G.T.N.
Textiles Ltd. & Anr Vs. Assistant Directors, R.O.T. Commr.& Ors [1993]
INSC 135 (17 March 1993)
Kuldip
Singh (J) Kuldip Singh (J) Kasliwal, N.M. (J)
CITATION:
1993 AIR 1596 1993 SCR (2) 403 1993 SCC (3) 438 JT 1993 (2) 416 1993 SCALE
(2)123
ACT:
Essential
Commodities Act, 1955:
Section
3--Textile Control Order, 1986--Clause 16 and notification issued thereunder--Textile
commissioner prescribing manner of packing--Constitutional validity of.
Constitution
of India, 1950:
Articles
14 and 19(1) (g)--Textile (Control) Order, 1986--Clause 16 and notification
issued thereunder-Textile Commissioner prescribing mode of packing
yarn--Whether violative of.
HEAD NOTE:
Different
varieties of cotton yarn were manufactured by the appellant-Mills. Packing of
the yarn was done in two forms, viz. cone form which was used in power loom and
hosiery industry and hank form which was exclusively consumed by the handloom
industry. For the cone form of packing the ring frame cops were fed to the
winding machines and for the hank form of packing the cops were fed to the
reeling machines.
The
appellants were packing the yarn in cone form only.
Since
they had not installed the reeling machines, they could not pack the yarn in
hank form.
In
exercise of powers under S.3 of the Essential Commodities Act, 1955, Textile
(Control) Order, 1986 was issued by the Government. Clause 16 of the said order
gave power to the Textile Commissioner to issue directions providing the manner
of packing of yarn in hanks, cones or in any other form and in such proportion
as he deemed necessary or ex- pedient. It also laid down the complete
guidelines for exercise of the powers by the Textile Commissioner.
Exercising
his powers under clause 16 of the 1986 Order, the Textile Commissioner issued a
notification on 293.90, which was amended on 11.5.90 and 17.5.90. According to
the Notification every producer of yarn should pack in hank form at least 50%
404 of the total yarn packed by him during each half-yearly period for civil
consumption.
The appellants
challenged the constitutional validity of clause 16 of the Textile (Control)
Order, 1986 and the Notification issued there under, by filing Writ Petitions
before the High Court. The Writ Petitions were dismissed and the
appellant-Mills preferred the present appeals.
The
appellants contended that an identical notification dated 29.6.1979 issued
under the Textile (Control) Order, 1948 was struck down by the High Court and
the said judgment having been upheld by this Court, the respondents were bound
by the same and the Textile Commissioner had no authority to issue a fresh
notification in similar terms; and that the appellants could not be compelled
to manufacture something for which the appellants have not installed necessary
machinery and other super-structure. It was further contended that the
Notification was violative of Articles 14 and 19(1)(g) of the Constitution of
India.
Dismissing
the appeals, this Court,
HELD:
1. The present notification under challenge has been issued under Clause 16(1)
of the Textile (Control) Order, 1986. Unlike Clause 21(5) of the 1948 Order,
proviso to Clause 16(1) of the 1986 Order provides complete guidelines to the
Textile Commissioner to issue the directions envisaged there under. [409G-H]
Sri Rani Lakshmi G.S. & W. Mills Pvt. Ltd. & Others v. Textile
Commissioner, Bombay & Ors., AIR 1986 Madras 66, distinguished.
2. In
order to make available sufficient quantity of hank yarn at reasonable price
and also for the sustenance of Handloom workers engaged in the largest cottage
industry in India, it became necessary to reserve hank yarn for Handloom sector
by making it obligatory on the part of the manufacturers of yarn to pack a
certain percentage of their production packet for civil consumption in the form
of hanks. Thus the notification has been issued in the interest of the general
public and also for the larger interest of the textile industry, and is not violative
of Art. 19(1)(g) of the Constitution of India. [411B-C]
3.
Having accepted the condition regarding packing of yarn in hank form, while
taking the licence, under clause 4 of the Industrial Licence, the 405
appellants cannot now turn round and say that they are not bound by the same.
[411F]
4.
There is no violation of Art. 14 of the Constitution since the notification has
been made applicable uniformly to all the producers of yarn. The appellants are
required to pack yarn in hank form in the proportion as provided in the
notification keeping in view the total yarn packed by the mill concerned. In
any case the grievance of the appellants has been substantially mitigated by
the press note dated May 11, 1990 issued by the Textile Commissioner,
reinstituting the erstwhile relaxation getting yarn obligation fulfilled by
transfer of surplus yarn packing of another producer, and allowing a producer
to get hank yarn reeled through another producer having extra relying capacity.
