellants under
greater statutory control, and are, therefore. invalid for want of previous
sanction of the President in terms of the proviso to Article 304(b). This
challenge. as seen above, has been rejected by the High Court for the reason
that the appel- lants' business has been in equal measure controlled by the
Principal Act itself. The appellants being dealers in mo- lasses. the new
definition of the term "molasses", which includes "khandsari
sugar", does not subject their business to any greater control.
The
appellants' counsel. Mr. G.L. Sanghi contends that the provisions of the
Amendment Act. 1973 impose direct and immediate restrictions upon the
appellants' trade. They are a burden on trade and they deter the appellants
from trad- ing. They directly affect the freedom of trade and commerce.
They
are not merely regulatory for the purpose of facilitat- ing the free flow of
trade and commerce. They are restric- tions hampering trade. They may be
justifiable as reasonable restrictions, but being restrictions unsupported by
previous sanction of the President, they are nevertheless invalid.
Mr.
C.M. Nayar, appearing for the respondents, on the other 505 hand. contends that
the impugned provisions of the Amendment Act, 1973 are regulatory measures
enacted to facilitate trade and they do not come within the ban of the proviso
to clause (b) of Article 304. These provisions do not require the previous
sanction of the President in terms of the proviso to Article 304(b).
Counsel
on both sides. in support of the respective contentions. refer to the principle
stated by this Court in Ariabari Tea Co., Ltd. v. State of Assam & Ors.,
[1961] 1 SCR 809; The Automobile Transport (Rajasthan) Ltd. v. The State of
Rajasthan & Ors., [1963] 1 SCR 491 and State 0f Bihar & Ors. v. Harihar
Prasad Debuka & Ors.. [1989] 2 SCC 192 and other cases. [1967] (21 SCR 361;
[1971] (11 SCC 59; [1986](1) SCR 939;[1989] (31 SCC 211;[1990] (31 SCC 87;
[1957] SCR 721; [1970] (11 SCR 400; [1955] (11 SCR 380; [1954] (31 All E.R.
6(17; [1954] (51 SCR 873. 8811; [1975] Supp. SCR 473; [1983] (31 SCC 237 and
[1969] (1) SCC 541.
It is
not and cannot be. disputed that if the impugned provisions are not merely
regulatory with a view to facili- tating trade. but are in quality and
substance restrictive.
though
reasonable as restrictions can be. and if they in effect constitute a hinderance
or impediment to the free flow or movement of trade, they are unconstitutional
in the absence of previous sanction of the President. The question, however is
the Principal Act. being an "existing law" and, therefore, beyond
challenge. do the impugned provisions.
introduced
in 1973. being additional provisions. enlarge in substance and quality the
scope and ambit of the Principal Act. thereby impeding in greater measure the
free flow or movement of trade so as to fall within the ban of the provi- so to
clause (b) of Article 304? In other words. does the Amendment Act.1973. restrict
the appellants' business to a greater extent or is it merely clarificatory in
so far as.
at any
rate. the appellants are concerned? The point then really is. has the amendment
made the Act more stringent in so for as the appellants are concerned? If the
answer is negative. as the High Court has held. the appellants are not
aggrieved. and cannot therefore. success- fully challenge the Amendment Act.
Referring
to the principle of contemporanea exposition.
Mr. Sanghi
says that the Act. as it stood before the amend- ment. was not understood to
apply to khandsari unit. and consequently to the business of the appellants. and
it became applicable only as a result of the amendment. We do not agree that
this submission is right. The High 506 Court has, on the basis of the pleadings
and other evidence, and with reference to the relevant provisions,
categorically held that the Act, as it originally stood, was applicable to the
trade of the appellants, and the amendment in effect did not make any
difference to them. The High Court has found that the appellants were not
aggrieved solely by reason of the amendment, and the provisions, as they stood
prior to the amendment, applied to them in equal measure. This apart, the
amendment, in our view, was merely clarificatory, and it was always well
understood in trade that khandsari sugar was also sugar, and that any reference
to sugar, in the absence of specific exclusion or qualification, was capable of
equal application to sugar of all kinds including khandsari. Even if it is true
that persons who dealt with the statute under- stood its provisions in a
restricted sense, such mistaken construction of the statute did not bind the
Court, so as to prevent it from giving it its true construction. (see the observation
of Lord Blackburn in The Trustees of the Clyde Navigation v. Laird & Sons,
8 AC 658, 670), as quoted in National & Grindlays Bank Ltd. v. The
Municipal Corporation of Greater Bombay, [1969] 1 SCC 541.
We are
of the view that the reasoning of the High Court was correct. The Principal Act
being an 'existing law' within the meaning of Article 366(10) read with Article
305 of the Constitution, and the provisions of the Amendment Act, 1973 which
are impugned in this appeal being clarifica- tory, the previous sanction of the
President was not re- quired. See the principle stated in Syed Ahmad Aga v.
State of Mysore, [1975] Suppl. SCR 473. We do not, however, ex- press any view
as to whether the impugned Act is regulatory or restrictive, for that question,
for the present purpose, is, in our opinion, academic.
The
appeal is dismissed with costs throughout.
P.S.S.
Appeal dismissed.
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