PETITIONER:
BISHAMBHAR DAYAL CHANDRA MOHAN AND OTHERS. ETC. ETC.
Vs.
RESPONDENT:
STATE OF UTTAR PRADESH & ORS.
DATE OF JUDGMENT05/11/1981
BENCH:
SEN, A.P. (J)
BENCH:
SEN, A.P. (J)
ISLAM, BAHARUL (J)
CITATION:
1982 AIR 33 1982 SCR (1)1137
1982 SCC (1) 39 1981 SCALE (3)1685
CITATOR INFO :
F 1982 SC1016 (13,14)
R 1985 SC 660 (25)
RF 1987 SC 741 (16)
ACT:
Uttar Pradesh Food Grains Dealers (Licensing and
Restriction on Hoarding) Order, 1976 and Uttar Pradesh Food
Grains (Procurement and Regulation of Trade) Order, 1978,
clause (4) as amended by Notification No. P-XXIX-Food-5-5-
(42)/80 dated April 21,1981-Teleprinter Message issued by
the State Government dated March 31, 1981 regarding
enforcement of the Orders-Constitutional validity of-
Articles 14, 19(1)(g), 162, 300A and 301 of the Constitution
of India.
Constitution of India, Article 32-Jurisdiction of the
Supreme Court to investigate into facts, explained.
Words and phrases-"Law" occurring in Article 300A "at
any time" and "reasonable restriction", meaning of.
HEADNOTE:
In exercise of the powers vested under the Essential
Commodities Act, 1951, the State Government of Uttar Pradesh
issued two orders, namely (1) the Uttar Pradesh Food Grains
Dealers (Licensing and Restriction on Hoarding) Order, 1976
and (2) the Uttar Pradesh Food Grains (Procurement and
Regulation of Trade) Order 1978. By its teleprinter message
dated March 31, 1981 to all the Regional Food Controllers,
the State Government issued certain further instructions for
effective enforcement of the two Orders and in particular
regulating the inter-district and outside the State-movement
of wheat by traders on private account. By a Notification
No. P-XXIX-Food-5-5(42)/80 dated April 21,1981, clause (4)
of the 1978 Order, was amended providing that no wholesale
dealer, commission agent, or a retailer shall have in stock
wheat more than 250 quintals, 250 quintals and 20 quintals
respectively, at any time, since it was of opinion that it
was necessary or expedient so to do for securing the
equitable distribution and availability of foodgrains at
fair prices.
Pursuant to the powers vested in them, the Senior
Marketing Inspector and the Chief Marketing Inspector, Agra,
intercepted and seized the trucks laden with wheat of the
petitioners who are wholesale dealers of foodgrains from the
Union Territory of Delhi and the States of Punjab and
Haryana at the check post at Saiyan on the border between
the States of Uttar Pradesh and Madhya Pradesh, and after
bringing them back to the purchase point at Agra unloaded
the wheat from the said trucks. While the petitioners moved
an application for the release of the seized wheat before
the Additional District Magistrate (Civil Supplies), Agra,
the Marketing Inspectors not only lodged First Information
1138
Reports but obtained an interim order on May 23, 1981 for
the sale of the seized wheat as it was subject to speedy and
natural decay. The seized wheat had been purchased by the
State Government on Government account at the procurement
price and the sale proceeds were credited into the treasury.
The petitioners challenged the teleprinter message
dated March 31, 1981 and the Notification dated April 21,
1981 on the following grounds: (1) The Notification fixing
the maximum limit of wheat permitted to be possessed by a
wholesale dealer at 250 quintals, at a time, is an
unreasonable restriction on the freedom of trader guaranteed
under Article 19(1)(g) of the Constitution; (2) there is no
distinction made between a wholesale dealer and a commission
agent in as much as the maximum limit of wheat allowed to be
possessed by them is the same, i.e., 250 quintals at a time
and the fixation of such limit in the case of a wholesale
dealer is arbitrary, irrational and irrelevant and thus
violative of Article 14 of the Constitution; (3) the
instructions conveyed by the State Government by its
teleprinter message dated March 31, 1981, placing
restrictions on movement of wheat by traders on private
account from the State of U.P. to various other States and
on inter-district movement of wheat within the State, were
violative of their fundamental rights under Article 19(1)(g)
and Article 301 of the Constitution; (4) the seizure of the
consignments of the wheat, while they were in transit in the
course of inter-State trade and commerce from the Union
Territory of Delhi and the States of Punjab and Haryana to
various destinations in the States of Maharashtra and Madhya
Pradesh, was without "the authority of law" and in violation
of Article 300A of the Constitution; (5) the restriction
must be by "law" or by an "order" having the force of law
and not by recourse to the executive authority of the State
under Article 162 of the Constitution, that is, by an
executive action. The teleprinter message of the State
Government dated March 31, 1981 on the basis of which the
seizures were effected in truth and substance, had no legal
sanction and cannot be construed to be a notified order
within the meaning of sub-section (1) read with sub-section
(5) of section 3 of the Essential Commodities Act; it was
nothing but an executive direction. No executive action
which operates to the prejudice of the citizens can be taken
without the authority of law. The seizures effected were not
in compliance with the instructions contained in the
teleprinter message and not for breach of the two control
Orders and, therefore, it was nothing but a "colourable
exercise" of power. The real purpose of the seizure was
procurement of wheat in furtherance of the directives of the
Central Government without any legal sanction, since the
farmers were not willing to sell their wheat at the
procurement price; and (6) under sub-section 2(ii) of
section 6A of the Act there being no control price for
wheat, the wheat should have been sold by public auction by
the Additional District Magistrate while passing an interim
order.
Dismissing the petitions, the Court
^
HELD: 1:1. The restriction imposed by the State
Government on wholesale dealers of wheat is neither
arbitrary nor is of an excessive nature beyond what is
required in the national interest. To check speculative
tendencies of the wholesale traders and others who
manipulate the market by withholding stocks of a commodity
and to obviate blackmarketing, the stock limit of wheat was
fixed for wholesale dealers at 250 quintals at a time, as in
the case of a commission agent, the underlying idea being
that the wholesale dealers should be allowed to
1139
continue their trading activities within reasonable limits.
The fixation of stock limit at 250 quintals implies that
wholesale dealers can have at any time, in stock, a wagon-
load of wheat. The words "at any time" mean "at any given
time", which means that a wholesale dealer should not have
in stock more than 250 quintals at a time. But there is
nothing to prevent a wholesale dealer from entering into a
series of transaction during the course of the day. [1173 A-
E]
1:2. The State Government had adopted various measures
in the interest of the general public for the control of
production, supply and distribution of, and trade and
commerce in, essential commodities. The Order fixing a stock
limit introduces a system of checks and balances to achieve
the object of the legislation, that is, to ensure equitable
distribution and availability of essential commodities at
fair prices. Looking to the prevailing conditions, the
imposition of such restrictions satisfies the test of
reasonableness. The fixation of such stock limit is not
arbitrary or irrational having no nexus to the object sought
to be achieved and is, therefore, intra vires of Article 14.
The limitation imposed fixing a stock limit for a wholesale
dealer at 250 quintals is also a reasonable restriction
within the meaning of Article 19(6) of the Constitution.
[1174 A-D]
2:1. The teleprinter message No. PP-1061/XXIX.Food-5
dated 31st March, 1981 was in the nature of executive
instruction of the State Government to the Regional Food
Controllers of the various regions to be more vigilant and
to secure due observance of the control orders. [1156 B, E-
F, 1163 C]
2:2. The instructions conveyed by the State Government
by the impugned teleprinter message imposing the requirement
for the making of an endorsement by the Deputy Marketing
Officer or the Senior Marketing Officer or the physical
verification of stocks of wheat during the course of
transit, are not a 'restriction' or an 'intrusion' on the
fundamental right to carry on trade or business guaranteed
under Article 19(1)(g) or on the freedom of trade, commerce
and intercourse under Article 301. These are nothing but
regulatory measures to ensure that the excess stock of wheat
held by a wholesale dealer, commission agent or a retailer
is not transported to a place outside the State or from one
district to another. Even if these requirements are
considered to be a 'restriction' on inter-State or intra-
State trade, that is, across the State or from one part of
the State to another, the limitation so imposed on the
enjoyment of the right cannot be considered to be arbitrary
or of an excessive nature and thus violative of Article
19(1)(g) or Article 301 of the Constitution. There being no
ban on the export of wheat from the State of Uttar Pradesh
to various other States or from one district to another
within the State, subject to the making of an endorsement by
the Deputy Marketing Officer or the Senior Marketing Officer
concerned, the Petitioners who are wholesale dealers of
foodgrains in the State of Uttar Pradesh are, therefore,
free to carry on their business within the permissible
limits, that is, they may carry on their trade or business
or enter into inter-State or intra-State transactions of
wheat subject to the stock limit of 250 quintals, at a time.
[1174 D-H, 1175 A-B]
2:3. The teleprinter message dated March 31, 1981 was a
direct sequel to the Centre's directives contained in its
earlier teleprinter message and intended or meant to achieve
three main objectives, namely, (i) to provide price support
in wheat to purchasers with a view to sustain, maintain and
maximise the pro-
1140
curement of wheat; (ii) to prevent hoarding and black-
marketing; and (iii) to provide for equitable distribution
and availability of wheat at fair prices. The directions
were obviously meant to subserve the object of the
legislation and were in public interest. The State
Government was committed to provide price support in wheat
to producers and hence to maximise procurement of wheat,
there is nothing unusual on the State Government issuing
such executive instructions. [1156 E-F, 1160 D-E]
2:4. Even assuming that the impugned teleprinter
message is not relatable to the control Orders, the State
Government undoubtedly could, in exercise of the executive
power of the State, introduce a system of verification on
movement of wheat from the State of Uttar Pradesh to various
other States at the check post on the border and place
restrictions on inter-district movement of wheat by traders
on private account within the State. [1156 E-F]
Ram Jawaya Kapur v. State of Punjab [1955] 2 SCR 225
and Naraindas Indurkhya v. State of Madhya Pradesh & Ors.,
[1974] 3 SCR 624, explained and followed.