[411G-H; 412A]
CIVIL
APPELLATE JURISDICTION: Civil Appeal Nos. 1334-43 of 1993.
From
the Judgments and Orders dated 29.10.1991 of the Andhra Pradesh High Court in
W.P. Nos. 9133, 8920, 8074, 7932 and 11119/90 8113/91 (dt. 31.10.91), 8201/90,
8987/91 (dt. 30.10.91), 9165 & 7656 of 1990 K.K. Venugopal, C.S. Vaidyanathan,
Vijayanarayana and Ms. Vijayalakshmi Menon for the Appellants. K. Swamy and Ms.
A. Subhashini for the Respondents.
The
Judgment of the Court was delivered by KULDIP SINGH, J. Special leave granted
in all the petitions.
The
appellants-petitioners challenged the constitutional validity of Clause 16 of
the Textile (Control) Order, 1986 [the 1986 Order] and the notification, issued
thereunder, dated March 29, 1990 as amended on May 11, 1990 and May 17, 1990
(the notification) by the Textile Commissioner before the Andhra Pradesh High
Court by way of writ petitions under Article 226 of the Constitution of India.
The High Court by its judgment dated October 29, 1991 dismissed the writ petitions. These
appeals by way of special leave are against the judgment of the High Court The
appellants are the Spinning and Weaving Mills in the State of Andhra Pradesh. The cotton yarn manufactured by
the mills is of different 406 varieties. It is classified on the basis of
counts. Yarn with 1 to 40 counts is coarse, 40 to 60 medium, between 60 and 100
fine and anything above 100 counts is described as very fine. There are two
methods of packing the yarn. One is the cone form packing which is used in
power-loom and hosiery industry. The other is hank form packing which is
exclusively consumed by the handloom industry. Spinning and packing are the two
stages of manufacturing yarn. Raw- cotton has to pass through the process of
blow-room, carding, drawing, simplex and finally the ring frame to complete the
process of spinning. The process of packing starts thereafter. For the cone form
packing the ring frame cops are fed to the winding machines and for the hank
form packing the cops are fed to the reeling machines. According to the
appellants they are packing the yarn in cone form.
They
have not installed the reeling machines and as such it is not possible for them
to pack the yarn in hank form.
The
1986 Order was issued by the Government of India in exercise of its powers
under section 3 of the Essential Commodities Act, 1955. Clause 16 of the 1986
Order is as under :-
"16
(1) The Textile Commissioner, may from time to time, issue directions in
writing to any manufacturer or class of manufacturers or manufacturers
generally, regarding,
(a) the
clauses or specifications of cloth or yarn which each manufacturer or class of
manufacturers of or manufacturers generally shall or shall not manufacture;
(b)
the maximum or minimum quantities of cloth or yarn which such manufacture or
class of manufacturers or manufacturers generally shall manufacture during such
period as may be specified in the Order;
(c) the
maximum price ex-factory, wholesale or retail at which any class or
specification of cloth or yarn may be sold; or
(d) the
principles on which and the manner in which such maximum prices may be
determined by a manufacturer; and
(e) the
manner of packing of yarn in hanks, cones or in 407 any other form and in such
proportion as he may consider necessary or expedient:
Provided
that in issuing any direction under this clause, the Textile Commissioner shall
have regard to:
(i) the
demand for cloth or yarn;
(ii) the
needs of the general public;
(iii)the
special requirements of the industry for such cloth or yarn;
(iv) the
capacity of the manufacturer or class of manufacturers or manufacturers
generally, to manufacture or pack different descriptions or specifications of
cloth or yarn; and
(v) the
necessity to make available to the general public cloth of mass consumption.
(2)
While issuing any direction under sub- clause (1), the Textile Commissioner may
also provide that such direction shall be with reference to the quantity of
cloth or yarn packed by the manufacturer or class of manufacturers or
manufacturers generally during the period specified in the direction.
(3)
Every manufacturer, or class of manufacturers or manufacturers generally, to
whom a direction has been issued shall comply with it.
