PETITIONER: MANNALAL JAIN Vs. RESPONDENT: THE STATE OF ASSAM AND OTHERS. DATE OF JUDGMENT: 29/09/1961 BENCH: DAS, S.K. BENCH: DAS, S.K. SINHA, BHUVNESHWAR P.(CJ) SARKAR, A.K. AYYANGAR, N. RAJAGOPALA MUDHOLKAR, J.R. CITATION: 1962 AIR 386 1962 SCR (3) 936 CITATOR INFO : E 1974 SC 366 (95) R 1981 SC2001 (5) RF 1981 SC2030 (4,12) ACT: Food Control-Licence for wholesale dealing in rice and paddy-Licensing Order prescribing- conditions for licence- state Government issuing instructions to licensing grant of authorities to grant licences to co-operative societies only-Propriety of-Grant of license to co-operative societies and refusal to others Legality of-Essential commodities Act, 1955(10 of 1955), ss. 3 and 6-Assam Foodgrains (Licensing and 'Control) Order, 1961, cl. 5. HEADNOTE: In exercise of the powers conferred by s. 3 of the: Essential commodities Art, 1955, the Assam Government made the Assam Foodgrains (Licensing and Control) Order, 1961. This Order provided that no person could do business in foodgrains including, rice and paddy, in wholesale quantities except under a licence issued thereunder. Clause 5 of, the Order laid down in sub. cls. (a) to (e) matters which the licensing authority shall, among other matters, which have regard to in granting or refusing a license sub- cl. (e) being whether the applicant is a co-operative society". In 1959, directions had been issued to all, licensing authorities by the Government that the rights of monopoly procurement had been given to Apex Co-operative Society. The petitioner applied for a licence but was refused in view of the provisions of sub-cl. (e) of cl. 5 of the Order. The petitioner challenged the order refusing the licence on the grounds: (1) that sub-clause (e) was ultra vires 937 as' it was beyond the powers granted to the State Government under s. 3 read with s. 5 of the Act, and (ii) that sub-cl (e) had been applied in a discriminatory manner with a view to create a monopoly in favour of the Apex Co-operative Society. Held, (per C.J., Das and Ayyangar, JJ.), that sub-cl. (c) of cl. 5 of the Order was not ultra vires s. 3 read with s. 5 of the Act, but the impugned,order rejecting the application of the petitioner was bad as it infringed the rights of the petitioner guaranteed under Arts, 14 and 19 of the Constitution. Section 3 of the Act authorised the making of an order to achieve two objects, for maintaining or increasing supplies of essential commodities and for securing their equitable distribution and availability at fair prices. Sub-clause (e) of cl. 5 of the Control Order,, 1961, which enabled the licensing authority to' prefer a cooperative society in certain circumstances in the matter of granting a licence, was not unrelated to the objects mentioned in s.3 of the Act. A co-operative society may, by reason of the place which it occupies in the village economy of a particular area, be in a better position for maintaining or increasing supplies of rice and paddy and even for securing their equitable distribution and availability at fair prices. Ramanlal Nagardas v. M. S. Palnitkar, A. I.R. 1961 Guj. 38, distinguished. Sub-clause (e) permitted the licensing authority to give preference to co-operative societies in certain cases but it did not. have the effect of creating a monopoly in favour of co-operative societies. In the present case the licensing authority refused licence to the petitioner for the only reason and purpose of granting a monopoly to co-operative societies; it had administered the law in a discriminatory manner and for the purpose of achieving the ulterior object of creating a monopoly in favour of co-operatives which object was not within sub-cl. (a), The licensing Authority was influenced, not by considerations mentioned in cl. 5 of the Order, but by the instruction issued by the' State Government to grant licences to cooperatives only. It was not proper for the, Government to issue instructions to the licensing authorities when they were required to act according to the provisions of law. Per Sarkar and Mudholkar,JJ. Sub-clause (e) of cl. 5 of the Order served the object of s. 3 of the Act to maintain or increase the supplies of essential 'commodities and to secure their equitable distribution and availability at fair prices and Was not ultra vires. Even it the Order allowed only one class, namely cooperative societies, to do the business and prohibited others. it would; still advance the objects, of, the Act; and the prohibition of the others. doing the business would amount. to, reasonable restrictions under Art. 19(6). 938 Narendra Kumar v. The Union of india, (ISM 2 S.C.R. 375 and Glass Chatons Imports a Users' Association v. The Union of India, (W.P. 65 of 1959, unreported), relied on. The licensing authority had not exercised its power under sub-cl. (e) in a discriminatory manner in the prevent case. The authority was entitled to give preference to a co- operative society and that is what it has done. Though the result of this preference was to prevent the petitioner from carrying on his business, it was in the circumstances, a reasonable restriction on his right as it was necessary for securing foodgrains at reasonable prices and in adequate quantities. There were no directions given, by the State Government in 1961 to licensing authorities to grant licences only to co-operative societies and it could not be said that the licencing authority had only carried out the directions of the Government and had not acted independently. In fact, the Order itself carried a direction in sub-cl. (e) to give preference to co-operative societies. The co-operative societics formed a class by themselves and a provision giving preference to such a class better served the objects of the Act, and had a clear nexus with the object of the Act and did not offend Art. 14. JUDGMENT:
ORIGINAL JURISDICTION: Petition No. 303 of 1960.
Under Article 32 of the Constitution of India for the
enforcement of Fundamental Rights.
C. K. Daphtary, Solicitor-General of India, N. Sharma, S.
C. Nath and R. Gopalakrisnan, ‘for the Petitioner.
M. C. Setalvad, Attorney-General `for India and Naunit Lal,
for the Respondents.
1961. September 29. The Judgment of Sinha C. J., S. K. Das
and Rajagopala Ayyangar was delivered by
S.K. DAS. J.-This writ petition by one Mannalal Jain was
originally filed on October 17, 1960, and the order
complained of was dated September 13, 1960. This was an
order made by the Deputy Commissioner, Kamrup Gauhati,
rejecting an application made by the petitioner for the
grant of a license for the year 1960 for dealing ‘in rice
and paddy under the relevant provisions of the Assam
Foodgrains (Licensing and Control) Order, 1960. This writ
petition was put up for
939
hearing in this Court on February 2, 1961. The hearing was,
however, adjourned sine die, because it was stated before us
that the period of licence for 1960 had already expired and
a fresh application would have to be made for a license for
1961. A fresh application was accordingly made by the
petitioner on February 4, 1961. But before that date: a
fresh Assam Foodgrains (Licensing, and Control) Order, 1961
was made by the Governor of Assam and the application made
by the Petitioner had to be dealt with under the new Order.
No order having been made on this fresh application by the
Deputy Commissioner, the petitioner moved this Court by
means of a petition (C.M.P. No. 850 of 1961) asking for
certain reliefs, one of which was that the respondents,
namely, the licensing authorities, should be directed to
consider the application of the petitioner and grant him a
license. On April II, 1961 an order was made rejecting the
application of the petitioner. This order which is impugned
before us was in these terms.