3:1. The State Legislature is competent to enact a law
on the subject covered by Entry 33, List III, regulating
trade and commerce in, and the production, and supply and
distribution of "foodstuffs". The Essential Commodities Act,
1955 was enacted by Parliament in exercise of concurrent
jurisdiction under Entry 73, List II, of the Seventh
Schedule to the Constitution as amended by the Constitution
(Third Amendment) Act, 1954. The exercise of such concurrent
jurisdiction would not deprive the State Legislature of its
jurisdiction thereunder. The executive power of the State
which is coextensive with the legislative power is subject
to the limitation contained in Article 162 which directs
that in any matter with respect to which the legislature of
a State and Parliament have power to make laws, the
executive power of the State shall be subject to, and
limited by, the executive power expressly conferred by the
Constitution or by any law made by Parliament upon the Union
of authorities thereof. [1158 F-H, 1159 A-B]
3:2. The State in exercise of its executive powers is
charged with the duty and the responsibility of carrying on
the general administration of the State. So long as the
State Government does not go against the provisions of the
constitution of any law, the width and amplitude of its
executive power cannot be circumscribed. If there is no
enactment covering a particular aspect, certainly the
Government can carry on the administrative directions or
instructions, until the legislature makes a law in that
behalf. Otherwise the administration would come to a
standstill. [1157 B-C]
3:3. The executive power of "search and seizure" is a
necessary concomitant of a welfare State. It tends to
promote the well being of the nation. Many questions arising
in the field of search and seizure are factual in nature,
involving varying degrees of difference among the infinitely
diverse facts. It is a limitless area where not only every
factual variation presents a new constitutional question,
but it is a peculiar field in which the decisions of courts
do not help in clarifying the law. The decisions in the
field are of little precedental value, because the more the
cases that are decided the more issues arise, through
possible factual variation. [1159 B-E]
1141
4:1. The quintessence of the Constitution is the rule
of the law. The State or its executive officers cannot
interfere with the rights of others unless they can point to
some specific rule of law which authorises their acts. [1161
A]
State of Madhya Pradesh v. Thakur Bharat Singh, [1967]
2 SCR 454, Satwant Singh Sawhney v. Dr. Ramarathnam,
Assistant Passport Officer, Government of India, New Delhi &
Ors., [1967] 3 SCR 525 at 542; Smt. Indira Nehru Gandhi v.
Shri Raj Narain, [1976] 2 SCR 347 at 524, reiterated.
4:2. The Essential Commodities Act, 1955 is a "law"
within the meaning of Article 302 of the Constitution
imposing reasonable restrictions on the right to carry on
trade and commerce as guaranteed by Article 19(1)(g) and
Article 301 of the Constitution. The object of the Act is to
provide, in the interest of the general public for the
control, production, supply and distribution of, and trade
and commerce in, certain essential commodities. [1161 D-E]
5. From the point of view either of Entry 54 List II or
of Article 301 of the Constitution, the State Legislature is
competent to set up the check posts and barriers on the
State's borders, designed and meant to prevent evasion of
sales tax and other dues. Just as inter-State trade and
commerce must pay its way and be subject to taxation,
persons engaged in inter-state trade or commerce are equally
subject to all regulatory measures. The check posts or
barriers set up by the State Government under section 28 of
the U.P. Sales Tax Act, 1948, which is legally accepted as
valid and also considered not a restriction or impediment to
the freedom of trade, commerce and intercourse granted under
Article 301 of the Constitution, can certainly be utilised
as a machinery for due observance of the laws, for example,
for verification and control of movement of wheat by traders
on private account from the State of Uttar Pradesh to
various other States.
[1159 F, 1160 B-D]
6:1. The fundamental right to carry on trade or
business guaranteed under Article 19(1)(g) or the freedom of
inter-State trade, commerce and intercourse under Article
301 of the Constitution, has its own limitations. The
liberty of an individual to do as he pleases is not
absolute. It must yield to the common good. Absolute or
unrestricted individual rights do not and cannot exist in
any modern State. There is no protection of the rights
themselves unless there is a measure of control and
regulation of the rights of each individual in the interests
of all. Whenever such a conflict comes before the Court, it
is its duty to harmonise the exercise of the competing
rights. The Court must balance the individual's rights of
freedom of trade under Article 19(1)(g) and the freedom of
inter-State trade and commerce under Article 301 as against
the national interest. Such a limitation is inherent in the
exercise of those rights. [1164 E-H]
6:2. Under Article 19(1)(g) of the Constitution, a
citizen has the right to carry on any occupation, trade or
business and the only restriction on this unfettered right
is the authority of the State to make a law imposing
reasonable restrictions under clause (6). [1165 A]
6:3. The expression "reasonable restriction" signifies
that the limitation imposed on a person in enjoyment of the
right should not be arbitrary or of an excessive nature,
beyond what is required in the interests of the public. The
test of reasonableness, wherever prescribed, should be
applied to each individual
1142
statute impugned, and no abstract standard, or general
pattern of reasonableness can be laid down as applicable in
all cases. The restriction which arbitrarily or excessively
invades the right cannot be said to contain the quality of
reasonableness and unless it strikes a proper balance
between the freedom guaranteed in Article 19(1) (g) and the
social control permitted by clause (6) of Article 19, it
must be held to be wanting in that quality. [1165 B-D]
6:4. Several steps taken, in the instant case, like
prevention of movement of stock of wheat to various other
States, movement of wheat from one district to another
within the State only after the verification of the
transaction and due endorsement by the Deputy Marketing
Officer or the Senior Marketing Officer concerned and also
the physical verification at the check post on the State's
borders etc. were designed to prevent a price rise in wheat
in the State of Uttar Pradesh and to prevent outflow of
wheat from the State to various other States and from one
district to another district within the State. The whole
object was to ensure that the wholesale dealers in
foodgrains did not corner stocks of wheat for the purpose of
speculation, and hence the steps taken were reasonable and
in the interests of the general public. If, therefore, the
seizure can be justified on the basis of any valid law, it
cannot be held to be illegal. [1165 D-H]
7:1. Article 301 imposes a limitation on all
legislative power in order to secure that trade, commerce
and intercourse throughout the territory of India shall be
free. Although Article 301 guarantees that trade, commerce
intercourse throughout the country shall be free, the right
to carry on inter-State trade and commerce may be subject to
reasonable restrictions in the interests of the general
public. [1165 A, 1166 A, C]
7:2. The word 'free' in Article 301 does not mean
freedom from laws or from regulations. Article 301
guarantees freedom of trade, commerce and intercourse
throughout the country from any State barriers. The whole
object was to bring about the economic unity of the country
under a federal structure, so that the people may feel that
they are members of one nation. One of the means to achieve
this object is to guarantee to every citizen in addition to
the freedom of movement and residence throughout the
country, which is achieved by Article 19(1)(d) and (e) is
the freedom of movement or passage of commodities from one
part of the country to another. This freedom of trade,
commerce and intercourse throughout the country without any
"State barriers" is not confined to inter-State trade but
also including intra-State trade as well. In other words,
subject to the provisions of Part XIII, no restrictions can
be imposed upon the flow of trade, commerce and intercourse,
not only between the State and another, but between any two
points within the territory of India whether any State
border has to be crossed or not. [1166 D-H]
7:3. The regulatory measure or measures imposing
compensatory taxes do not come within the purview of the
restrictions contemplated by Article 301. The regulatory
measures should, however, be such as do not impede the
freedom of trade, commerce and intercourse. [1166 H, 1167 A]
8:1. In view of the provisions of clause (3) of the
1976 Order read with clauses (4) & (6) of the 1978 Order,
the validly seized excess stock of wheat lying with such
dealer, that is, a wholesale dealer, commission agent or a
retailer, in truth and substance, became their "unlicensed
stock". Here, if really the Delhi traders had purchased the
excess stock of wheat from wholesale dealers, com-
1143
mission agents or retailers in the State of Uttar Pradesh,
as is alleged, it is possible to contend that there was a
contravention of the provisions of clause (4) of the 1978
Order. The question whether the seizure was for any
contravention of any order issued under section 3 of the Act
has to be determined by the Additional District Magistrates
(Civil Supplies), Agra, on the evidence adduced by the
parties before him. The facts being controverted, the
petitioners have no right to relief under Article 32 of the
Constitution. [1168 D-H, 1169 A-B]
8:2. Supreme Court can neither act on documents which
are yet to be proved nor can they pronounce upon the
genuineness of the transactions covered by them or record
any finding on the basis of the documents when the facts are
in dispute. [1169 E]
8:3. Normally, it is not the function of Supreme Court
to investigate into facts in proceedings under Article 32 of
the Constitution when they are controverted with a view to
discerning the truth. The matter must, in a situation like
this, be left to the fact-finding body. For the
establishment of their right to relief under Article 32, the
petitioners must establish the necessary facts before the
said Additional District Magistrate in the proceedings under
section 6A of the Essential Commodities Act. If they fail to
get relief in such proceedings, their obvious remedy lies in
a suit for damages for wrongful seizure. [1171 A-C]
9:1. The State Government cannot while taking recourse
to the executive power of the State under Article 162 of the
Constitution deprive a person of his property. Such power
can be exercised only by authority of law and not by a mere
executive fiat or order. Article 162 being subject to other
provisions of the Constitution, is necessarily subject to
Article 300A. [1169 F-G]
Wazir Chand v. The State of Himachal Pradesh, [1955] 1
SCR 408; Bishan Das and Others v. The State of Punjab and
Others, [1962] 2 SCR 69, referred to.
9:2. The word 'law' in the context of Article 300A must
mean an Act of Parliament or of a State Legislature, a rule,
or a statutory order, having the force of law, that is
positive or State-made law. [1169 G-H]
9:3. The effect of the Constitution (Fourth) Amendment
Act, 1955, is that there can be no 'deprivation' unless
there is extinction of the right to property. Here, no
doubt, the wheat had to be sold, as it was subject to speedy
and natural decay, but the petitioners are entitled to the
sale proceeds, if ultimately it is found by the Additional
District Magistrate (Civil Supplies), Agra, that there was
no contravention by them of an order issued under section 3
of the Act. It is true that the seizure was with intent to
confiscate under section 6A of the Act, but that would not
make the seizure illegal, if, ultimately, it is found that
there was contravention of an order issued under section 3
of the Act. If the facts were not in controversy and if the
petitioners were able to prove that there was wrongful
seizure of wheat by the State Government of Uttar Pradesh at
the check post of Saiyan on the border, while in transit, in
the course of inter-State trade and commerce from the Union
Territory of Delhi, perhaps, they would be entitled to the
return of the seized wheat, or, in the alternative, to the
payment of price thereof. [1170 D-H, 1171 A]
1144
9:4. The question that the seizures were in reality for
procurement of wheat in furtherance of the directive of the
Central Government, and not for breach of the two Control
Orders and, therefore, were nothing but a 'colourable
exercise of power', is dependent on facts to be found on
investigation. Further, the question that there being no
control price for wheat, the wheat should have been sold by
public auction, is again a question that must be raised
before the Additional District Magistrate (Civil Supplies),
Agra, in the proceedings pending before him under section 6A
of the Act. [1171 C-D]
JUDGMENT:
ORIGINAL JURISDICTION:
Food Grains Matters.
