PETITIONER:
P.P. ENTTERPRISES ETC. ETC.
Vs.
RESPONDENT:
UNION OF INDIA & OTHERS ETC.
DATE OF JUDGMENT16/03/1982
BENCH:
MISRA, R.B. (J)
BENCH:
MISRA, R.B. (J)
FAZALALI, SYED MURTAZA
CITATION:
1982 AIR 1016 1982 SCR (3) 510
1982 SCC (2) 33 1982 SCALE (1)184
ACT:
Sugar (Control) order 1966, clause 5 read with order
No. G.S.R. 410C E/Ess. Com./Sugar dated 14-7-1980-order
prescribing maximum quantity of sugar (Vacuum Pan Sugar) and
Khandsari (open Pan Sugar) to be kept in stock, whether
violative of Articles 14 and 19(1)(g) of the Constitution
and also ultra vires section 3 of the Essential Commodities
Act. 1955.
HEADNOTE:
In exercise of powers conferred by section 3 of the
Essential Commodities Act, 1955, Sugar Control order 1966
was issued by the Government of India, Ministry of
Agriculture Clause 5 of that order empowered the Central
Government to issue directions, inter alia, to recognised
dealers regarding production, maintenance of stock, storage,
sale, grading, packing, making weighment, disposal, delivery
and distribution of sugar.
By order No. GSR-410-E/Ess. Com/Sugar dated 14-7-1980,
the Central Government issued directions to the effect that
no recognised dealer shall keep in stock at any time (a)
Vacuum pan sugar in excess of, (i) in Calcutta and other
extended area recognised dealers who import sugar from
outside West Bengal, 3500 quintals; other recognised dealers
250 quintals; (ii) in other places in cities and towns with
a population of one lakh or more 250 quintals and with a
population of less than one lakh 100 quintal and (b)
Khandsari (open pan sugar) 250 quintals. Further no
recognised dealer shall hold any stock of vacuum pan sugar
or khandsari (open pan sugar) for a period exceeding 10 days
from the date of receipt by him of such stock of sugar or
khandsari.
The recognised dealers, there-fore, assailed the
constitutional validity of the said order on three grounds:
(I) the impugned order is not covered by section 3 of the
Essential Commodities Act and is ultra vires (2) the
impugned order imposes unreasonable restrictions on the
right of the petitioners to carry on their trade and so it
is violative of Article 19 (1) (g) of the Constitution: (3)
the impugned order is also violative of Article 14 of the
Constitution for two reasons: (a) the petitioners have been
singled out for hostile treatment from other dealers of
sugar at Calcutta: (b) the impugned order is unreasonable
and impracticable.
Dismissing the petitions, the Court
^
HELD: 1, The order dated 14-7-1980 is not ultra vires
section 3 of the Essential Commodities Act, 1955. The
expression "to secure their equitable
511
distribution and availability at fair prices", is wide
enough to cover the impugned order Likewise, the expression
"storage and distribution" used in clause (d) of sub-section
(2) of section 3 of the essential Commodities Act, 1955
should be given a liberal construction to give effect to the
legislative intent of public welfare. Sugar, which term
includes khandsari, is an essential commodity and over the
years it has become a scarce commodity. In the public
interest it became essential to pass the order to secure its
equitable distribution and availability at fair prices. To
that end it became 'necessary to prevent hoarding and black-
marketing. [515 F-H, 516 A-E]
2. Restrictions put by the impugned order can by no
means be said to be unreasonable. It is only regulatory and
not prohibitory. The direction enjoined recognized dealer
not to keep sugar in stock at any time in excess of the
quantity specified therein. It only seeks to regulate the
limit of storage of sugar and does not prohibit its storage.