Having regard to the existing licenses in
these areas (Mangaldai and Gauhati), and the
quantity of foodgrains available therein, any
further license would be superfluous.”
When the petition was again put up for hearing on May 1,
1961 the petitioner asked for time to amend his original,
petition, which related to the order refusing to grant him a
license for 1960. This amendment became necessary by reason
of the subsequent order passed on April 11, 1961, quoted
earlier, by which the petitioner’s application for a license
for 1961 was rejected. This amendment was allowed.
Therefore, we have now to deal with the writ petition as
amended by the petition dated May 5, 1961 (C.M.P. No. 1140.
of 1961).
It is necessary now to state the relevant facts out of which
the petition has arisen. The petitioner states that he is
an Indian citizen carrying on a business dealing in rice
and paddy in the district of
940
Kamrup in the State of Assam. In 1955 was enacted the
Essential Commodities Act, 1955 (Act 10 of 1955). In
exercise of the powers conferred by s. 3 of the said Act,
read with a notification by which the said powers were
delegated by the Central Government to the Government of
Assam, the latter Government made an Order called- the Assam
Foodgrains (Licensing and Control) Order. 1958. The result
of this was that no dealing in rice and paddy in wholesale
quantities was permissible unless the petitioner obtained a,
license from the relevant licensing authority. The
petitioner states that he obtained such a license in 1958.
This license expired on December 31, 1958. The case of the
petitioner is that in 1959 also he carried on his business
though there is some dispute as to whether he obtained a
license for that year. On November 26, 1959, the petitioner
received a letter from the office of the Deputy Director of
Supply, Gauhati, which said that his license would not be
renewed after December 31, 1959. This communication, it is
stated, was the result of a decision taken by the Government
of Assam on the advice of a body called the Food Advisory
Council to give a right of monopoly procurement of paddy to
a cooperative society in the district of Kamrup known as the
Assam Co. operative Apex Marketing Society Ltd. (respondent
No. 6 before us). In a letter dated November 13, 1959, the
Director of Sup-ply, Assam, indicated the policy to be
followed to give effect to the decision aforesaid in these
terms
“The right of monopoly procurement in respect
of Kamrup district including Mangaldai Sub-
division, Taxpur Sub-division, Cachar
district, Nowgong district including United
Mikir and North Cachar Hills and North
Lakhimpur Sub-division has been given to the
Co- operative Apex Marketing Society. The
Society will procure paddy from the ‘growers
through various service Co-operative Societies
spread over the district or sub-division. They
941
will procure all available surplus paddy and
deliver to Supply Department the quantity
required for the buffer stock for those areas.
Any paddy procured by them which is not
required by us may be delivered to the mills.”
A copy of the letter was forwarded to all licensing
authorities. on January 5, 1960, the Assam Foodgrains
(Licensing and Control) Order, 1960, came into force. This
replaced the earlier Order of 1958. Clause 5 of the 1960
Order was in these terms:
5. Maiters to be- taken into consideration
for granting a license.-In granting or
refusing a license under this Order, the
licensing authority shall among other matters
have regard to the following,- namely:-
(a) the stock of foodgrains available in the
locality for which the license is required;
(b) the number of persons who have applied
for and/or been granted licenser, in respect
of the foodgrains under this Order in the
locality
(c) the business ordinarily carried on by
the applicant; and
(d) the past activities of the applicant as
a licensee or business man/firm:
Provided that the State Government may
from time to time modify the conditions for
granting a license.”
On January 28, 1960 the petitioner made his application for
a license for the year 1960. This application was rejected
by an order dated February 17, 1960. The reason given for
the rejection was in these terms:
“You are hereby informed that as ;the Co-
operative Apex Marketing Society has been
given the right of monopoly purchase in the
Kamrup district this year, your case. cannot
be considered for issue of the license.
942
This reason was obviously based on the decision as to
monopoly procurement, which the Government of Assam had
adopted.
Against-this order the petitioner moved the High Court of
Assam by means of a writ petition under Art. 226, of the
Constitution. The High Court allowed the petition mainly on
the; ground that the application, of the petitioner for a
license for, the year 1960 was not considered on merits by
the licensing authority in accordance with the provisions of
el. 5 of the Assam Foodgrains (Licensing and Control) Order,
1960. The High Court did not go into the larger question
whether the State could or could not create a monopoly in
the matter of procurement of paddy under the said provisions
by means of executive instructions issued to the licensing
authorities. It however, quashed, the order dated February
17, 1960 and issued a writ of mandamus directing the
licensing authority to consider the application of the
petitioner on- merits and in accordance with the provisions
of the aforesaid Control Order. Till June 7, 1960 no order
was passed by the licensing authority, and on that date the
petitioner made two applications to the High Court, one for
directing the licensing authority to grant,, him & license
for 1960 and the other for taking action, for contempt of
court. A notice of these applications, it is stated, was
served on the respondents. On June 8, 1960 the licensing
authority made another order refusing to grant a license to
the petitioner. This order stated that “as the Assam Co-
operative Apex Marketing Society Ltd., had already been
granted a license to deal in rice and paddy., with its
branches spread all over the district, it was considered
unnecessary to grant further dealing licenses to individual
dealers for the same area”. On June 9, 1960 the
applications earlier made by the petitioner to the High
Court on June 7, 1960 were withdrawn and a fresh application
was made on June 15, 1960, which, was directed against the
order dated June 8, 1960. On
943
August 10, 1960 the-High Court again set aside the order and
directed the licensing authority to act independently of
instructions received from the Government and, to apply its
mind to the merits of the application and, decide it in
accordance with the relevant provisions of the Assam
Foodgrains (Licensing and Control) Order, 1960. Again, no
orders were made by the licensing authority till September
8, 1960 in accordance with the directions of the High Court,
and the petitioner made two applications on that date: one
for enforcing the direction of the High Court, and the
other for initiating proceedings in contempt. These
applications were admitted and it is stated that notices
were served on the respondents, including the licensing
authority, on that very date. On September 13, 1960 the
licensing authority made another order, again rejecting the
application of the petitioner. This order stated inter
alia:
“For the areas for which the application have
been made the Assam Co-operative Apex
Marketing Society Ltd., has earlier. applied
for and has been granted license. This is as
relevant consideration under Clause 5 (b) of
the Assam Foodgrains (Licensing and Control
Order, 1960. The stock of foodgrains avail
able in the area can easily be procured by the
party already given license. Being a on
operative, it has better facility in this
respect.
As such, I do not find it necessary to grant
license to the applicant. The petition is,
therefore, rejected”.