A. Movement by Road:
(a) WP. Nos.2907-2908,3234, 3238-39,3164,3254, 3630-
31,3686, 3783, 3816, 4816, 4929-31, 4836-38, 4996-
5001, 5051-54, 5089-93, 5136-46, 5247, 3160, 3634,
4494,4616,4967, 5362-71, 5416-20, 5447-50,5716-17,
5840,6015,6587-89 & 6609-14/81.(b) WP. Nos. 5062,5157-58,5451 & 5615-17/81.
(c) WP Nos. 5097,5042, 5098, 5017, 5214 & 6135-36/81 &
7003/81.(d) WP. Nos.3421, 3407, 3408-13, 3422, 3536, 3561-64,
5238,13824, 5466, 5544, 6009, 6130-31, 6572-74 &
6582-83/81.(e) WP. Nos. 4904-4905, 5080, 5094, 5239-45, 5358-59,
5395, 5483, 5484-88, 5489-92, 5734-39, 6584-86 &
6817-21/81.(f) WP. Nos.4960-62, 4958-59, 5129-33, 5219-20, 5331-
33, 5518-19, 5526, 5428-31 & 5527/81.(g) WP. Nos. 4526, 4926, 4995, 5046, 5048-50, 5100,
5101, 5136-46,5402-11, 5436-38, 5560, 5520-21,
5562,5558, 5556, 5559,5550,5546-47, 5552, 5555,
5553-54,5511, 5482, 5618-19,5809-20,6132-33, 6244,
6273-75,6267-72, 5512-14, 5515,6570 and 5562/81,
7027-29 and 7032-34/81.(h) WP. Nos.5221,5380-83,5129-33,5421-22,5440, 5507-
10, 5662, 5806-5807, 6245, 6246, 6265, 6398 and
6684/81.1145
(i) WP. Nos. 3592, 3353, 5396, 6016, 6247-48, 6616,
6668 and 6798/81.(j) WP. Nos.5003, 4453, 4455-56,5346-48,4955,5082-89,
5577-80, 5581 and 5724/81.(k) WP. Nos.3489 and 4293/82.
(l) WP. No. 4818/81.
(m) WP. Nos.2916,2932,3242, 3297-3302,3334-43, 3475,
4098-4100, 4136, 4304, 4187, 4777, 5007-17,5027-
34, 5352-55, 5473-79, 5604-5608, 5740-42, 5743-44,
5821, 6012-13 and 5583-92/81.(n) WP Nos. 5391 and 5525/81.
(o) WP No. 5443/81.
(p) WP. Nos. 5444,5663 and 6266/81.
(q) WP. No. 5464/81.
(r) WP. Nos. 5451 and 5564-66/81.
(s) WP. No. 5807/81.
(t) WP. Nos.5571-75, 5622-29 and 6014/81.
(u) WP. Nos.5718-19/81 and 6943/81.(v) WP. No. 5568-69/81.
B. Restriction on Quantum of Food-Grains which can be held:
(a) WP. Nos. 2932, 3776-3780, 4140-45, 4326-28, 4876-
4902, 4670-78 and 5473-79/81.(b) WP. No. 5480/81.
(c) WP. Nos. 4955-56,5330,5392,3823 and 6278/81.
(d) WP. Nos. 5529-30/81.
(e) WP. Nos.5531-32/81.
1146
(f) WP. Nos. 5841-50/81.
(g) WP. Nos. 5656-58/81.
(Under Article 32 of the Constitution of India)
Hari Sarup, M.N. Phadke, Soli J. Sorabjee, J.P.
Goyal and C.M. Lodha, (M/s. B. Datta, R.A. Gupta, Miss
Kamini Jaiswal, Rajiv Dutta, Manoj Swarup and Miss
Lalita Kohli, R.S. Sharma, R.K. Jain, Pankaj Jain, P.K.
Jain, K.K. Jain, K.B. Rohatgi, B.R. Kapur, B.S.
Tawakley, S.R. Srivastava, N.N. Sharma, A.K. Goel,
Mitter and Mitter and Co., S.K. Jain, Rajesh Jain,
Mukul Mudgal, M. Qamaruddin, Mrs. M. Qamaruddin, Anis
Suhrawardhy, A.P. Mohanty, K.K. Gupta, Ravi Prakash
Gupta, C.K. Ratnaparkhi, S.C. Birla, M.C. Dhingra, and
S.K. Gambhir for the appearing Petitioners.
G.N. Dikshit, O.P. Rana, Mrs. Shobha Dixit, R.N.
Poddar, G. Gopalakrishan, A.V. Rangam, B.D. Sharma,
D.P. Mohanty and A. Shroff for the Respondents.The Judgment of the Court was delivered by
SEN, J. The issue in this and the connected 505
petitions under Art. 32 of the Constitution is of far-
reaching significance. It raises questions of the highest
importance as to the scope and extent of the executive power
of the State under Art. 162 of the Constitution, in relation
to regulation and control of trade and commerce in food-
stuffs. It necessarily involves a claim by the petitioners
who are wholesale dealers of foodgrains that the exercise of
such governmental power conflicts with the rule of law and
is in flagrant violation of the freedom of trade, commerce
and intercourse guaranteed under Art. 301 of the
Constitution and the fundamental right to carry on trade and
business guaranteed under Art. 19 (1) (g) of the
Constitution. These petitions fall into two distinct and
separate categories, one by the wholesale dealers of
foodgrains from the Union Territory of Delhi and the
neighbouring States of Punjab and Haryana, and the other by
the wholesale dealers of foodgrains from the State of Uttar
Pradesh.1147
The short question that falls for consideration in some
of the writ petitions by wholesale dealers of foodgrains
from the Union Territory of Delhi and the State of Punjab
and Haryana is whether the action of the State Government of
Uttar Pradesh in setting up check-posts on its borders and
the stoppage and seizure of wheat in transit through the
State of Uttar Pradesh during the course of inter-State
trade and commerce to various destinations in the States of
Madhya Pradesh and Maharashtra at the check-post at Saiyan
on the border between the States of Uttar Pradesh and Madhya
Pradesh on the strength of its instructions conveyed by its
teleprinter message dated March 31, 1981, was in violation
of Art. 301 of the Constitution.In a majority of the writ petitions by wholesale
dealers from the State of Uttar Pradesh, two questions
arise, (1) whether Notification No. P-XXIX-Food-5-5 (42)/80
dated April 21, 1981, issued by the State Government of
Uttar Pradesh, in exercise of the powers conferred by s. 3
read with s. 5 of the Essential Commodities Act, 1955
(hereinafter referred to as the Act), by which cl.4 of the
Uttar Pradesh Foodgrains (Procurement and Regulation of
Trade) Order, 1978, has been amended, providing that no
wholesale dealer, commission agent or retailer shall have in
stock wheat more than 250 quintals, 250 quintals and 20
quintals respectively, at any time, Infringes the
fundamental right to carry on trade or business guaranteed
under Art. 19 (1) (g) and (2) whether the governmental
instructions conveyed by its teleprinter message dated March
31, 1981, placing restrictions on movement of wheat by
traders on private account from the State of Uttar Pradesh
to various other States and on inter-district movement of
wheat within the State, were in breach of the fundamental
right under Art. 19 (1) (g) read with Art. 301 of the
Constitution.The following are the facts and circumstances so far as
necessary to show as to how the legal questions are
presented. It would be convenient first to deal with the
writ petitions filed by the whole-sale dealers of foodgrains
from the Union Territory of Delhi and the States of Punjab
and Haryana seeking a declaration that the impugned action
of the State Government of Uttar Pradesh in setting up
check-posts on the borders of the State and directing
seizure of wheat in transit through the State, on the
strength of the impugned teleprinter message, conflicted
with the guarantees of inter-State trade and commerce dealt
with by Art, 301 of the Constitution.1148
Facts in all these cases are more or less similar. The
petitioners who are wholesale dealers of foodgrains from the
Union Territory of Delhi and the States of Punjab and
Haryana allege that between April 29-30, 1981, they, acting
as commission agents, purchased wheat from the open market
in Delhi and elsewhere and despatched the same by trucks to
various destinations in the State of Maharashtra and to some
places in the State of Madhya Pradesh. According to them,
the trucks laden with wheat were accompanied by relative
bills, goods receipts, inter-State transit passes etc., duly
crossed the check-post at Faridabad and were also allowed to
cross the check-post at Kotwan on the border between the
Union Territory of Delhi and the State of Uttar Pradesh and
were on their way to their respective destinations. They
allege that the Senior Marketing Inspector, Agra,
intercepted the trucks in question at the check-post at
Saiyan on the border between the State of Uttar Pradesh and
Madhya Pradesh between April 30, 1981, and May 2, 1981. The
seized trucks were brought back to the purchase point at
Agra and the wheat was unloaded. Thereupon, the petitioners
rushed to Agra and made an application on May 4, 1981, under
s.6A read with ss. 3 and 7 of the Act before the Additional
District Magistrate (Civil Supplies), Agra, for the release
of the seized wheat. In the said application, the
petitioners, inter alia, claimed and unequivocally stated
that there was no ban on export of wheat from the Union
Territory of Delhi to other States, that the wheat in
question was neither purchased at Agra, nor was it being
transported from Agra to any other district in Uttar
Pradesh, that Agra was a place in transit, and that the
instructions of the State Government contained in the
impugned teleprinter message dated March 31, 1981 did not
constitute a validly notified order under sub-s. (5) of s. 3
of the Act.The Chief Marketing Inspector, Agra, had in the
meanwhile seized 42 trucks laden with wheat either at the
check-post at Saiyan or at Agra and lodged first information
reports at the Saiyan police station or at the Civil Lines
police station in respect of the consignments alleging that
the movement of wheat was in contravention of the impugned
teleprinter message and was therefore seized, and in three
of them it was alleged that the wheat had been purchased at
Agra. On the report of the Chief Marketing Inspector, the
Additional District Magistrate (Civil Supplies), Agra drew
up proceedings under s. 6A of the Act and directed the
police to complete the investigation within 15 days.1149
On May 23, 1981, the Additional District Magistrate
(Civil Supplies), Agra under sub-s. (2)(i) of s. 6A of the
Act passed interim orders for the sale of the seized wheat
as it was subject to speedy and natural decay, at the
request of the Senior Marketing Inspector, similar to the
one reproduced below:These proceedings under s.6A of the Essential
Commodities Act started on the report of SMI Saiyan
dated 30.4.1981 (Paper No. 1) whereby it was brought to
the notice of this Court that truck nos….. were
caught carrying 120 quintals…..of wheat respectively
beyond Saiyan border outside the State in contravention
of the orders issued by the Government vide telex No.