By the Impugned order the Central Government sought to
prevent hoarding and black-marketing, and to ensure
equitable distribution and availability of sugar at fair
prices in the open market.[516 E, 519 D]
A person has a right to carry on any occupation, trade
or business and the only restriction on this unfettered
right is the authority of tho State to make a law imposing
reasonable restrictions under clause (6). The expression
reasonable restrictions' signifies that the limitation
imposed on a person in eojoyment of that right should not be
arbitrary or of an excessive nature beyond what is required
in the interest of the public. No cut and dry test can be
applied to each individual statute impugned, nor an abstract
standard or general pattern of reasonableness can be laid
down as applicable in all cases. The Supreme Court in each
case has to strike a proper balance between the freedom
guaranteed by Article 19 (1) (g) and the social control
permitted by clause (6) of Article - 19. [516 B-D]
State of Mysore v. H. Sanjeeviah, [1967] 2 SCR 360,
explained and distinguished.
M/s. Laxmi Khandsari & Ors. v. State of U.P. & Ors.,
[1981] 2 SCC 609, followed.
3. The order is not violative of Article 14 of the
constitution. The fixation of limits for storing sugar in
Calcutta and other places is not arbitrary but is based on
reasonable classification. The government is the best judge
of the situation in a particular State and what quantity of
sugar will meet the exigencies of the situation at a
particular place is purely a governmental function. For one,
Calcutta serves as a feeder line to meet the requirements of
sugar to the eastern part of the country, and therefore, the
stocks of sugar to be held by the dealers in Calcutta are
not required for consumption in Calcutta alone. Besides,
Calcutta being far away from the sugar manufacturing units
in Bihar and Uttar Pradesh, from where bulk of supplies are
obtained, sugar is transported by the wholesale dealers in
railway wagons which take sometime unusually longer time in
transit. These and various other factors have been taken
into consideration by the Government while fixing the
storage limits of sugar for the dealers in Calcutta. [519 F-
H, 520 A]
512
The fact that over the years sugar has become a scarce
commodity and people have to purchase it even at a
prohibitive price, the dealers would be able to sell the
sugar in their stock without difficulty at any time at the
prevalent market price. In a rare exceptional case there may
be some hardship on that score but it cannot be said, on
that account, that the order is violative of Article 14 of
the Constitution. In such cases, we hope and trust that the
concern ed Government would allow a reasonable time within
which the dealers could dispose of the excess quantity of
sugar, if any. [520 G, 5 21 A-C]
Suraj Mal Kailash Chand & Ors. v. Union of India &
Anr., Writ Petitions Nos. 8334-48 of 1981 decided on
September 25, 1981 (unreported case): Bishambhar Dayal
Chandra Moharl & ors, etc. v. State of Uttar Pradesh & Ors.
etc. Writ Petitions Nos. 2907-2908 of 1981 and connected
writ petitions (a group of SOS writ petitions) decided on
November S, 1981, followed.
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition Nos. 3846/81,
6454-55/80, 230-249, 502-510, 524, 726-27, 777-96, 803,
1069, 1207-09,1326,439-40,1607,1691-93,1702,1703-7,1734.36,
1737 40, 1759-72, 1789-90, 1879, 1946-47, 1948, 1959, 1972-
97, 2012-17, 2027-39, 2076, 2077-78, 2125-83, 2194-95, 2204-
11, 2284-2326, 2361-62,2363-64, 2365-2404,2405-26, 2444-58,
2459-88,2497-2501, 2503-05,2513-19, 2520-25,2542-73, 2597,
2616-41,2642-48, 2661-63, 2665-66,2698-2700, 2702-21, 2723-
26, 2730-44 2756-62, 2766-76, 2779-2802,2803-15, 2818-26,
2847-55, 2856-67, 2885-96, 2897 98, 2912-15,2917-26, 2968-
76, 2980-3001, 3002-46, 3047-52, 3070-87, 3088-3102, 3165-
3205, 3210-17, 3259-64, 3268-77, 3286, 3305-11, 3312-
22,3325,3346, 3355,3357-70, 3371-91, 3403, 3477-82,3484-88,
3492-3504,3505-15, 3516,3517-34,3560, 3572-79, 3637, 3693-
3730, 3732-36, 3757-75, 3899-3912,4053-69,4192-4229,
4261,4329, 4495, 4496-4508,4606-09, 4617-21,4622-69, 4846-
75, 4978-86, 5218,5349, 5533-43, 5597-5609, 5623, 5626-42,
5728, 5746, 6577-81, 6814, 6934-42,7203, ,217-20,7409,7454-
56,7484, 7641,7659,7773,7943, 7944, 8084,8089, 8090,
8192,8195, 8201, 8431, 8436, 8834, 8862, 8878-81, 8924 &
8979 of 1981.