This time instead of going to the High Court of Assam, the
petitioner came here and filed his writ petition on October
17, 1960 (Writ Petition No. 303 of 1960). Thereafter,
certain proceeding ,took place in this Court to which we
have earlier referred in the first paragraph of this
judgment The amended writ petition as it now stands is
directed against the order of the licensing authority dated
April 11, 1961, by which it rejected the
944
application of the petitioner for a license for 1961. The
provisions of the Assam Foodgrains (Licensing and Control)
Order 1960 are no longer relevant, because a fresh Order
called the Assam Foodgrains (Licensing and Control) Order,
19,61, was made by the Governor of Assam. We shall,
hereinafter call this the Control Order, 1961. It is
necessary ‘to read here cl. 5 of the Control Order, 1961.
5. Matters to be taken into consideration
for granting a license.-In granting or
refusing a license under this Order, the
licensing authority shall, among. other
matters, have regard to the following,
namely:-
(a) the stock of foodgrains available in the
locality for-which the license is required;
(b) the number of persons who have applied
for and those who have been granted licenses
in respect of the foodgrains under this Order
in the locality;
(c) the business ordinarily carried on by
the applicant;
(d) the past activities of the applicant as
a licensee or business man/firm; and
(e) whether the applicant is a cooperative
society.
It should be noticed that the proviso to old el. 5 was
omitted and a new sub-cl. (e) was added. This sub-clause
enables the licensing authority, in granting or refusing a
license, to have regard to the consideration whether the
applicant is a co-operative society. To complete the
statement of facts, it may perhaps be observed that on
November 10, 1960, the High Court rejected the application
for proceeding against the opposite, parties by way of
contempt, mainly on the ground. that the order made on
September 13, 1960, was not before it.
On behalf of the petitioner the order dated April 11, 1961,
has been impugned on two main
945
grounds. The first ground of attack is that sub-cl.(e) of
cl.5 of the control Order, 1961 is ultra vires,because it
goes beyond the powers granted to the State Government under
s. 3 read with S. 5 of the ‘Essential Commodities’ Act,
1955. The second ground of attack is that ‘even if sub-cl.
(e) of cl. 5 of the Control Order.. 1961, is intra vires
being within the powers granted to the State Government, it
merely allows the licensing authority to take into
consideration, among, other relevant matters, the
circumstance that the applicant for a licence is a co-
operative society; it does not say that a monopoly right of
procurement Should be given in favour of a co-operative
society by excluding all. Others; therefore, it was not open
to the, licensing authority to proceed on the footing as if
that subclause bad created a right of monopoly in favour of
co-operatives. The argument. is that in the present case,
the licensing authority instead of applying its mind to the
provisions of cl. 5 of the Control Order, 1961, went by the
instructions issued by the State Government to grant a.
right of ,monopoly to cooperative societies and based its
order on such, instructions.., in spite’ of directions to
the contrary given by the High Court on earlier applications
made by the petitioner. In other words, it is contended
that the impugned order was a mere” colourable exercise of
power in the sense that instead of exercising the powers in
accordance with the provisions of law by which the licensing
authority had to be guided, it acted in, accordance with the
instructions of the State Government and granted ‘a monopoly
in favour of co-operative, societies,- such monopoly not
being contemplated by the provisions of cl. 5 of the Control
Order, 1961; therefore., the impugned order was bad being
without any legal authority or jurisdiction, and as it took-
away the right of the petitioner to carry on his trade, and
furthermore made a discrimination against him for the
purpose of granting a monopoly to respondent No. 6 not
contemplated by law, it violated the
946
petitioner’s rights under Arts. 14 and 19 of the
Constitution. He is accordingly entitled. to come. to this
Court under Art. 32 of the Constitution to have the order
quashed. The petitioner has also claimed that for the same
reasons, the grant of a license in favour of respondent No.
6 should also be quashed.
On behalf of the respondents, the State- of Assam, its
officers, and the Assam Co-operative Apex Marketing Society
Ltd. (respondent No. 6), it has been urged that neither of
the aforesaid two grounds of attack is valid. On their
behalf the argument is that sub-cl. (e) of cl, 5 of the
Control Order, 1961, is within the authority and power
granted to the State Government under s. 3 read with a. 5 of
the Essential Commodities Act, 1955. Secondly, it is
contended that no monopoly has been granted to the Assam Co-
operative Apex Marketing Society Ltd., and the order of the
licensing authority dated April 11, 1961 is based on the
considerations referred to in sub-cls. (a) and (b) of el. 5
of the Control Order, 1961, and cannot be assailed on a
petition under Art. 32 of the Constitution.
We proceed now to a consideration of the grounds of attack
and the replies thereto. As to the first ground of attack
it must be made clear at the very outset that the vires of
the Essential Commodities Act, 1955 have not been challenged
before us. What has been contended before us is that s.3 of
the Act gives, certain powers to the Central Government,
which powers the Central Government has delegated the State
Government of Assam. These powers it is contended, do not
authorise the insertion of sub-cl. (e) of cl. 5 of the
Control Order, 1961; in other words the argument is that
whether the applicant for a licence is a, co-operative
Society or not has no relevance whatsoever to the objects
fur which s. 3 grants the powers to the Central-Government
or its delegate to make certain Orders. Sub-section (1) of
a. 3 is relevant to this argument and reads:
947
“3 (1) If the Central Government is of *onion
that it is necessary or expedient an to do for
maintaining or increasing supplies of my
essential commodity or for securing their
equitable distribution and availability at
fair prices it may by, order, provide for
regulating or prohibiting the production,
supply and distribution thereof and trade and
commerce therein.”
Sub-section (2) of s. 3 which we need not read enumerates
the various categories of Orders which can be made in
exercise of the powers conferred by sub-s.(1), but without
prejudice to the generality of those powers. Now, the
argument before us is that the, powers under a. 3 can be
exercised when the Central Government or its delegate is of
opinion that it it; necessary or expedient to exercise the
powers to achieve two objects: (a) for maintaining or
increasing supplies of any essential commodity, or (b) for
securing their equitable distribution and availability at
fair prices. It is contended that the circumstance whether
the applicant for a licence is a co-operative society or not
has no connection what so ever with the aforesaid two
objects and therefore, sub-cl. (e) of cl.5 of the Control
Order, 1961 is not within the powers granted by a. 3 of the
Act.
We cannot accept this argument in the very broad terms in
which it has been stated. We are astisfied that cl. 5 of
the Control Order, 1961 does not provide for a monopoly in
favour of cooperative societies. The clause enumerates five
matters and states that the licensing authority shall have
regard to those matters in granting or refusing a license.