1061/29-Food-5 dated 31.3.1981 F.I.R. was lodged at
P.S. Saiyan in respect of the above contravention.
Notice under s. 6B of the EC Act was issued to the
O.Ps….. who were driving the trucks at the time of
search and seizure.Replies were filed by the owners of the wheat
contending that the said rules were not part of any
Control Order under Section 3 of the EC Act nor they
had any legal sanction for want of publication in the
Official Gazette. The O.Ps. have pleaded that they were
taking their goods in transit through Agra and in fact
the movement of wheat so made by them was inter-state
movement which was not banned by the Central Government
or State Government.I heard the learned counsels on behalf of the
O.Ps. and the learned PO as well. In these proceedings
final orders cannot be passed at this stage as the
matter is still under investigation.
PO directed to put up progress of investigation
within 15 days from now.In the meanwhile I order that the wheat seized by
SMI Saiyan be got purchased at the Official Price so
that the same does not get damaged. The sale proceeds
be got deposited in Government Treasury under proper
Head of Account.1150
This interim order is being passed under sub-s.
(2) (i) of s.6A of the Essential Commodities Act, 1955.
File be put up after 15 days along with report of
prosecuting office regarding progress of investigation.
Sd/-N.N. Varma
Addl. Collector, Agra
23.5.1981
The seized wheat has been purchased by the State Government
on Government account at the procurement price and the sale
proceeds credited into the Treasury.The State Government has filed a counter-affidavit of
the Chief Marketing Officer, Lucknow, in all these cases as
also the affidavits of the Senior Marketing Inspectors at
Agra controverting the allegations made by the petitioners.
It is stated that the source of the power to effect the
seizure was not the impugned teleprinter message, but the
power of search and seizure conferred on an Enforcement
Officer under cl. 6 of the U.P. Foodgrains Dealers
(Licensing and Restriction on Hoarding) Order, 1976 and
under cl.6 of the Uttar Pradesh Foodgrains (Procurement and
Regulation of Trade) Order, 1978 (hereinafter called the
1976 Order and 1978 Order respectively), both of which were
issued by the State Government, in exercise of the powers
under s. 3 of the Act, read with Government of India,
Ministry of Agriculture (Department of Food) Notification
No. G. S.R. 888 dated June 28, 1961, No. GSR 316 (E) dated
June 20, 1972, No. GSR 452 (E) dated October 25, 1972, No.
GSR 168 (E) dated March 13, 1973 and No. GSR 800 dated June
9, 1978 respectively, since it was of opinion that it was
necessary or expedient so to do for securing the equitable
distribution and availability of foodgrains at fair prices.
The State Government contends that the impugned teleprinter
message dated March 31, 1981 was in the nature of an
executive instruction issued by the State Government under
its undoubted powers under Art. 162 of the Constitution for
the due observance of the provisions of the two Control
Orders. It is said that no person can carry on business in
foodgrains as a dealer or as a commission agent except under
and in accordance with the terms and conditions of a valid
licence issued in that behalf under cl. 4 of the 1976 Order.
It is also said that no wholesale dealer, commission agent
or trader can have in stock more than 250 quintals, 250
quintals and 20 quintals respectively, at any time. It is
asserted that the State Govern-1151
ment has the right to set up check-posts for the purpose of
verification so that there is no contravention of the
provisions of the two Control Orders, particularly with a
view to ensure that excess quantity of wheat is not
transported in violation of the 1978 Order to other
districts or other States.The State Government in the counter-affidavit of the
Chief Marketing Officer, Lucknow, specifically denies the
allegations made by the petitioners that the 42 trucks laden
with wheat seized at the check-post at Saiyan on the border
between the States of Uttar Pradesh and Madhya Pradesh or at
Agra were in transit during the course of inter-State trade
and commerce.With regard to the seizure of the wheat, it is averred
in para 13 of the counter-affidavit:“The correct fact is that the authority on the
bona fide apprehension that the wheat so moved actually
was purchased from the State of Uttar Pradesh from
nearby places and the same was being moved to other
States on the garb of outside wheat. It is submitted
that such traders who are exporting wheat alleged to
have purchased from places other than the State of
Uttar Pradesh and were/are carrying the same to other
States, have only to satisfy the authorities concerned
of the bona fides of such transactions. However there
is no ban on such movement from one State to another.”As regards the check-posts, it is submitted that the
State Government is committed to provide price support in
wheat to farmers at Rs. 130 per quintal. This commitment
also involves purchase of wheat directly from the farmers
without interference from traders/middlemen, who try to
purchase wheat from the farmers at lower prices and sell the
same at Government purchase centres with substantial
profits. Such transactions are effected in fictitious names.
This not only frustrates the procurement policy of the
Government but also prejudicially and financially affects
the producers’ interests. In para 5 it is accordingly
averred:“In order to curb the above tendencies and
preventing the activity of traders/middlemen the State
Government have provided a simple system of verifying
all transactions by traders.1152
This procedure involves getting all transactions
of wheat verified by the Deputy Regional Marketing
Officer indicating inter alia the name of the persons
to whom the stocks are sold, their licence numbers etc.
and quantum of stocks sold, price paid etc. This
process will make it simultaneously very difficult for
traders to buy at low price from farmers and resell at
high prices at the Government purchase centres.”As regards the impugned teleprinter message it was
stated that it was issued by the State Government in order
to sustain and maintain and maximise the procurement of
wheat by introducing a system of verification at the check-
posts.The State Government contests the right of the
petitioners falling in the first category, that is,
wholesale dealers of wheat from the Union Territory of Delhi
and the States of Punjab and Haryana, to relief under Art.
32 of the Constitution who question the legality and
propriety of the seizures. It is a matter for investigation
which is pending before the Additional District Magistrate
(Civil Supplies), Agra and, according to it, the question
cannot be decided without full investigation into facts.In support of the writ petitions, learned counsel
appearing for the petitioners have, in substance, urged
three grounds. (1) There was nothing to prevent the State
Government from making a law placing reasonable restriction
on the freedom to carry on any occupation, trade or business
guaranteed under Art. 19(1) (g) read with Art. 19(6) of the
Constitution, or on the freedom of trade, commerce and
intercourse, throughout the territory of India, guaranteed
under Art. 301 of the Constitution, but the restriction must
be by “law” or by an “order having the force of law” and not
by recourse to the executive authority of the State under
Art. 162 of the Constitution, i.e., by an executive action.
(2) The seizure of the consignments of the wheat, while they
were in transit in the course of inter-State trade and
commerce from the Union Territory of Delhi and the States of
Punjab and Haryana to various destinations in the States of
Maharashtra and Madhya Pradesh, was without the “authority
of law” and in violation of Art. 300A of the Constitution.
The seizure of the wheat being wrongful, the petitioners
were entitled to an appropriate writ, direction or order for
the return of the seized wheat or the price thereof. (3) The
impugned teleprinter message of the State Government dated
March 31, 1981 on the basis of which the seizures were
effected, in truth and
1153
substance, had no legal sanction and cannot be construed to
be a notified order within the meaning of sub-s. (1) read
with sub-s. (5) of s. 3 of the Act; it was nothing but an
executive direction. No executive action which operates to
the prejudice of a citizen can be taken without the
authority of law. It was asserted that the seizures effected
were in compliance of the instructions contained in the
impugned teleprinter message and not for breach of the two
Control Orders and therefore it was nothing but a
“colourable exercise” of power. The real purpose of the
seizure was procurement of wheat in furtherance of the
directives of the Central Government, without any legal
sanction since the farmers were not willing to sell their
wheat at the procurement price.Learned counsel for the petitioners also challenge the
action of the Additional District Magistrate (Civil
Supplies) Agra in passing an interim order in terms of sub-
s. (2) (i) of s. 6A of the Act for the sale of the seized
wheat on Government account and for the sale proceeds to be
credited into the treasury in an appropriate Head of
Account; it is urged that under sub-s. (2) (ii) of s. 6A of
the Act there being no control price for wheat, the wheat
should have been sold by public auction.In reply, learned counsel for the State has repelled
all these contentions. It is submitted that the source of
power to effect the seizure was not the impugned teleprinter
message, but the two Control Orders issued under s. 3 of the
Act. He asserted that the wheat in question was not being
transported during the course of inter-State trade and
commerce from the Union Territory of Delhi and the States of
Punjab and Haryana to various other States. The wheat had in
fact been purchased at Agra and was being lifted from the
State of Uttar Pradesh and had, therefore, to be seized at
the check-post at Saiyan and at Agra. He points out that
under cl. 3 of the 1976 Order, no person can carry on
business as a dealer or commission agent, except and in
accordance with the terms and conditions of a licence issued
in that behalf by the licensing authority. According to him,
the seized wheat had been purchased at Agra in the course of
trade, and they were not isolated transactions and,
therefore, the Delhi traders committed contravention of cl.
3 of the 1976 Order. It is also pointed out that cl. 4 of
the 1978 Order, as amended, provides that no person who is a
wholesale dealer, commission agent or retailer shall have in
stock wheat in quantities exceeding 250 quintals, 250
quintals and 20 quintals at a time. It is further pointed
out, cl. 14 of the 1976 Order, and cl. 6
1154
of the 1978 Order confer the power of search and seizure on
an enforcement officer or the licensing authority or any
other officer authorised by the Government in that behalf,
and the expression “enforcement officer” defined in cl. 2(e) of the former Order and cl. 2(d) of the latter, includes
the Chief Marketing Inspector. According to the learned
counsel the Government instructions conveyed in the impugned
teleprinter message is merely in the nature of an executive
instruction for the enforcement of the two Control Orders.