(Under Article 32 of the Constitution)
Shanti Bhushan, V.M. Tarkunde, P.A. Francis and G.N.
Dikshit.
R.K. Jain, P.B. Jain, Pankaj Kaira, S. Mittar, M.G.
Gupta, J B.R. Kapoor, Miss, Bhajan Ram Rakhyani, S.R.
Srivastava, B.V. Tawakley, Shobha Dikshit, B. Dutta, B.D.
Sharma, Miss A. Subhashini,
513
N.N. Sharma, T.C Sharma, A. Ghosh, S.V. Tambwekar and Girish
Chandra for the appearing parties. A
The Judgment of the Court was delivered by
MISRA J. In exercise of powers conferred by section 3
of the Essential Commodities Act, 1955, Sugar Control order
1966 was issued by the Government of India, Ministry of
Agriculture. Clause S of that order empowered the Central
Government to issue directions, inner alia, to recognised
dealers regarding production, maintenance of stock, storage,
sale, grading, packing, making weighment, disposal, delivery
and distribution of sugar.
By Order No. GSR-410-E/Ess. Com./Sugar dated the 14th
of July, 1980 the Central Government issued the following
directions:
“In exercise of the powers conferred by clause 5
of the Sugar (Control) order, 1966, and in supersession
of the order of the Government of India in the Ministry
of ‘Agriculture (Department of Food) No. GSR-60(e)/Ess. Com./Sugar, dated the 26th February, 1980, the
Central Government hereby directs that no recognised
dealer shall keep in stock at any time-
(1) Vacuum pan sugar, in the places mentioned below,
in excess of the quantities mentioned against
each-(i) in Calcutta and extended area-
(a) recognised dealers who import sugar from
outside West Bengal-3,500 quintals,(b) other recognised dealers-250 quintals;
(ii) in other places-
(a) in cities and towns with a population of
one lakh or more-250 quintals;(b) in other towns with a population of less
than one lakh-100 quintals.
514
(2) Khandsari (open pan sugar) in excess of 250
quintals.
Provided that no recognised dealer shall hold any
stock of Vacuum pan sugar or Khandsari (open pan sugar)
for a period exceeding ten days from the date of
receipt by him of such stock of sugar or Khandsari. . .
Provided further that nothing in this order shall
apply to the holding of stocks of sugar-
(i) on Government account; or
(ii) by the recognised dealers nominated by a State
Government or an officer authorised by it to hold
such stock for distribution through fair price
shops; or
(iii) by the Food Corporation of India.
Explanation:-For the purpose of this order,
“Calcutta and extended area” means the areas specified
in the Schedule to the notification of the Government
of West Bengal No. 7752 F.S./14-R-92/61, dated the 16th
December, 1964.”
The petitioners in this groups of petitions, who are
dealers in sugar, seek to challenge the constitutional
validity of the- said order on three grounds; (I) the
impugned order is not covered by section 3 of the Essential
Commodities Act and is Ultra vires; (2) the impugned order
imposes unreasonable restrictions on the right of the
petitioners to carry on their trade and so it is violative
of Article 19(2)(g) of the Constitution; (3) the impugned
order is also violative of Article 14 of the Constitution
for two reasons: (as the petitioners have been singled out
for hostile treatment from other dealers of sugar at
Calcutta, (b) the impugned order is unreasonable and
impracticable.