The five matters enumerated in the clause are not exhaustive
of the matters which the licensing authority may consider;
because the clause says that the matters enumerated therein
are five “”among other matters” which the licensing
authority may consider. Obviously enough it is open to Ye
licensing authority to
948
consider all matters relevant to, the’grant or refusal of
a license and the; five matters enumerated in the clause
merely highlight some of those matters.All that can be said
is that sub-cl. (e) enables the licensing authority to,;
prefer a co-operative society in certain circumstances in
the matter of granting a license; in other words, there may
be cases or localities : where the considerations set out in
sub-cl. (e) may override other considerations, in the matter
of granting a license. We do not think that sub- cl. (e)
has any more far reaching effect. Indeed the: learned
Attorney-General appearing for : the respondents conceded
that sub-cl. (e) of cl. 45 did not have the effect of
creating a monopoly in favour of co-operative societies.
Proceeding, therefore, on the footing that sub-cl. (e) of
el. 5 does not provide for the creation of a monopoly, can
it be said that it is out. ,side the powers conferred. on
the State Government by s. 3 of’ the Essential Commodities
Act, 1955 ? It is no disputed before us that sub-
cls.(a) (a) to (d)fall within the powers conferred by s.
3. Matters such as the stock of foodgrains, available in
the locality for which the license is required, the number,
Of persons who have applied for and those who have been
granted licenses in the locality, the business ordinarily
carried on by the applicant, and the ‘Past activities of the
applicant as a licensee or- businessman, are undoubtedly
matter& which have; relation to the two objects mentioned in
s. 3. Can it be. said that the fifth matter mentioned in
sub-cl. (e) viz., whether the applicant is a co-operative
society is completely’ unrelated to those two, objects? We
are unable to say that it is. In the counter-affidavit
filed on. behalf of the respondents it has; been stated that
cooperative societies have better facilities for procuring
foodgrains and are in a position to ensure scheduled prices
to the farmers who, grow paddy. It has been further stated
that amongst the cooperative societies, axe primary,
societies which
949
consist of the growers of paddy there are also cooperative
societies called supply co-operatives which are in a
position to eliminate middle-man’s profits. In para. 4 it
was stated that the National Development Council decided
that the State should take over wholesale trade in
foodgrains with a view to maintaining price levels which are
fair to the producer and the consumer and reduce,-to the
minimum the disparity between the prices received by the
farmer and the prices paid by the consumer throughout the
year. It was also decided that an adequate number of
primary marketing societies should be set up and linked with
village cooperatives which should serve as agencies for
collection and sale of foodgrains at assured price,% at the
village level. The affidavit then stated
In view of the decision of the National
Development, Council, the Government of Assam
in consultation with their State Food Advisory
Council decided that in making procurement of
rice and paddy in the State, preference should
be given to the co-operative societies
wherever they have resources and facilities.
We are of the view that by reason of the position which co-
operative societies may occupy in the village economy of a
particular area,, it cannot be laid down as a general
proposition that sub-cl.(e) of cl 5 of of the Control Order,
1961, is unrelated to the objects mentioned in s. 3 of the
Essential Commodities Act, 1955. There may be places or
areas where co-operative societies are in a better position
for maintaining or increasing supplies of rice and., paddy
and even, for- securing their equitable distribution and
availability at fair prices. We must, therefore repel the
very broadly stated contention of the learned counsel for
the petitioner that sub-cl. (e) of cl. 5 of the Control
Order, 1961, can have no-relation whatsoever to the two
objects mentioned in s. 3 of the Essential Commodities Act,
1955. On behalf of them petitioner reliance
950
was placed on the decision in Ramanlal Nagardas v. M. S.
Palnitkar (1). That was a case in which the validity of
State action in entrusting wholesale distribution of sugar
which is an essential commodity under the Essential Com-
modities Act, 1955, to Co-operative Societies only and
excluding other dealers holding similar licenses like the
co-operative ‘societies from such distribution, was
challenged and adore for consideration. It was held that a
State could make a classification for the purpose of@
achieving particular legislative objects but the
classification must satisfy two conditions : (1) it must be
founded on intelligible differentia, and (2) the differentia
must have a rational relation to the objects sought to be
achieved. The question was considered from the point of
view of Art. 14 of the Constitution and it was held that the
action of the State Government in entrusting wholesale
distribution of sugar to cooperative societies to the
exclusion of other licence-holders amounted to a
discrimination which violated the right guaranteed under
Art. 14. The principles underlying Art. 14 of the Constitu-
tion are now well-settled and have been enunciated and
explained in a number of decisions of this Court and we
consider it unnecessary to refer to those principles in
detail. In the case under our consideration no
discrimination has been made between one class of license-
holders and another class of license-holders as in the case
of Ramanlal Nagardas V. M. S. Palnitkar (1). What has
happened in the present’ case is that licenses have been
granted only to cooperative societies and a license has been
denied to the petitioner, the licensing authority proceeding
on the footing that a monopoly must be created in favour of
co-operative societies. A discrimination has indeed taken
place ‘as against the petitioner, a discrimination which is
not justified by the ‘Provisions of cl. 5 of the Control
Order, 1961. In dealing with the application of the
petitioner the licensing authority
(1) A. I. R. 1961 Guj. 38.
951
has made, a, discrimination which is met justified by 5.
That would take us to the second argument of the learned
counsel for the petitioner, but on his first argument the
decision in Ramanlal Nagardas v. M. S. Palnitkar (1) is of
no assistance. Sub-clause (e) of el. 5, we have already
stated, enables the licensing authority to give preference
to a co-operative society in certain circumstances; but it
does not create a monopoly in favour ;of co-operative
societies. The preference given has a reasonable relation
to the objects of the legislation set out in s. 3 of the
Act; therefore, sub-cl. (e) of cl. 5 of the Control Order,
1961, cannot be held to be bad on the ground of class
legislation but the passing of an order under the sub-clause
for a purpose not contemplated by it will amount to
discrimination and denial of the guarantee of equal
protection of the law.
This brings us to the second argument urged on behalf of the
petitioner and here we think that the learned counsel for
the petitioner is on much surer ground. It was open to the
licensing authority to give preference to co-operative
societies, if it was of the opinion that granting a license
to a co-operative society in a particular locality would
facilitate the objects of s. 3 of the Act. This is not what
the licensing authority did. He repeatedly refused a
license to the petitioner, for the only reason and purpose
of granting a monopoly to co-operative societies. In other
words, the discrimination that has been made by the
licensing authority is really in the administration of the
law. It has been administered in a discriminatory, manner
and for the purpose of achieving an ulterior object, namely,
the creation of a monopoly in favour of co-operatives, an
object which, clearly enough, is not within sub-cl. (e) of
el. 5 of the Control Order, 1961. We have quoted earlier
the various orders which the, licensing authority had
passed. Those orders clearly show that the licensing
authority refused a licence to the
(1) A.I.R. 1961 Guj. 38.