In support of the contentions, he also relies on the
executive power of the State under Art. 162 of the
Constitution. In the premises, the contention on behalf of
the State is that the question whether the seized wheat was
liable to be confiscated or not under s. 6A of the Act, was
a matter pending adjudication before the Additional District
Magistrate (Civil Supplies) Agra. That depends on whether or
not there was contravention by the petitioners of any of the
Order issued under s. 3 of the Act and, therefore, cannot be
determined without full investigation into the facts.The Inter-Zonal Wheat (Movement Control) Order, 1976,
issued by the Central Government, in exercise of the powers
conferred by s. 3 of the Act has been rescinded with effect
from April 13, 1977. The result of this is that the whole
country constitutes a single zone for free movement of wheat
except in such States where an order is issued under s. 3
read with s. 5 of the Act, placing a ban on export of wheat
such as in the State of Rajasthan. Admittedly, the State
Government of Uttar Pradesh has not issued any order under
s. 3 read with s. 5 of the Act, placing a ban on export of
wheat from the State or any restriction on inter-district
movement of wheat within the State. The State Government
does not contest this position and indeed, the Chief
Marketing Officer in his counter-affidavit states:“The State of Uttar Pradesh has not banned the
movement of wheat outside the State or from one
district to another district within the State. It is
submitted that such traders who are transporting wheat
alleged to be purchased from a place other than the
State of Uttar Pradesh and were/are carrying the same
to other States other than Uttar Pradesh have only to
satisfy the authorities concerned of the bona fides of
the transactions. However, there is no ban on such
movement from one State to another.”1155
The impugned teleprinter message dated March 31, 1981
runs as follows:“For:
Regional Food Control,
Agra/Bareilly/Dehradun/Faizabad/Gorakhpur
Jhansi/Haldwani/Kanpur/Meerut/Varanasi
Lucknow (by Hand)
From:Secretary (Food)
Lucknow.No. TP-1061/XXIX-Food-5 Dated: Lucknow:
March 31, 1981.
Refer Tel TP-712/XXIX-Food-5-5(1)/81 of 9th March
1981 regarding renewal of and issue of new licences to
dealers(,) Government committed to provide benefits of
support price to producers hence to ensure that maximum
quantity of wheat is purchased by agencies (.) Para (.)
After careful consideration Government have decided
that with effect from first April 1981 till thirtieth
June 1981 no repeat no fresh licences are to be issued
to any person who wish to deal in wheat, wheat products
or both as wholesaler commission agent retailer (.)
Para (.) Government have also decided that during April
1981 to June 1981 movement of wheat by traders on
private account to outside district shall be regulated
only on the endorsement of Deputy Regional Marketing
Officer concerned and hitherto this power being
exercised by Senior Marketing Inspector shall not
repeat not be used by them (.) Para (.) At the same
time easy availability of wheat in open markets is to
be ensured(.) Keeping all the relevant factors in view
endorsement by Dy. R.M.O. should be made judiciously on
genuine and bonafide grounds(.) Para(.) Dy. RMO will
send daily report to RFC of the cases in which such
permission is granted or endorsement made(..) RFC will
compile and send weekly report to Government(.)
Permission to be given very sparingly and general
impression made should be that they will not gain by
doing any trading in wheat(.) Visit Mandis regularly
and check quantities lying in traders premises(.)
Presence of large stocks with trade means staff
1156
is not during their job properly(.) Inform all
concerned immediately for strict compliance(.)
Dated: Lucknow; March 31, 1981 Sd/-M. Subrahmanyam
Secretary
Food & Civil Supplies Sec. 5
U.P. Secretariat, Lucknow.”There can be no doubt that the aforesaid teleprinter
message was in the nature of executive instructions of the
State Government to the Regional Food Controllers of the
various regions to secure compliance with the orders. It may
be mentioned that the State Government was committed to
provide price support in wheat to producers and hence to
maximise procurement of wheat, issued instructions that no
fresh licences till June 30, 1981 were to be granted to any
person who wished to deal in wheat, wheat products, or both,
as well as a wholesale dealer, commission agent or a
retailer. It further conveyed the policy decision of the
Government that during April 1981 movement of wheat by
traders on private account to outside districts shall be
regulated only on the endorsement of the Deputy Marketing
Officer concerned and not by the Senior Marketing Inspectors
as hitherto before. The Government also directed the
Regional Food Controllers to ensure easy availability of
wheat in open market. As regards the making of endorsement,
they were advised that the powers should be exercised with
due circumspection. They were also asked to visit the mandis
and keep a constant vigil on the stocks lying with the
traders. There appears to be nothing unusual on the State
Government issuing such executive instructions.Even assuming that the impugned teleprinter message is
not relatable to the two Control Orders, the State
Government undoubtedly could, in exercise of the executive
power of the State, introduce a system of verification on
movement of wheat from the State of Uttar Pradesh to various
other States at the check-posts on the border and place
restrictions on inter-district movement of wheat by traders
on private account within the State. The executive power of
a modern State is not capable of any precise definition. In
Ram Jawaya Kapur v. State of Punjab, Mukherjea, C.J., dealt
with the scope of Arts. 73 and 162 of the Constitution. The
learned Chief Justice observed that neither of the two
Articles contains any
1157
definition as to what the executive function is or gives an
exhaustive enumeration of the activities which would
legitimately come within its scope. It was observed:
“Ordinarily the executive power con-notes the residue of
governmental functions that remain after legislative and
judicial functions are taken away”. It is neither necessary
nor possible to give an exhaustive enumeration of the kinds
and categories of executive functions which may comprise
both the formulation of the policy as well as its execution.
In other words, the State in exercise of its executive power
is charged with the duty and the responsibility of carrying
on the general administration of the State. So long as the
State Government does not go against the provisions of the
Constitution or any law, the width and amplitude of its
executive power cannot be circumscribed. If there is no
enactment covering a particular aspect, certainly the
Government can carry on the administration by issuing
administrative directions or instructions, until the
legislature makes a law in that behalf. Otherwise, the
administration would come to a standstill.In Ram Jawaya Kapoor’s case (supra) it was contended
that the executive power of the State did not extend to the
carrying on of trade of printing, publishing and selling of
text-books for schools unless such trade was authorised by
law. In repelling the contention, Mukherjea, C.J. speaking
for the Court, observed :Our Constitution, though federal in its structure,
is modelled on the British Parliamentary system where
the executive is deemed to have the primary
responsibility for the formulation of governmental
policy and its transmission into law though the
condition precedent to the exercise of this
responsibility is its retaining the confidence of the
legislative branch of the State. The executive function
comprises both of the determination of the policy as
well as carrying it into execution. This evidently
includes the initiation of legislation, the maintenance
of order, the promotion of social and economic welfare,
the direction of foreign policy, in fact the carrying
on or supervision of the general administration of the
State.The learned Chief Justice then went on to observe :
The Indian Constitution is a written Constitution
and even the legislature cannot override the
fundamental rights
1158
guaranteed by it to the citizens. Consequently, even if
the acts of the executive are deemed to be sanctioned
by the legislature, yet they can be declared to be void
and in-operative if they infringe any of the
fundamental rights of the petitioners guaranteed under
Part III of the Constitution. On the other hand, even
if the acts of the executive are illegal in the sense
that they are not warranted by law, but no fundamental
rights of the petitioners have been infringed thereby,
the latter would obviously have no right to complain
under article 32 of the Constitution though they may
have remedies elsewhere if other heads of rights are
infringed.In Naraindas Indurkhya v. State of Madhya Pradesh & Ors
Bhagwati, J., speaking for the Court, reiterated the
principles laid down by Mukherjea, C.J. in Ram Jawaya
Kapur’s case (supra) and held that the State Government
could act in exercise of the executive power of the State
under Art. 162 of the Constitution in relation to any matter
with respect to which the State Legislature has power to
make laws even if there was no legislation to support such
executive action. There is no denying the fact that the
State Legislature is competent to enact a law on the subject
covered by Entry 33, List III, which reads:33. Trade and commerce in, and the production,
supply and distribution of,-(b) foodstuffs, including edible oilseeds and
oils.The Essential Commodities Act, 1955 was enacted by
Parliament in exercise of concurrent jurisdiction under
Entry 33 List III of the Seventh Schedule to the
Constitution as amended by the Constitution (Third
Amendment) Act, 1954. The exercise of such concurrent
jurisdiction would not deprive the State legislature of its
jurisdiction thereunder. The State legislature, therefore,
could still make a law on the subject regulating trade and
commerce in, and the production, supply and distribution of
‘foodstuffs’ and the only question that would arise is one
of repugnancy dealt with in Art. 254 of the Constitution.
The executive power of the State being co-extensive with its
legislative power under Entry 33, List III, it relates to
all matters covered by the subject ‘foodstuffs’,
1159
trade and commerce in, and the production, supply and
distribution thereof. This is, of course, subject to the
limitation contained in Proviso to Art. 162 which directs
that in any matter with respect to which the legislature of
a State and Parliament have power to make laws, the
executive power of the State shall be subject to, and
limited by, the executive power expressly conferred by the
Constitution or by any law made by Parliament upon the Union
or authorities thereof.This leads us to another aspect of the problem of
considerable difficulty and importance. The subject ‘search
and seizure’, is a field which has not come before the court
with considerable frequency, but this is a hard fact of life
which the citizen does encounter very often. The executive
power of ‘search and seizure’ is a necessary concomitant of
a welfare State. It tends to promote the well being of the
nation. Many questions arising in the field of search and
seizure are factual in nature. They involve varying degrees
of difference among the infinitely diverse facts. Every
factual variation presents not only a new problem, but also
a new constitutional question. It is a limitless area in
which different issues may arise with vast variations of
facts which are involved in each individual case. This is,
indeed, a peculiar field in which the decisions of courts do
not help in clarifying the law. The decisions in the field
are of little precedental value because, the more the cases
that are decided, the more new issues arise, through
possible factual variations.The check-posts and barriers on the borders of the
State of Uttar Pradesh are set up under s. 28 of the U.P.