(4)
Where, on an application made by any manufacturer or class or manufacturers or
otherwise the Textile Commissioner is satisfied that any direction issued by
him under this clause causes undue hardship or difficulty to any such
manufacturer or class of manufacturers, he may, by order and for reasons, to be
recorded in writing, direct that the direction shall not apply, or shall apply
subject to such modification as may be specified in the order to such manufacturer
or class of manufacturers." 408 In exercise of the powers under Clause 16
of the 1986 Order the Textile Commissioner issued the notification. The
operative part of the notification is re-produced hereunder :-
"2.
Every producer of yarn shall pack yarn for civil consumption in hank form in
each half- yearly period commencing from April-September, 1990, period and in
every subsequent half yearly period in proportion of not less than fifty
percent of total yarn packed by him during each half-yearly period for civil
consumption:
Provided
that not less than eighty percent of the yarn required to be packed in hank
form shall be of counts 40s and below in regard to category 1 at Annexure-I to
this Notification :
Provided
further that the obligation to pack hank yarn pertaining to a particular half-
yearly period can be fulfilled before the end of the month succeeding such
period to which the obligation pertains." At this stage we may briefly
notice the earlier litigation which ended with the judgment of the Madras High
Court in Sri Rani Lakshmi G.S. & W. Mills Pvt. Ltd. & Others v. Textile
Commissioner, Bombay & Ors., AIR 1986 Madras 66. In Rani Lakshmi Mills' case the constitutional validity of Clause
21(5) of the cotton textile (Control) Order, 1948 [1948 Order] and the
notification dated June
29, 1979 issued thereunder
were challenged. The said Notification was in similar terms as the notification
before us in these appeals. Clause 21(5) of the 1948 Order was as under :-
"(5) The Textile Commissioner may, by General or Special Order, direct any
manufacturer or class of manufacturers to pack yarn in hanks, cones or in any
other form and in such proportion as he may consider necessary or ex- pedient:
and thereupon such manufacturers or class of manufacturers shall be bound to
comply with such directions".
It was
argued before the Madras High Court that Clause 21(5) of the 1948 Order did not
provide any guidelines for the exercise of power by the 409 Textile
Commissioner and as such was arbitrary and violative of Article 14 of the
Constitution of India. The High Court accepted the argument and struce down
Clause 21(5) of the 1948 Order on the following reasoning "A bare reading
of the provision of clause 21(5) would therefore show that the proviso under
that clause gives completely uncontrolled and uncanalized power which can only
be described as an arbitrary power depending upon what he considers is
necessary or expedient." Special leave petitions 12569-92/84 against the
judgment of the Madras High Court were dismissed by this Court on February 21, 1991.
Because
of the judgment of the Madras High Court in Rani Lakshmi Mills case the 1948
Order was repealed and the 1986 Order was promulgated. Clause 16(1) of the 1986
Order gives power to the Textile Commissioner to issue directions providing the
manner of packing of yarn in hanks, cones or in any other form and in such
proportion as he may consider necessary or expedient. Proviso to Clause 16(1)
lays down complete guidelines for the exercise of power by the Textile
Commissioner.
Relying
upon Rani Lakshmi Mills' case the learned counsel for the appellants have
contended that identical notification having been struck down by the Madras
High Court and the judgment upheld by this Court, the respondents are bound by
the same and the Textile Commissioner had no authority to issue fresh
notification in similar terms. In any case according to the learned counsel the
impugned notification is liable to be struck down on the same grounds. We do
not agree with the learned counsel. The notification struck down by the Madras
High Court was issued under Clause 21(5) of the 1948 Order. The High Court held
Clause 21(5) of the 1948 Order unconstitutional and as a consequence struck
down the notification dated June 29, 1979. The present notification has been
issued under Clause 16(1) of the 1986 Order. Unlike Clause 21(5) of the 1948
Order proviso to Clause 16(1)- of the 1986 Order provides complete guidelines
to the Textile Commissioner to issue the directions envisaged thereunder. As
such the ground of attack which was available to the petitioners before the
Madras High Court is not available to the appellants before us. We, therefore,
reject the contention based on the judgment of the Madras High Court in Rani Lakshmi
Mills' case.
410
Mr. Venogopal and Mr. Vaidyanathan learned counsel for the appellants have then
contended that the appellants do not manufacture hank yarn. The contention is
that the respondents cannot compel the appellants to manufacture something for
which the appellants have not installed the necessary machinery and other
superstructure. The notification according to the learned counsel infracts
their fundamental right under Article 19(1)(g) of the Constitution of India. We
see no force in the contention. The Textile Industry in this country is the
second largest industry, next to agriculture, providing employment to millions
of people. This industry is accounting for 20% of the total industrial output.