952
petitioner not on grounds referred to in sub-cls.(a) and (b)
of cl. 5 but on the ground’ that the State Government had
decided to introduce a right of monopoly procurement of
paddy in favour of co-operative societies and therefore, no
licenses should be granted to individual dealers other than
cooperative societies. Judged against the background of
facts to ‘which we have earlier referred in this Judgment,
the impugned order dated April 11, 1961 appears to us to
have been based on the same ground, namely, the creation of
a monopoly in favour of co-operatives, even though the order
refers to existing licenses and the quantity of foodgrains
available in the locality. In the course of the hearing
before us, the case was adjourned in order to give the
parties an opportunity of filing necessary affidavits to
show whether individual dealers other than co-operatives
have been completely excluded in the whole of the State in
the matter of dealing in paddy. The affidavits show that
private dealers have been completely excluded. In the
affidavit filed on behalf of respondent No. 1, it has been
stated in para. 4:
“It is not denied that in the year 1961
licenses for the procurement of paddy have
been issued to the co-operatives in all the
paddy producing districts in Assam.”
To show however that no monopoly hag been created in
favour of a particular co-operative society like respondent
No. 6, it has been stated that a number of co-operative
societies have been or are being granted licenses for the
procurement of paddy.’ In our view these statements in the
affidavits filed on behalf of the respondents show only one
and one object viz., creation of a monopoly in favour of
cooperatives. To achieve that object the State Government
has resorted to an indirect method. Instead of making an
Order authorising such monopoly (if the State was
953
competent to make such an Order under the Essential
Commodities Act, 1955, as to which we express no opinion),
it has chosen to adopt the indirect method of issuing
instructions to the licensing authorities in all the
districts to grant licenses to co-operatives only. The vice
of the impugned order lies in the licensing authority
accepting such instructions and passing an order in
accordance there with. The duty of the licensing authority
was to pass orders in accordance with el. 5 of the Control
Order, 1961. Instead of doing that. it passed an order in
accordance with the instructions given to it on behalf of
the State Government, instructions which appear to us to be
not in consonance with sub-cl.(e) of el. 5; because sub-cl.
(e) contemplates a preference to co-operative societies in
certain circumstances, but not a monopoly in their favour.
We accordingly hold that the impugned order is bad as
violating the rights of the petitioner guaranteed under
Arts. 14 and 19 of the Constitution. We must, therefore,
quash the order of the licensing authority dated April 11,
1961. We must also quash the order by which the licensing
authority granted a licence in favour of respondent No. 6.
The licensing authority must now consider the application of
the petitioner for a license for the year 1961 on merits
along with the application , of respondent No. 6 and such
other applications as may be still pending. In dealing with
these applications the licensing authority must have regard
to the provisions of cl. 5 of the Control Order, 1961, and
such other provisions of law as have a bearing on them, in
the light of the observations made in this judgment. it
would be the duty of the licensing authority to ignore all
instructions which are not in consonance with the provisions
of law by which it is to be guided As the year 1961 will
come to an end within a few months., the applications should
be dealt with as expeditiously as possible so that the right
of the petitioner may
954
not be rendered infructuous by reason of the delay made in
disposing of the applications.
Before we part with this case we express our deep concern
over the manner in which the State Government or its
officers have issued instructions in the matter of granting’
of licenses, instructions which clearly’ enough are not in
consonance with the provisions of law governing the grant of
such licenses. We doubt the wisdom of issuing executive
instructions in matters which are governed provisions of
law; even if it be considered necessary to issue
instructions in such a matter,, the instructions cannot be
so ‘framed or utilised as to override the provisions of law.
Such a method ‘Will destroy the very basis of the rule of
law and strike at the very root of orderly administration of
law. We have thought it necessary to refer to this matter
because we feel that the instructions which the State
Government or its officers have issued in the matter of
granting of licenses for the procurement of paddy are not in
consonance with the provisions of el. 5 of the Control Order
1961,
In the result the petition is allowed with costs and the
necessary orders should now issue as directed above.
SARKAR J.-The petitioner is a citizen of India and carries
on business as dealer in rice and paddy in the State of
Assam. Since 1958, dealing in rice and paddy was controlled
in that State by Orders made by the State Government from
time to time under the Essential Commodities Act, 1955 by
virtue of powers delegated to it by the Central Government
under s. 5 of that Act. These Orders here.after called
Licensing Orders,, provided that no person could engage in
any purchase, sale or storage for sale of any foodgrains,
which included rice and paddy in wholesale quantities
except, under and in accordance with the terms and condition
of a licence business involving issued thereunder.
Purchase or, sale in wholesale quantities was defined
955
as purchase, or sale of quantities exceeding ten maunds in
any one transaction. The petitioner had obtained a license
to deal in paddy for the year 1958. It is not clear whether
he had obtained a license to do so for 1959. With
these years, however, this case is not concerned.
On January 28, 1960, the petitioner had applied under the
Licensing Order then in force for a license to deal in paddy
in Kamrup district: of Assam for the year 1960. His
application was refused by an order made on February 17,
1960 on the ground that it could not be considered as the
Co-operative Apex Marketing Society had been given the right
of monopoly purchase in Kamrup district. The petitioner then
moved the High Court of Assam under Art. 226 of the
Constitution to quash this order. On April 27, 1960, the
High Court delivered judgment quashing the order on the
ground that the authority concerned was bound to ;consider
the petitioner’s application for licence and had failed to
do so. The High Court issued a writ of mandamus directing
that the petitioner’s application be considered on its
merits. As the licensing authority did not consider the
petitioner’s application till June 7 1960, the latter on
that date moved the High Court again for enforcement of the
writ issued. On receipt of the notice this motion, the
licensing authority passed an order on June 8, 1960 again
refusing to grant the petitioner the licence. This order,
stated, “Your petition is considered. As the Assam co-
operative Marketing Society has already been’ granted a
licence to deal in rice and paddy with branches spread all
over this district, it is considered unnecessary to grant
further dealing licences to individual dealers for the same
area. Hence the petition is rejected.”
The petitioner thereupon dropped his motion to the High,
Court of Assam of June 7, 1960 and moved the High Court
afresh under Art. 226 against the order of June 8, 1960
refusing him the licence
956
and the High Court on August 8, 1960, quashed it on the
ground that the licensing authority had to act in a quasi-
judicial capacity and that it bad decided the case on the
instructions of the State Government without considering for
itself the merits of the case in terms of the Licensing
Order. The authority was again directed to decide the case
in a quasijudicial capacity.
The licensing authority not having taken up for decision the
petitioner’s case for the grant of licence as directed by
the High Court, he moved. the High Court on September 8,
1960 for appropriate reliefs. On receipt of the notice of
this motion the licensing authority passed an order on
September 13, 1960, again refusing to grant licence to the
petitioner and certain other private dealers. The order
stated, “For the areas for which the applications have been
made the. Assam Co-operative Apex Marketing Society has
earlier applied for and has been granted licence. This is a
relevant consideration under el. 5(b) of the Assam
Foodgrains (Licensing and Control) Order, 1960. The stock
of foodgrains available in the area can easily be procured
by the party already given the licence. Being a Co-
operative Society it has better facility in this respect.