Sales Tax Act, 1948 and are designed and meant to prevent
evasion of sales tax and other dues. The constitutional
validity of s. 28 and its cognate provisions, ss. 28A to 28C
has, rightly, if we may say so, not been challenged before
us. From the point of view either of Entry 54, List II, or
of Art. 301 of the Constitution, there is no question of any
lack of competence in the State legislature to set up the
checkposts and barriers on the State’s borders. These
provisions, read with the requirements of r. 83(4) of the
U.P. Sales Tax Rules, 1948 require that the owner, driver or
any other person in-charge of the vehicle or vessel shall,
in respect of such goods carried in the vehicle or vessel as
are notified under sub-s. (1) of s. 28A, carry with him, a
declaration in Form XXXI, a certificate in Form XXXII, a
transit pass in Form XXXIV in duplicate, cash memo, bill of
sale or challan and a trip-sheet in triplicate. The factual
existence of these check-1160
posts or barriers on the State’s borders is not denied, nor
their legality challenged. It is not suggested that the
setting up of these check-posts is a restriction on the
freedom of trade, commerce and intercourse guaranteed under
Art. 301 of the Constitution, or is such as directly and
immediately restricts or impedes the free flow or movement
of goods. It is also not suggested that these regulatory
measures in setting up the check-posts on the State’s
borders are such as impede freedom of trade, commerce and
intercourse. Just as inter-State trade and commerce must pay
its way and be subject to taxation, persons engaged in such
inter-State trade or commerce are equally subject to all
regulatory measures. There is no reason why the check-posts
or barriers set up by the State Government under s. 28 of
the U.P. Sales Tax Act, 1948, cannot be utilised as a
machinery for due observance of the laws, e.g. for
verification and control of movement of wheat by traders on
private account from the State of Uttar Pradesh to various
other States.The instructions conveyed by the State Government by
the impugned teleprinter message dated March 31, 1981, were
a direct sequel to the Centre’s directives contained in its
earlier teleprinter message. It was intended and meant to
achieve three main objectives, namely, (1) to provide price
support in wheat to purchasers with a view to sustain,
maintain and maximise the procurement of wheat; (2) to
prevent hoarding and blackmarketing; and (3) to provide for
equitable distribution and availability of wheat at fair
prices. These directions were obviously meant to subserve
the object of the legislation and were in public interest.These cases were argued with much learning and resource
particularly with reference to the rule of law and the
consequent limitations on the executive power of the State
under Art. 162 to ‘trench’ upon the fundamental right to
carry on trade or business guaranteed under Art. 19 (1) (g)
and the freedom of trade, commerce and intercourse
throughout the territory of India guaranteed under Art. 301
of the Constitution. It necessarily involves a claim by the
State that the measures taken by the State Government by the
impugned teleprinter message were nothing but regulatory
measures to ensure that the excess stock of wheat held by a
wholesale dealer, commission agent or a retailer is not
transported to a place outside the State or from one
district to another within the State and therefore were not
a ‘restriction’ on the fundamental right to carry on trade
or business guaranteed under Art. 19 (1)(g) or on the
freedom of trade, commerce and intercourse under Art. 301.1161
The quintessence of our Constitution is the rule of
law. The State or its executive officers cannot interfere
with the rights of others unless they can point to some
specific rule of law which authorises their acts. In State
of Madhya Pradesh v. Thakur Bharat Singh, the Court repelled
the contention that by virtue of Art. 162, the State or its
officers may, in the exercise of executive authority,
without any legislation in support thereof, infringe the
rights of citizens merely because the legislature of the
State has power to legislate in regard to the subject on
which the executive order is issued. It was observed:“Every act done by the Government or by its
officers must, if it is to operate to the prejudice of
any person, be supported by some legislative
authority.”The same principle was reiterated by the Court in Satwant
Singh Sawhney v. Dr. Ramarathnam, Assistant Passport
Officer, Government of India, New Delhi & Ors, and Smt.
Indira Nehru Gandhi v. Shri Raj Narain.There can be no doubt that the Essential Commodities
Act, 1955, is a ‘law’ within the meaning of Art. 302 of the
Constitution imposing reasonable restrictions on the right
to carry on trade and commerce as guaranteed by Art.
19(1)(g) and Art. 301 of the Constitution. The object of the
Act is to provide, in the interests of the general public,
for the control, production, supply and distribution of, and
trade and commerce in, certain essential commodities. To
appreciate the points involved, it is necessary to set out
the material statutory provisions. Sub-s. (1) of s. 3 of the
Act provides as follows:“3(1). If the Central Government is of opinion
that it is necessary or expedient so to do for
maintaining or increasing supplies of any essential
commodity or for securing their equitable distribution
and availability at fair prices, or for securing any
essential commodity for the defence of India or the
efficient conduct of military operations, it may, by
order, provide for regulating or prohibiting the
production, supply and distribution thereof and trade
and commerce therein.1162
Sub-s. (2) thereof provides that without prejudice to the
generality of the powers conferred by sub-s. (1) an order
made thereunder may provide for any of the matters
enumerated therein. Sub-s. (5) provides that any order made
under this section shall in the case of an order of a
general nature or affecting a class of persons, be notified
in the Official Gazette. By virtue of the delegation of
powers under s. 5 of the Act the State Government in
relation to such matters and subject to such conditions as
may be specified, may exercise the powers of the Central
Government under s. 3 Clause (j) of sub-s. (2) of 3 provides
that the Central Government or the State Government, as the
case may be, may by order provide:“For any incidental and supplementary matters,
including, in particular, the entry, search or
examination of premises, aircraft, vessels, vehicles or
other conveyance and animals, and the seizure by a
person authorised to make such entry, search or
examination……’
Sub-ss. (1) and (2) of s. 6A of the Act, insofar as
material, provide as follows:“6A(1). Where any essential commodity is seized in
pursuance of an order made under section 3 in relation
thereto, a report of seizure shall, without
unreasonable delay, be made to the Collector of the
district or the Presidency-town in which such essential
commodity is seized and whether or not a prosecution is
instituted for the contravention of such order, the
Collector may, if he thinks it expedient so to do,
direct the essential commodity so seized to be produced
for inspection before him, and if he is satisfied that
there has been a contravention of the order, may order
confiscation of-(a) the essential commodity so seized;
6A(2). Where the Collector, on receiving a report
of seizure or on inspection of any essential commodity
under sub-s. (1), is of the opinion that the essential
commodity is subject to speedy and natural decay or it
is otherwise expedient in the public interest so to do,
be may-(i) order the same to be sold at the controlled
price, if any, fixed for such essential
commodity under this Act or under any other
law for the time being in force; or
1163(ii) where no such price is fixed, order the same
to be sold by public auction:Provided that in case of foodgrains, the Collector
may, for its equitable distribution and availability at
fair prices, order the same to be sold through fair
price shops at the price fixed by the Central
Government or by the State Government, as the case may
be, for the retail sale of such foodgrains to the
public.”
Learned counsel for the State Government, in all
fairness, does not assert that the impugned teleprinter
message having regard to the requirements of sub-s. (5), has
the effect of a notified Order under s. 3 of the Act placing
a ban on export of wheat from the State or imposing a
restriction on inter-district movement of wheat. It is
submitted that it only conveyed the instructions of the
State Government requiring the Regional Food Controllers to
be more vigilant to secure due observance of the laws. The
question still remain whether the instructions conveyed by
the teleprinter message had the force of law.
It is therefore to be considered whether the
instructions conveyed by the State Government by the
impugned teleprinter message were relatable to the two
Control Orders and therefore could be considered to be ‘law’
or an order having the force of law placing reasonable
restriction on the freedom to carry on any occupation, trade
or business guaranteed under Art. 19(1)(g) read with Art.
19(6) of the Constitution or on the freedom of trade,
commerce and intercourse throughout the territory of India
guaranteed under Art. 301 o the Constitution. It is further
to be considered whether the seizure of wheat in transit was
with authority of law.
It is submitted that although the impugned teleprinter
message dated March 31, 1981 was in the nature of executive
instructions of the State Government to the Regional Food
Controllers of the various regions to secure compliance with
the two Control Orders, it had the force of law. It is
pointed out that under licence conditions Nos. 11, 12 and 13
of the licence issued in Form B under cl. 4 of the 1976
Order, a dealer is required to comply with any direction
that may be given by the State Government in regard to
purchase, sale or storage for sale of foodgrains, to furnish
such information relating to his business as may be demanded
of him and to carry out such instructions as may, from time
to time, be given,
1164
by the State Government or the licensing authority, and to
give all facilities at all reasonable times, to the
enforcement officer or the licencing authority or any
officer authorised by him or the State Government for the
inspection of the stocks etc. It is further pointed out that
the State Government of Uttar Pradesh has by Notification
No. P-XXIX-Food-5-5(42)/80 dated April 21, 1981, in exercise
of the powers conferred by s. 3 read with s. 5 of the Act,
with the prior concurrence of the Central Government, issued
the Uttar Pradesh Foodgrains (Procurement and Regulation of
Trade) (First Amendment) Order, 1981. By cl. 2 thereof, a
new cl. 4 has been substituted in the 1978 Order by which
the stock limit of dealers in foodgrains has been re-fixed,
as it was of the opinion that it was necessary and expedient
so to do for securing equitable distribution and
availability of wheat at fair prices. The new cl. 4 provides
that no wholesale dealer, commission agent or retailer,
shall have in stock, wheat more than 250 quintals, 250
quintals and 20 quintals respectively, at any time. The re-
fixation of the stock limit of a wholesale dealers at 250
quintals, at any time, is to ensure that wholesale dealers
in the State of Uttar Pradesh do not try to corner stocks of
wheat for purposes of speculation. The submission is that
the State Government without placing any restriction on
movement of wheat from the State of Uttar Pradesh to various
other States, has virtually frozen the excess stock of wheat
lying with wholesale dealers of foodgrains in the State.
There is, in our opinion, considerable force in these
submissions.
The real question at issue is whether or not the
seizure of wheat was with the authority of law. The
fundamental right to carry on trade or business guaranteed
under Art. 19(1)(g) or the freedom of inter-State trade,
commerce and intercourse under Art. 301 of the Constitution,
has its own limitations. The liberty of an individual to do
as he pleases is not absolute. It must yield to the common
good. Absolute or unrestricted individual rights do not and
cannot exist in any modern State. There is no protection of
the rights themselves unless there is a measure of control
and regulation of the rights of each individual in the
interests of all. Whenever such a conflict comes before the
Court, it is its duty to harmonise the exercise of the
competing rights. The Court must balance the individual’s
rights of freedom of trade under Art. 19(1)(g) and the
freedom of inter State trade and commerce under Art. 301 as
against the national interest. Such a limitation is inherent
in the exercise of those rights.
1165
Under Art. 19(1)(g) of the Constitution, a citizen has
the right to carry on any occupation, trade or business and
the only restriction on this unfettered right is the
authority of the State to make a law imposing reasonable
restrictions under cl. (6). The principles underlying in
cls. (5) and (6) of Art. 19 are now well settled and
ingrained in our legal system in a number of decisions of
this Court, and it is not necessary to burden this judgment
with citations. The expression ‘reasonable restriction’
signifies that the limitation imposed on a person in
enjoyment of the right should not be arbitrary or of an
excessive nature, beyond what is required in the interests
of the public. The test of reasonableness, wherever
prescribed, should be applied to each individual statute
impugned, and no abstract standard, or general pattern of
reasonableness can be laid down as applicable in all cases.
The restriction which arbitrarily or excessively invades the
right cannot be said to contain the quality of
reasonableness and unless it strikes a proper balance
between the freedom guaranteed in Art. 19(1)(g) and the
social control permitted by cl. (6) of Art. 19, it must be
held to be wanting in that quality.