Shri Shanti Bhushan, senior counsel appearing in one of
the petitions viz., Writ Petition No. 3846 of 1981, took up
the first point. and urged that the impugned order is not
covered by any of the clauses of section 3 of the Essential
Commodities Act.
Section 3 of the Essential Commodities Act, 1955,
insofar as it is material for the purposes of this case,
reads:
515
“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 prohibition the
production, supply and distribution thereof and trade
and commerce therein
(2) With prejudice to the generality of the powers
conferred by sub-section (1), an order made
thereunder may provide-
(a) ………. (b) ………. (c)…………
(d) for regulating by licences, permits or otherwise
the storage, transport, distribution, disposal,
acquisition, use of consumption of, any essential
commodity.”
The language of section 3 (1) coupled with clause (d)
of subsection (2) of section 3 is wide enough to cover the
impugned order. Section 3 (1) authorises the Central
Government to pass an order for regulating or prohibiting
the production, supply and distribution of an essential
commodity and trade and commerce therein if it is of opinion
that it is necessary or expedient to do so for securing the
equitable distribution and availability. at a fair price of
the essential commodity. The same power has been made more
specific by clause (d) of sub-section (2) of section 3,
which provides for regulating by licences. permits or
otherwise, the storage, transport, distribution, disposal,
acquisition, use or consumption of, any essential commodity.
Sugar, which term includes khandsari, is an essential
commodity and over the years it has become a scarce
commodity. In the public interest it became essential to
pass the impugned order to secure its equitable distribution
and availability at fair prices. To that end it became
necessary to prevent hoarding and black-marketing. The
expression “to secure their equitable distribution and
availability at fair prices” is wide enough to cover the
impugned order. Likewise, the expression “storage and
distribution” used in clause (d) of sub-section (2) of
section 3 should be given a liberal construction to give
effect to the legislative intent of public welfare. So
construed, the impugned order is fully pro-
516
tected and is not ultra vires section 3 of the Essential
Commodities Act, 195 5.
This leads us to the second contention, namely, the
impugned order being violative of Article 19 (1) (g) of The
Constitution inasmuch as it imposed unreasonable restriction
on the right of the petitioners to carry on trade or
business.
A person has a right to carry on any occupation, trade
or business and only restriction on this unfettered right is
the authority of the State to make a law imposing reasonable
restrictions under clause (6). The expression ‘reasonable
restrictions’ signifies that the limitation imposed on a
person in enjoyment of that right should not be arbitrary or
of an excessive nature beyond what is required in the
interest of the public. No cut and dry test can be applied
to each individual statute impugned, nor an abstract
standard or general pattern of reasonableness can be laid
down as applicable in all cases. The Court in each case has
to strike a proper balance between the freedom guaranteed by
Article 19 (1) (g) and the social control permitted by
clause (6) of Article 19. By the impugned order the Central
Government has only put an embargo on the dealers on keeping
sugar in excess of the quantity specified. It was passed
only with a view to prevent hoarding and black-marketing,
and to ensure equitable distribution and availability of
sugar at fair prices in the open market.
Reliance was placed by Shri Shanti Bhushan on State of
Mysore v. H. sanjeeviah.(J) In that Case the State
Government of Mysore had framed rules to regulate the
transit of timber, firewood, charcoal and bamboos from all
lands in exercise of powers conferred by section 37 of the
Mysore Forest Act 11 of 1900. By rule 2 framed on October
13, 1952, it was provided that no person shall import forest
produce into, export forest produce from, or move forest
produce within, any of the areas specified in Schedule A
unless such forest produce is accompanied by permit
prescribed in rule 3. On April 15, 1959 the State of Mysore
issued a notification adding a proviso to rule 2 which read
as follows:
517
“Provided that no such permit shall authorise any
person to transport forest produce between SUN set and
sun-rise in any of the areas specified in Schedule A.”