As such I do not find it necessary to grant licence to these
applicants. The petitions are therefore rejected”.
Thereupon the High Court on November 10, 1960, made an order
on the petitioner’s aforesaid motion of September 8, 1960
discharging the rule as the order asked for had been made.
It observed that the order of September 13, 1960 was not
before it and it was competent to say whether that order was
in consonance with its order of August 8, 1960. It also
observed that it did not find sufficient reason to take any
action against the licensing authority for the delay in the
matter of the disposal of the application for licence.
Before proceeding further I would like to point out that the
Assam Foodgrains (Licensing and
957
Control) Order, 1960 being the Licensing Order by which the
petitioner’s application for licence for 1960 was governed
did not contain any provision enabling any preference to be
given to a co-operative society in the matter of the grant
of licence.
I now come to the present petition. It was ;moved in this
Court by the petitioner under Art. 32 of the Constitution
challenging the validity of the order of the Licensing
authority dated September 13, 1960, and asking that the
licence granted to the Assam Co-operative Apex Marketing
Society be declared illegal and for an order directing the
licensing authority to consider the applications for
licences according to the provisions of,the Licensing Order,
1960. The petition came in for hearing on February 2, 1961.
By that date the year for which the petitioner had asked for
a licence had expired and the Licensing Order, 1960 had been
replaced by another Order of 1961. In the result the
petition bad become substantially infructuous. The
petitioner, therefore, suggested to this Court that he would
make an application for a licence for the year 1961 and in
the meantime the petition might stand adjourned. An order
was thereupon made adjourning the petition sine die.
Thereafter the petitioner on February 4, 1961, made a fresh
application for licence for dealing in paddy for the year
1961. An order was made by the licensing authority on this
application on April 1 1, 1961, in these terms : “Having
regard to the existing licences in these areas (Mangaldai
and Gauhati), and the quantity of food grains available
therein,an further licence,, would be superfluous.” In the
result the petitioner was refused licence for the year 1961.
Thereafter, the petitioner under orders obtained from this
Court amended hi,$ petition and now seeks to challenge the.
order of April 11, 1961. The respondents to this petition
axe the State of Assam and some of its officers including
the licensing, authority
958
concerned, as also. the Assam Co-operative Apex Marketing
Society, hereafter called the Apex Society.
As I have already said, the application for licence for 1961
was governed by the Licensing Order, 1961. The dispute in
this case mainly turns on cl. (e) of paragraph 5 of this
Order. That paragraph is in these terms:
.LM15
“In granting or refusing a licence under this Order, the
licensing authority shall, among other matters, have regard
to the following, namely: –
(a) the stock of foodgrains available in the locality for
which the licence is required;
(b) the number of persons who have applied for and those
who, have been granted licences in respect of the foodgrains
under this Order in the locality;
(c) the business ordinarily carried on by the applicants
(d) the past activities of the applicant as a licensee or
business man/firm; and
(e) whether the applicant is a cooperative society.”
It is not in dispute that in the areas to which the
Licensing Order 1961, had been applied, licences to deal in
paddy had been given to: various Co-operative Societies
which were subsidiaries of the Apex Society and no licence
had been given to any private dealer. The respondents say
that these grants were duly made under cl. (e) of paragraph
5 of the Licensing Order, 1961. It is this action which
forms the main grievance of the ,petitioner. He puts his
contentions on two grounds. First, he says that cl. (e) of
paragraph 5 of the Licensing Order 1961 is ultra vires as it
has no
959
relation, to, the object of the Essential Commodities Act
under which it was made. Secondly, he says that in any
event the Order has been applied. in a discriminatory manner
and with a view to create a monopoly in favour of the Apex
Society to deal in paddy and the petitioner’s fundamental
rights under Arts. 19(1)(g) and 14 have thereby been
violated..
It does not seem to me that either of these two contentions
is well founded. I shall first consider whether paragraph
5(e) of the Order is ultra vires the Act. Now it is
important to note ,that the validity of the Act is not
challenged. It would follow that if the Order made under
the Act is not ultra vires, it would be perfectly valid. It
is s. 3 of the Act which enables the Orders to be made.
That section so far as relevant is in these terms
S. 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, it may, by order, provide for
regulating or prohibiting the production, sup-
ply and distribution thereof and trade and
commerce therein.
The object of the Act, therefore, is to maintain or increase
the supplies of essential commodities which include
foodgrains and to secure their equitable distribution and
availability at fair prices. Clause (e0 of paragraph 5 of
the Licensing Order, 1961 certainly allows a co-operative
society to be Preferred. in the matter of a grant of
licence. The question then is, would the object of the, Act
be achieved if the trade in paddy is given to co-operative
societies ? I think it would. A co-operative society is one
which has as its object the promotion of the, economic
interests of its members in accordance with co-operative
principles : see s. 4 of the
960
Co-operative Societies Act, 1912. A society carries on
business in accordance with co-operative principles when it
trades with its own members, the profit motive not being
paramount in such business. When, therefore, a licence to
purchase paddy is given to a co-operative society of
growers, what happens is that the seller sells to a body of
which he is a member. The result is the virtual elimination
of the middleman and a consequential reduction in the price.
The following observation,% from the judgment of this Court
in Narendra Kumar v. The Union of India (1) are, to my mind,
very apposite in the present context :
“That middleman’s profits increase the price
of goods which the consumer has to pay is
axiomatic’ ” (p. 389). ,,It has therefore been
the endeavour at least in modern times for
those responsible for social control to keep
middlemen’s activities to the minimum and to
replace them largely by co-operative sale
societies of producers and co-operative sale
societies of the consumers.” (p. 390).
Therefore, I feel no doubt that if the purchase of paddy is
left to growers co-operatives-and that is what cl. (e) of
paragraph 5 aims at-rice,, which is husked paddy, can
reasonably be expected to be made available to the consumers
at a fair price. That would serve the object of the Act and
the clause cannot, therefore, be said to be ultra vires the
Act.
Then it is said that cl. (e) of paragraph 5 would result in
creating a monopoly in favour of co-operative societies and
that would be illegal and also outside the object of the
Act. This contention also seems to me to be ill founded.
It seems to me that if paragraph 5 had contained only cl.
(e) directing preference being given to co-operative
societies in the matter of grant of licences and that is
the basis on which the present contention is advanced that
would not have made it bad. The question
(1) [1960] 22 S. C. R. 375.
961
of creating a monopoly does not really arise in such a case.
The Order may then allow one class only, namely, co-
operative societies, to do the business. That would, as I
have already stated, advance the object of the Act. It
would also however amount to a prohibition of others doing
the business. The only question then would be whether such
prohibition would be reasonable under Art. 19(6). That is
how the matter appears to have been considered by this Court
in two cases to which I will now refer.