The nature of the right alleged to have been infringed
is that wholesale dealers in foodgrains from the State of
Uttar Pradesh or elsewhere are prevented from moving their
stock of wheat to various other States or from one district
to another without the transaction being verified and duly
endorsed by the Deputy Marketing Officer or the Senior
Marketing Officer concerned. The other restriction on the
enjoyment of their right placed by the impugned teleprinter
message is that there should be physical verification at the
checkposts on the State’s borders. These steps were designed
to prevent a price rise in wheat in the State of Uttar
Pradesh and to prevent outflow of wheat from the State to
various other States and from one district to another
district within the State. The whole object was to ensure
that the wholesale dealers in foodgrains did not corner
stocks of wheat for the purpose of speculation. It cannot be
said that they do not contain the quality of reasonableness
or were not in the interests of the general public. In
judging the validity of these restrictions, the Court has to
strike a proper balance between the freedom guaranteed under
Art. 19(1)(g) and the social control permitted by Art.
19(6).
If, therefore, the seizure can be justified on the
basis of any valid law, it cannot be held to be illegal.
This is equally true of Art. 301. Art. 301 imposes a general
limitation on all legislative
1166
power in order to secure that trade, commerce and
intercourse throughout the territory of India shall be free.
Having placed a general limitation on the legislative powers
of Parliament and the State Legislatures, Art. 302 relaxes
that restriction in favour of Parliament by providing that
authority may, by law, impose such restrictions on the
freedom of trade, commerce and intercourse between one State
and another and within any part of the territory of India in
the public interest. Likewise, Art. 304(b) provides that
notwithstanding anything in Art. 301 or Art. 303, a
legislature of a State may, by law, impose such reasonable
restrictions on the freedom of trade, commerce or
intercourse with or within that State as may be required in
the public interest, provided that no Bill or amendment for
the purpose of cl. (b) shall be introduced or moved in the
legislature of a State without the previous sanction of the
President. Although Art. 301 guarantees that trade, commerce
and intercourse throughout the country shall be free, the
right to carry on inter-State trade and commerce may be
subject to reasonable restrictions in the interests of the
general public.
The word ‘free’ in Art. 301 does not mean freedom from
laws or from regulations. Art. 301 guarantees freedom of
trade, commerce and intercourse throughout the country from
any State barriers. It declares that subject to the other
provisions of Part XIII, trade, commerce and intercourse
throughout the territory of India shall be free. The whole
object was to bring about the economic unity of the country
under a federal structure, so that the people may feel that
they are members of one nation. One of the means to achieve
this object is to guarantee to every citizen the freedom of
movement and residence throughout the country. That is
achieved by Art. 19(1)(d) and (e). No less important is the
freedom of movement or passage of commodities from one part
of the country to another. The progress of the country as a
whole also requires free flow of commerce and intercourse as
between different parts, without any barrier. This freedom
of trade, commerce and intercourse throughout the country
without any ‘State barriers’ is not confined to inter-State
trade but also includes intra-State trade as well. In other
words, subject to the provisions of Part XIII, no
restrictions can be imposed upon the flow of trade, commerce
and intercourse, not only between one State and another, but
between any two points within the territory of India whether
any State border has to be crossed or not.
It is now well settled that the regulatory measures or
measures imposing compensatory taxes do not come within the
purview of the
1167
restrictions contemplated by Art. 301. The regulatory
measures should, however, be such as do not impede the
freedom of trade, commerce and intercourse. It cannot be
said that the instructions conveyed by the State Government
by the impugned teleprinter message imposing the requirement
for the making of an endorsement by the Deputy Marketing
Officer or the Senior Marketing Officer or the physical
verification of stocks of wheat during the course of
transit, are a ‘restriction’ on the freedom of trade,
commerce and intercourse within the country, i.e, across the
State or from one part of the State to another. These are
nothing but regulatory measures to ensure that the excess
stock of wheat held by a wholesale dealer, commission agent
or a retailer is not transported to a place outside the
State or from one district to another. Even if these
requirements are construed to be a ‘restriction’ on the
inter-State or intra-State trade, the limitation so imposed
on the enjoyment of the right cannot be considered to be
arbitrary or of an excessive nature. Nor can it be said that
such restrictions do not satisfy the test of reasonableness.
The question whether or not the seizure of the wheat
was for contravention of any order issued under s. 3 of the
Act is pending investigation before the Additional District
Magistrate (Civil Supplies), Agra. For the establishment of
their rights the petitioners have still to establish that
the wheat in question was bought by them in open market in
Delhi and elsewhere and was being merely transported through
the State of Uttar Pradesh in the course of inter-State
trade and commerce. If that be so, then there was no
contravention of any order issued by the Central Government
under s. 3 or by the State Government under s. 3 read with
s. 5 of the Act. If, on the contrary, the wheat had been
purchased by them at Agra or nearby places within the State
of Uttar Pradesh, the question would arise whether such
purchase, storage or sale of wheat was in contravention of
any of the two Control Orders. In case there was such
contravention of any of the provisions of the two Control
Orders, then there was undoubtedly the power of search and
seizure. The case of the State Government before us was that
the source of power to effect the seizure was the two
Control Orders. It was asserted that the wheat was not being
transported during the course of inter-State trade and
commerce from the Union Territory of Delhi to various other
States, but had, in fact, been purchased at Agra and was
being lifted from the State of Uttar Pradesh and had
therefore to be seized at the check-post at Saiyan and at
Agra. Under cl. 3 of 1976 Order, no person can carry on
business as a
1168
dealer or commission agent except and in accordance with the
terms and conditions of a licence issued in that behalf by
the licensing authority. The term ‘dealer’ is defined in s.
2(c) of the Order to mean a person engaged in the business
of purchase, sale or storage for sale of foodgrains.
According to the State, the seized wheat had been purchased
at Agra in the course of trade and they were not isolated
transactions and, therefore, the Delhi traders committed
contravention of cl. 3 of the 1976 Order. Cl. 14 thereof
confers the power of search and seizure on an enforcement
officer or the licensing authority or any other officer
authorised by the State Government in that behalf. The
expression ‘enforcement officer’ is defined in cl. 2(e) of
that Order and it includes the Chief Marketing Officer and
in that capacity the Chief Marketing Officer, having reason
to believe that contravention of the provisions of the Order
had been, was being, or was about to be committed, had the
power to seize the trucks at the check-post at Saiyan and
effect the seizure of the trucks laden with wheat and bring
them to the purchase point at Agra.
Furthermore, under cl. 4 of the 1978 Order, as amended,
no person who is a wholesale dealer, commission agent or a
retailer, shall have in stock wheat in quantities exceeding
250 quintals, 250 quintals and 20 quintals respectively at a
time. Cl. 6 confers the power of search and seizure on an
enforcement officer which term as defined in cl. 2(d)
likewise includes the Chief Marketing Inspector, Under cl.
6(d), the Chief Marketing Inspector, as an enforcement
officer, had the power to seize any article in respect of
which he had reason to believe that a contravention of the
Order had been, was being, or was about to be committed. The
fixation of the maximum limits of stocks of wheat at 250
quintals 250 quintals and 20 quintals respectively, which a
wholesale dealer, commission agent or a retailer may hold,
at any one time, has necessarily the effect of freezing the
excess stock of wheat lying with such dealer. This also
results in preventing the movement of such excess stock of
wheat from the State of Uttar Pradesh to various other
States or from one district to another. The excess stock of
wheat lying with such dealer, that is, a wholesale dealer,
commission agent or a retailer, in truth and substance,
became their ‘unlicensed stock’. If really the Delhi traders
had purchased the excess stock of wheat from wholesale
dealers, commission agents or retailers in the State of
Uttar Pradesh, as is alleged, it is possible to contend that
there was a contravention of the provisions of cl. 4 of the
1978 Order. The question whether the seizure was for any
contravention of any Order issued under
1169
s. 3 of the Act has to be determined by the Additional
District Magistrate (Civil Supplies), Agra, on the evidence
adduced by the parties before him.
The facts being controverted, the petitioners have no
right to relief under Art. 32 of the Constitution. Each of
the petitioners has filed a sheaf of documents showing that
the wheat had been purchased in the open market in Delhi and
elsewhere, that the trucks laden with their wheat were
accompanied by the relevant bills, goods receipts, inter-
State transit passes etc., that the trucks in question were
allowed to cross the check-posts at Kotwan on the border
between the Union Territory of Delhi and the State of Uttar
Pradesh. but were seized either at the check-posts at Saiyan
on the border between the States of Uttar Pradesh and Madhya
Pradesh or at Agra, while they were in transit through the
State of Uttar Pradesh. It was also asserted that all the
documents were seized and taken away by the Senior Marketing
Inspector, and that he had given an acknowledgment of the
same. Learned counsel appearing for the State vehemently
contends that these documents were not shown to the
authorities concerned and it is for the petitioners to prove
these documents before the Additional District Magistrate
(Civil Supplies), Agra, in support of their claim We cannot
act on the documents because the transactions are still to
be proved. It is asserted on behalf of the State Government
that such documents could always be brought into existence,
particularly when none of the transactions were effected
through a Bank. This Court cannot obviously pronounce upon
the genuineness of the transactions or record any finding on
the basis of the documents when the facts are in dispute.
There still remains the question whether the seizure of
wheat amounts to deprivation of property without the
authority of law. Art. 300A provides that no person shall be
deprived of his property save by authority of law. The State
Government cannot while taking recourse to the executive
power of the State under Art. 162, deprive a person of his
property. Such power can be exercised only by authority of
law and not by a mere executive fiat or order. Art. 162, as
is clear from the opening words, is subject to other
provisions of the Constitution. It is, therefore,
necessarily subject to Art. 300A. The word ‘law’ in the
context of Art. 300A must mean an Act of Parliament or of a
State Legislature, a rule, or a statutory order; having the
force of law, that is positive or State made law. The
decisions in Wazir Chand v. The State of Himachal
1170
Pradesh and Bishan Das and others v. The State of Punjab and
others are an authority for the proposition that an illegal
seizure amounts to deprivation of property without the
authority of law. In Wazir Chand’s case (supra), the police
in India seized goods in possession of the petitioner in
India at the instance of the police of the State of Jammu
and Kashmir. The seizure was admittedly not under the
authority of law, inasmuch as it was not under the orders of
any Magistrate; nor was it under ss. 51, 96, 98 and 165 of
the Code of Criminal Procedure, 1898, since no report of any
offence committed by the petitioner was made to the police
in India, and the Indian police were not authorised to make
any investigation. In those circumstances, the Court held
that the seizure was not with the authority of law and
amounted to an infringement of the fundamental right under
Art. 31(1). This view was reaffirmed in Bishan Das’s case
(supra).