The appellant-mills are part of the textile industry in the State of Andhra
Pradesh. The respondents, in their written statement before the High Court,
have elaborately explained the spinning and the packing processes undertaken by
the appellant-mills.
According
to the respondents it is not correct that the appellants are being forced to
manufacture something which they are not manufacturing already. The five stages
of spinning (blow room, carding, drawing, simplex and ring frame) are common
and only thereafter the ring frame cops are either packed in hank form or in
cone form. The respon- dents have given cogent reasons for issuing the impugned
notification. We may briefly state the same.
The
textile industry consists of three sectors namely, Mill- Sector, Powerloom
Sector and Handloom Sector. The primary product in the industry is yarn. It is
produced only by the Mill-sector. The Powerloom and Handloom Sectors
manufacture fabrics and they depend upon the Mill--Sector for yarn. The yarn is
packed in two forms namely, cone form and hank form.
The
cone form is consumed entirely by the Powerloom Sector and the hank form by the
Handloom Sector. The handloom industry is the largest cottage industry in
India. Nearly one third of the country's requirement of cloth is met by this
Sector. As per the National Handloom Census, 1987-88 there were 3.9 million
handlooms spread all over the country out of which three million were engaged
in production of cotton cloth. The Handloom-Sector provided direct employment
to 8.4 million during 198889 and indirect employment to millions of people. The
production target for Handloom Sector for the Seventh Plan was 4600 million mts.
In
order to achieve the said production target a minimum of 460 million kgs. of
hank was required. The employment generated in the three sectors during the
year 1988 was 84.22, 50.95 and 11.81 lakh persons in Handloom Sector, Powerloom
Sector and Mill-Sector respectively. The production of cloth 411 for Handloom
Sector during the Eighth Plan has been targeted at 7000 million mts. out of
which cotton cloth is 5610 million mts. In order to achieve this target 561
million kgs. of hank yarn is required.
Against
the said requirement only 355 million kgs. of cotton yarn is being packed in
hank form. According to the respondents there is a big gap between the demand
and supply. This causes scarcity of yarn in the market and results in spiralling
of prices. It further results in unemployment in Handloom Sector. In order to
make available sufficient quality of hank yarn at reasonable prices and also
for the sustenance of Handloom workers, it became necessary to reserve hank
yarn for Handloom Sector by making it obligatory on the part of the
manufacturers of yarn to pack a certain percentage of their production packet
for civil consumption in the form of hanks.
We are
satisfied that impugned notification has been issued in the interest of the
general public and also for the larger interest of the textile industry.
It is
not disputed that under Clause 4 of the Industrial Licence granted to the
appellants one of the conditions is as under :- "the packing of yarn in
hank form and count wise production shall be in accordance with the policy in
force and the directions issued by the Textile Commissioner in this regard from
time to time." The appellants, having accepted the above condition while
taking the licence, cannot now turn round and say that they are not bound by
the same.
Mr. Vaidhyanathan
further contended that under the impugned notification unequals have been
treated as equals.
According
to him different mills have installed different machinery and have different
equipments. The contention is that the impugned notification is violative of
Article 14 as it has been made uniformly-applicable to mills which do not have
the same capacity to produce hank yarn. We see no force in the contention. The
impugned notification has been made applicable uniformly to all the producers
of yearn.
The
appellants are required to pack yarn in hank form in the proportion as provided
in the notification keeping in view the total yarn packed by the mill
concerned. In any case the grievance of 412 the appellants has been
substantially mitigated by the press note dated May 11, 1990 issued by the Textile Commissioner, Bombay. The relevant part is re-produced hereunder
:- "2. The Government have now reinstituted the erstwhile relaxation of
getting hank yarn obligation fulfilled by transfer of surplus hank yarn packing
of another producer.
Secondly,
the Government have also allowed a producer to get Hank yarn reeled through
another producer having extra relying capacity with the permission of the
Central Excise Authorities and with the arrangements through the State Handloom
Corporations and Apex.
Handloom
Cooperative Organisations in the areas having concentration of handloom
weavers." We, see no ground to interfere with the judgment of the High
Court. We, therefore, dismiss the appeals with costs. We assess the costs as Rs.
5000 to be paid by each of the appellants.
G.N.
Appeals dismissed.
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