The first is the case of Narendra Kumar(1) earlier
mentioned. There an order called the “Non-ferrous Metal
Control Order, 1958” had been issued under s. 3 of the
Essential Commodities Act, as the Licensing Order now under
consideration also was Clause (4) of the order there
considered provided that no person could acquire any
nonferrous metal except under a permit issued by the
Controller in accordance with such principles as the Central
Government might from time to time specify. Subsequently,
the Central Government enunciated certain principles for the
grant of these permits in a certain communication to the
Chief Industrial Adviser. Under these principles, no permit
could be issued to a dealer but it could only be issued to
certain manufacturers. The result was that the dealer’s
trade was totally prohibited and only certain manufacturers
were eligible for permits to carry on the trade of rolling
non-ferrous metals. Certain dealers moved this Court under
Art. 32 for a declaration that el. (4) read with the
principles formulated by the Government was bad as offending
Art. 19(1)(f) and (g). This Court held that (p. 387) :
“It is reasonable to think that the makers of
the Constitution considered the word
“restriction” to be sufficiently wide to save
laws ‘inconsistent’ with Art. 19(1), or
“taking away the rights’ conferred by the
(1) [1960] 2 S. C. R. 375.
962
Article, provided this inconsistency or taking
away was reasonable in the interests of the
different matters mentioned in the clause.
There can be no doubt therefore that they
intended the word restriction’ to include
cases of ‘prohibition’ also. The contention
that a law prohibiting the exercise of a
fundamental right is in no case saved, cannot
therefore be accepted.”
Having considered the facts of the case, the Court came to
the conclusion that el. (3) of the Order, the legality of
which also had been challenged, and el. (4) were valid
provisions. It observed that, (p. 390):
“It must therefore be held that el. 3 of the
Order. even though it results in the,
elimination of the dealer from the trade is a
reasonable restriction in the interests of the
general public. Clause 4 read with the
principles specified must also, be hold for
the same reason to be a reasonable restric-
tion.”
I ought here to point out that the principles enunciated by
the Government were held to be of no effect as they had not
been issued in compliance with sub-ss. (5) and (6) of s. 3
of the, Essential Commodities Act and on that basis petition
was allowed and a writ was issued restraining the Union from
giving effect to el. 4 of the order so long as the
principles governing the issue of permits were not duly
specified. This however does not affect the force of the
observations that I have earlier read from the judgment in
the case.
It seems to me that these observations fully apply to the
present case. The order read with the policy statement
though it resulted in a complete prohibition in trading by
dealers and in the creation of what the petitioner would
call a monopoly in favour of certain manufacturers was hold
to be good as a reasonable restriction on the
963
dealer’s right to trade under Art. 19(6) and the Writ was:
issued only because the formalities required for specifying
the policy statement had not been complied with. There is
no defect in the issue of the Licensing Order, 1961, with
which the present case is concerned. Therefore, the only
question would be whether such a prohibition of the trade of
the dealers like the petitioner, if any, by the Licensing
Order, 1961 would be reasonable in the circumstances of this
case.,
The other case to which I wish to refer is Glass Chatons
Importers & User’s Association v. The Union of India (1)
decided by this Court on April 10, 1961. That case arose
out of a petition under Art. 32 by certain importers of
glass chatons. There, the Central Government had issued an
order under the Import and Export (Control) Act, 1947,
called the Imports (Control) Order, 1955, prohibiting the
import of glass chatons except under a licence. Paragraph 6
of the Order laid down a number of grounds on which the
Central Government or the Chief Controller of Imports and
Exports might refuse to grant a licence or direct any other
licensing authority not to grant a licence. The ground
mentioned in el. (h) of this paragraph was ,if the licensing
authority decide to canalise imports and the distribution
thereof through special or specialised agencies or
channels.” It appears that since 1958, licences had been
granted to the State Trading Corporation. No applications
for licences had been, made by the petitioners or any other
trader at any time since 1957. It was however contended
that so long as paragraph 6(h) of the Order remained, it was
useless for the private traders to apply for licences. The
argument advanced on behalf of the petitioners was that
paragraph 6(h) was void being in contravention of Art.
19(1)(f) and (g). In regard to this argument this Court
observed:
(1) (W. P. 65 of 1959, unreported).
964
“It is obvious that if a decision has been
made that imports shall be by particular
agencies or channels the granting of licence
to any applicant outside the agency or channel
would frustrate the implementation of that
decision. If therefore a canalization of
imports is in the interests of the genera
l
public the refusal of imports licences to
applicants outside the agencies or channels
decided upon must necessarily be hold also in
the interests of the general public. The real
question therefore is : Is the canalization
through special or specialized agencies or
channels in the interests of the general
public.”
The Court held that it was unable to accept the argument
that a decision that imports shall be canalised is per se
not a reasonable restriction on the right to trade. On the
facts of the case, the Court took the view that a decision
to canalise imports of glass chatons was in the interest of
the general public. In this case, it had been contended
that the Government was creating a monopoly in favour of the
State Trading Corporation. The Court hold that the period
of permits granted to the State Trading Corporation having
already expired, the question did not really arise. But, as
would have been noticed earlier, the Court really dealt with
the same contention in deciding the-validity of paragraph
6(h) of the Order. This decision lends equally strong
support to the view that preference directed to be given by
cl. (e) of paragraph 5 of the Licensing Order with which we
are concerned to co-operative societies, would not
necessarily render it invalid.
I feel no doubt on the facts of the present case that a
preference to co-operative societies even if that resulted
in the dealers being prevented altogether from dealing in
paddy, would, be a reasonable restriction on the latter’s
right of trade. Assam is a deficit State in foodgrains. It
is the
965
duty of the State Government to see that the people living
within its boundaries are supplied with adequate foodgrains
and that at a reasonable price. The If paddy is procured for
the use of the consumers in the State through a co-operative
society, there is good reason, as already stated, to think
that rice at a reasonable price would be available to the
people of Assam. I will later in detail discuss the
structure and the activities of the co-operative societies
to whom licences had been granted. What I will have to say
there will amply establish that it was a reasonable step to
have taken to put the trade in charge solely of the co-
operative societies.
I turn now to the petitioner’s second contention, namely.
that cl.(e) of paragraph 5 has been worked in a
discriminatory manner so as to create a monopoly in favour
of the Apex Society. The first thing that I wish to observe
is that licences have not been given for the year 1961 to
the Apex Society but they have been given to a large number
of primary co-operative societies of growers. I find it
difficult, in any case, to appreciate how this can be said
to create a monopoly. It may amount to a prohibition of
trade by some persons. That however is a different matter
with which I have already dealt. I may state here that it
appears that in 1960 the licences had been issued to the
Apex Society, but that is not the situation now. Whether
what was done in 1960 was strictly legal or not is not a
question that now arises, for we are no longer concerned
with the licences for 1960.