The effect of the Constitution (Fourth) Amendment Act,
1955, is that there can be no ‘deprivation’ unless there is
extinction of the right to property. It is urged that the
seizure of wheat was not with a view to extinction of the
rights of the petitioners, but the property in the seized
wheat was theirs. No doubt, the wheat had to be sold, as it
was subject to speedy and natural decay, but the petitioners
are entitled to the sale proceeds, if ultimately it is found
by the Additional District Magistrate (Civil Supplies),
Agra, that there was no contravention by them of an order
issued under s. 3 of the Act. It is not necessary for us to
deal with the question whether an illegal seizure amounts to
‘deprivation’ of property within the meaning of Art. 300A
for purposes of this case, as the State Government does not
dispute the right of the petitioners to the sale proceeds.
It is true that the seizure was with intent to confiscate
under s. 6A of the Act, but that would not make the seizure
illegal, if, ultimately, it is found that there was
contravention of an order issued under s. 3 of the Act.
If the facts were not in controversy and if the
petitioners were also able to prove that there was wrongful
seizure of wheat by the State Government of Uttar Pradesh at
the check-post of Saiyan on the border, while in transit, in
the course of inter-State trade and commerce from the Union
Territory of Delhi, perhaps, they would be entitled to the
return of the seized wheat, or, in the alternative,
1171
to the payment of price thereof. The State contests the
right of the Court to investigate into the facts,
particularly when the matter is a fact in issue in the
aforesaid proceedings before the Additional District
Magistrate (Civil Supplies), Agra. Normally, it is not the
function of this Court to investigate into facts in
proceedings under Art. 32 of the Constitution when they are
controverted with a view to discerning the truth. The matter
must, in a situation like this, be left to the fact-finding
body. For the establishment of their right to relief under
Art. 32, the petitioners must, in our opinion, establish the
necessary fact before the said Additional District
Magistrate in the proceedings under s. 6A of the Act. If
they fail to get relief in such proceedings, their obvious
remedy lies in a suit for damages for wrongful seizure.
The question that the seizures were in reality for
procurement of wheat in furtherance of the directive of the
Central Government, and not for breach of the two Control
Orders and, therefore, were nothing but a ‘colourable
exercise of power’, is dependent on facts to be found on
investigation. Further, the question that there being no
control price for wheat, the wheat should have been sold by
public auction, is again a question that must be raised
before the Additional District Magistrate (Civil Supplies),
Agra, in the proceedings pending before him under s. 6A of
the Act.
Turning to the petitions under Art. 32 of the
Constitution by wholesale dealers of foodgrains from the
State of Uttar Pradesh, learned counsel appearing for these
petitioners challenged the impugned teleprinter message
dated March 31, 1981, and the Notification No. P. XXIX-Food-
5-5(42)/80 dated April 21, 1981, issued by the State
Government of Uttar Pradesh, by which cl. 4 of the Uttar
Pradesh Foodgrains (Procurement and Regulation of Trade)
Order, 1978, has been amended, particularly on three
grounds, namely, (1) the impugned notification fixing the
maximum limit of wheat permitted to be possessed by a
wholesale dealer at 250 quintals, at a time, is an
unreasonable restriction on the freedom of trade guaranteed
under Art. 19(1)(g) of the Constitution; (2) there is no
distinction made between a wholesale dealer and a commission
agent in as much as the maximum limit of wheat allowed to be
possessed by them is the same, i.e., 250 quintals at a time
and the fixation of such limit in the case of a wholesale
dealer is arbitrary, irrational and irrelevant and thus
violative of Art. 14 of the Constitution; and (3) the
instructions conveyed by the State Government by its
teleprinter message dated March 31, 1981, placing
restrictions
1172
on movement of wheat by traders on private account from the
State of Uttar Pradesh to various other States and on inter-
district movement of wheat within the State, were in breach
of their fundamental right under Art. 19(1)(g) read with
Art. 301 of the Constitution.
The first and second contentions may conveniently be
dealt with together. In order to appreciate these
contentions, it is necessary to state a few facts:
During the year 1979-80, the country was victim to a
very serious drought which affected with Kharif as well as
Rabi crops. The Government of India, therefore, fixed a
target of 9.5 million tonnes of wheat to be purchased in the
summer months of 1981 for the national buffer stock. It
fixed the procurement price at Rs. 130 per quintal as
against the support price of Rs. 127 per quintal recommended
by the Agricultural Price Commission to provide a better
incentive to the farmers. The procurement was carried out as
a measure of price support without any restriction on
movement from one State to another. However, some of the
States were implementing local laws with regard to ensuring
that the private trade adhered to the stock limit
restrictions on them and did not try to corner stocks for
speculation purposes. The original target fixed for
procurement was 9.5 million tonnes but at the end of June,
only 6.5 million tonnes had been purchased, leaving a
deficit of 3 million tonnes. The result was that the
Government of India was thus forced to buy 1.5 million
tonnes of wheat in the world market. The Government’s
procurement drive was mainly frustrated by wholesale dealers
of foodgrains cornering the stocks of wheat by paying a
price higher than the procurement price to the farmers.
The imperatives of the situation demanded that the
speculative tendencies of the trade were curbed by strictly
enforcing the stock limits of traders. Under original cl. 4
of the Uttar Pradesh Foodgrains (Procurement and Regulation
of Trade) Order, 1978, a wholesale dealer, commission agent
or a retailer could have in stock wheat not more than 750
quintals, 750 quintals and 100 quintals respectively, at any
time. In view of the worsening situation in the national
buffer stock and in the light of the experience gained
during the past few years, the State Government was of the
opinion that it was necessary and expedient to re-fix the
stock limits of such dealers. This was expected to maximise
procurement of wheat to meet the requirement of public
distribution, as well as, the buffer stock.
1173
It cannot be asserted that the restriction imposed by
the State Government on wholesale dealers of wheat is either
arbitrary or is of an excessive nature. The fixation of the
stock limit of wheat to be possessed by wholesale dealers,
at any time, at 250 quintals is an important step taken by
the State Government to obviate hoarding and black-marketing
in wheat which is in short supply. It is hardly necessary to
emphasise the extent and urgency of the evil sought to be
remedied thereby. Perhaps fixation of the minimum limit of
wheat permitted to be possessed by a wholesale dealer at 250
quintals, at a time, is too low, but the restriction so
imposed cannot be treated to be arbitrary or of an excessive
nature, beyond what is required in the national interest. It
is a matter of common knowledge that wholesale dealers of
foodgrains mainly operate in large cities and towns and have
the means and capacity to manipulate the market by
withholding stocks of a commodity. There was need to check
such speculative tendencies in the trade. It was therefore
felt expedient to re-fix the stock limit of wheat for
wholesale dealers at 250 quintals at a time, as in the case
of a commission agent. The underlying idea is that the
wholesale dealers should be allowed to continue their
trading activities within reasonable limits. The fixation of
stock limit at 250 quintals implies that wholesale dealers
can have at any time, in stock, a wagon-load of wheat. In
Krishan Lal Praveen Kumar & Ors. etc. v. The State of
Rajasthan, this Court has interpreted the words ‘at any
time’ as meaning ‘at any given time’. This means that a
wholesale dealer should not have in stock more than 250
quintals at a time. But there is nothing to prevent a
wholesale dealer from entering into a series of transactions
during the course of the day. This Court in Krishan Lal
Parveen Kumar’s case (supra) and Suraj Mal Kailash Chand &
Ors. v. Union of India & Anr., has upheld the validity of a
similar notification dated March 23, 1981, issued by the
State Government of Rajasthan in exercise of the powers
conferred by cl. 18 of the Rajasthan Trade Articles
(Licensing and Control) Order, 1980, fixing the maximum
limit of wheat to be possessed by a dealer at any one time
at 200 quintals, on the ground that it is a reasonable
restriction by the State Government within the meaning of
Art. 19(6) of the Constitution. In view of these decisions,
it is difficult to conceive as to how the contention based
on Art. 19(1)(g) of the Constitution can survive.
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True it is, if the governmental action is arbitrary or
there is no rational nexus to the object sought to be
achieved it is liable to be struck down as violative of Art.
14 of the Constitution. The State Government has adopted
various measures in the interest of the general public for
the control of production, supply and distribution of, and
trade and commerce in, essential commodities. To obviate
hoarding and blackmarketing in foodstuffs, it has
promulgated the Order. It introduces a system of checks and
balances to achieve the object of the legislation, i.e., to
ensure equitable distribution and availability of essential
commodities at fair prices. It cannot be said that looking
to the prevailing conditions, the imposition of such
restrictions does not satisfy the test of reasonableness.
Nor can it be said that the fixation of such stock limit is
arbitrary or irrational having no nexus to the object sought
to be achieved and is, therefore, violative of Art. 14. On
the contrary, the limitation imposed fixing a stock limit
for a wholesale dealer at 250 quintals is a reasonable
restriction within the meaning of Art. 19(6) of the
Constitution.
One further point requires to be noticed. The
contention that the action taken by the State Government in
issuing the impugned teleprinter message amounts to an
‘intrusion’ on the fundamental right to carry on trade or
business under Art. 19(1)(g) or on the freedom of trade,
commerce and intercourse under Art. 301 of the Constitution
appears to be wholly misconceived. As already stated the
instructions conveyed by the State Government by the
impugned teleprinter message imposing the requirement for
the making of an endorsement by the Deputy Marketing Officer
or the Senior Marketing Officer or the physical verification
of stocks of wheat during the course of transit, are not a
‘restriction’ on the fundamental right to carry on trade or
business guaranteed under Art. 19(1)(g) or on the freedom of
trade, commerce and intercourse under Art. 301. These are
nothing but regulatory measures to ensure that the excess
stock of wheat held by a wholesale dealer, commission agent
or a retailer is not transported to a place outside the
State or from one district to another. Even if these
requirements are considered to be a ‘restriction’ on inter-
State or intra-State trade, that is, across the State or
from one part of the State to another, the limitation so
imposed on the enjoyment of the right cannot be considered
to be arbitrary or of an excessive nature and thus violative
of Art. 19(1)(g) or Art. 301 of the Constitution. The State
Government in its return has stated that there is no ban on
the export of wheat from the State of Uttar Pradesh to
various other States or from one
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district to another within the State, subject to the making
of an endorsement by the Deputy Marketing Officer or the
Senior Marketing Officer concerned. The petitioners who are
wholesale dealers of foodgrains in the State of Uttar
Pradesh are, therefore, free to carry on their business
within the permissible limits, i.e., they may carry on their
trade or business or enter into inter-State or intra-State
transactions of wheat subject to the stock limit of 250
quintals at a time.
In the result, the writ petitions must fail and are
dismissed. The stay orders passed by the Court, from time to
time, stand vacated. Formal orders for vacating stay granted
in those matters need not be issued. There shall be no order
as to costs.
S.R. Petitions dismissed.
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