I Before proceeding further, I think it right to I say a few
things about the co-operative societies with which we are
concerned. About 1957, the Assam Government sponsored the
formation of the Apex Society. I would like to remind here.
that it is one of the directive principles of the
Constitution that co-operative societies should be
encouraged. Now, the structure of the Apex Society is like
a pyramid. It appears to have three tiers. On the top is
the Apex Society. Under it
966
come various. primary marketing Co-operative societies. At
the bottom rung are a large number of primary co-operative
service societies. The membership of the marketing,
societies consists mostly of cultivators and service
societies, and of the service societies, mostly of
cultivators. The function of the Apex Society appears to be
to co. ordinate the working of the subsidiary societies and
to obtain moneys from the Co-operative Apex Bank and there
out make advances to the cultivators through the subsidiary
societies, to help them in their cultivation. The service
societies procure from the growers the paddy grown by them I
they can spare and realise the moneys advanced to them out.
of the price of the paddy purchased. The money realised is
duly passed on to the Apex Society. The paddy collected is
sold by the service societies to the marketing societies.
The marketing societies in their turn deliver part of the
paddy to the Government for creating a buffer stock and the
remaining quantity to mills for milling into rice, in both
cases according to the directions of the Government. The
benefits derived from the whole scheme are obviously very
large. The middlemen are eliminated. The growers being
themselves members of ‘the societies, participate in their
profits whatever they are. :This helps to keep down the
price because a service society in passing on the paddy to
the marketing society charges very little by way of profit
and that profit is shared by the groweres who are its
members. This enables the growers to sell at a
comparatively lower price. The growers have further the
advantage of loans from the Apex Society to help them in the
Work of cultivation; these loans can be easily advanced and
on liberal terms because their repayment is secured by.,the
process of purchase of the produce through the, service
societies. It would he reasonable to think that this. would
encourage cultivation and result in larger quantities of
foodgrains-, being produced. That would also help to
achieve the
967
object of the Act It may further be pointed out that each of
these societies is a body corporate see s.18 of the Co-
operative Societies Act, 1912. The societies form a net
work over the entire surplus grain producing area of Assam,
each working in its own area. , A vast number of growers of
foodgrains are the members of the primary. marketing and
service societies. It is to these societies that the
licences had been issued of which, a grievance is being made
by the petitioner.
It appears that after the Apex and the subsidiary societies
had been formed, the State Government with the concurrence
of the Central Government decided on a policy of procuring
paddy in certain specified areas only through these
societies. The State Government thereupon issued
instructions to certain officers at the end of 1959 at
procurement of paddy for the Kharif year 1959-60 would be
made through the co-operative societies. It may be that it
was for this reason that the licensing authority had stated
in its order of February 17, 1930, earlier mentioned, that
the petitioner’s application for a licence could not be
considered. I have now to remind that the Licensing Order,
1960 did not contain any provision enabling preference
‘being given to a co-.-operative society in the grant of a
licence. This case however is not concerned any more with
regard to a licence for the year 1960 or the validity of any
order of the licensing authority refusing to grant the
petitioner any licence for that year..
Returning to the contention that the power under paragraph 5
(e) of the Licensing Order had been exercised in a
discriminatory manner, I wish first to observe that under
the Order which I have already held to be good, the
authority concerned in granting the licences was entitled to
prefer a co-operative society, and this is what, it has
,done.. Though the result may have been to prevent the
petitioner from carrying on, the trade of purchasing and
selling paddy, that, in my view is, in the
968
circumstances of this case, a reasonable restriction on his’
right to trade for that was necessary to secure for the
people of Assam supply of foodgrains at a reasonable price
and in adequate quantities:
I have very grave doubts if the licensing authority was
intended to act in a Quasi-judicial capacity in the matter
of granting licences. It has to be remembered that the
question before it was not so , much of the competing rights
of various applicants or of any is between an applicant and
the State. The duty of the licensing authority was to
advance the object of the Act in terms of the Licensing
Order. Its main consideration has to be to see that the
licences granted by it helped to make foodgrains available
at a fair price to the people of Assam. The Act gave the
powers for that purpose. It is because this purpose is
legitimate that the resultant prohibition of trading by
private dealers is also legitimate. I believe that the two
cases I have earlier mentioned proceeded on the basis that
the licensing authority was not a quasi-judicial officer.
It is not necessary for me however to pronounce finally on
this question.
It was contended that the licensing authority in granting
the licence to the co-operative society had only carried out
the directions of the Government and had not acted
independently. I find no basis for this contention apart
from the bald allegation of the petitioners which is denied
by the respondent. N directions by the Assam Government for
the year 1961 have been produced. The instructions to which
I have earlier referred requiring the licence to be given to
the co-operative societies were confined to the year 1959-
60. That had no force in regard to the year 1961 with which
we are concerned. Those instructions cannot be taken as
operating for all time to come for then the licensing
authority’s order granting licences to a co-operative
society in future years will always have ‘to be held to have
been made under these instructions. I am unable to take
such a view of the matter. As
969
already stated, the High Court had by its Order of August
10, 1960 asked the licensing authority to proceed in a
quasi-judicial manner. There is no reason to think that the
licensing authority had not observed this direction of the
High Court.
It also seems to me reasonable to think that the Assam
Government inserted cl. (e) in paragraph 5 of the Licensing
Order, 1961 in view of the judgments of the High Court of
Assam to which I have earlier referred. The Assam
Government obviously intended that the licensing authority
would in view of cl. (e) give preference to the co-operative
societies. Furthermore, s. 4 of the Act provides that an
order made under s. 3 conferring powers on any officer or
authority may contain directions to him as to the exercise
of such powers. In my view, for the reasons earlier stated,
a direction in the Licensing Order to give preference to co-
operative societies would not be bad. It seems to me that
cl. (e) of paragraph 5 of the Licensing Order, 1961 really
amounts to such a direction. It was not necessary after the
Licensing Order, 1961 for the Government of Assam therefore
to give any other direction to the licensing authority.
I do not think any question of violation of Art. 14 can be
seriously pressed. If the duty of the licensing authority
was quasi-judicial in its nature, then it is difficult to
appreciate how it can be said that its decision would offend
Art. 14. In any case, it seems to me quite clear that the
co-operative societies form a class by themselves and a
provision giving preference to such a class, would be a good
provision because the object of the Act would be better
served thereby for the reasons earlier mentioned; such
provision would have a clear nexus with the object of the
Act and therefore satisfy the test of Art. 14.
Looking at the matter from any point of view it seems to me
that the Order of the licensing authority giving preference
to the co-operative
970
Societies is not open to any objection. In my view that was
a fair Order to have been made in the circumstances of this
case.
I would for these reasons dismiss this petition.
MUDHOLKAR, J.-I agree with the judgment delivered by Sarkar,
J.
By Court-In accordance with the opinion of the majority
this Writ Petition is allowed with costs.
Petition allowed.