By another notification dated September 14, 1960 the State
Government introduced the second proviso to rule 2 which
read:
“provided further that permission may be granted
to timber merchants on their request to transport
timber upto 10 p.m. (22 hrs) under the following
conditions:
(i) the party who wishes to avail of the concession
should pay a cash deposit of Rs. 1000 as security
for the compliance with the timber transit rules
as in force;
(ii) that the deposit may be forfeited to government
for breach of any of the conditions of the timber
transit rules.”
The dealers in timber challenged the two provisos on the
grounds inner alia that they were beyond the rule making
authority conferred upon the State Government by section 37
of the Mysore Forest Act 11 of 1900 and in any event the
provisos imposed unauthorized restrictions on the freedom of
trade, commerce and intercourse. The High Court held that
the State Government while seeking to regulate the transport
of timber stopped transport altogether. This Court upholding
the order of the High Court observed:
“Power to impose restrictions of the nature
contemplated by the two provisos to r. 2 is not to be
found in any of the clauses of sub-s. (2) of s. 37. By
sub-s. (I) the State Government is invested with the
power to regulate trans port of forest produce “in
transit by land or water.” The power which the Stale
Government may exercise is however power to regulate
transport of forest produce, and not the power to
prohibit or restrict transport. Prima facie, a rule
which totally prohibits the movement of forest produce
during the period between sun-set and sun-rise is
prohibitory or restrictive of the right to transport
forest produce. A rule regulating transport in its
essence permits transport, subject to certain
conditions devised to promote trans port.”
518
This Court further observed:
“If the provisos are in truth restrictive of the
right to transport the forest produce, however, good
the grounds apparently may be for restricting the
transport of forest produce, they cannot on that
account transform the power conferred by the provisos
into a power merely regulatory.”
The facts of the present cases are materially different from
the facts of H. Sanjeeviah’s case (supra). In that case the
impugned provisos to rule 2 completely prohibited the
transport of the forest produce between sun-set and sun-
rise. But in the cases in hand the direction enjoined a
recognised dealer not to keep sugar in stock at any time in
excess of the quantity specified therein. It only seeks to
regulate the limit of storage of sugar and does not prohibit
its storage. The case of H. Sanjeeviah, therefore, is not of
much help to the petitioners herein.
In M/s. Laxmi Khandsari & Ors. v. State of U.P. &
ors.(l) this Court made the following observations about
reasonable restrictions on the right conferred by Article 19
(1) (g) of the Constitution in the following terms:
“As to what are reasonable restrictions would
naturally depend on the nature and circumstances of the
case, the character of the statute, the object which it
seeks to serve, the existing circumstances, the extent
of the evil sought to be remedied as also the nature of
restraint or restriction placed on the rights of the
citizen. It is difficult to lay down any hard and fast
rule of universal application but in imposing such
restrictions the State must adopt an objective standard
amounting to a social control by restricting the right
of the citizens where the necessities of the situation
demand. The restrictions must be in public interest and
are imposed by striking a just balance between the
deprivation of right and the danager or evil sought to
be avoided. If the restrictions imposed appear to be
consistent with the directive principles of State
policy they would have to be upheld as the same would
be in public
519
interest and manifestly reasonable. Further,
restrictions may be partial, complete, permanent or
temporary but they must bear a close nexus with the
object in the interest of which they are imposed.
Another important test is that restriction should not
be excessive or arbitrary. The court must examine the
direct and immediate import of – the restrictions on
the rights of the citizens and determine if the
restrictions are in larger public interest while
deciding the question that they contain the quality of
reasonableness. In such cases a doctrinaire approach
should not be made but care should be taken to see that
the real purpose which is sought to be achieved by
restricting the rights of the citizens is sub-served.
At the same time, the possibility of an alternative
scheme which might have been but has not been enforced
would not expose the restrictions to challenge on the
ground that they are not reasonable.”
Judged in that light and on an overall consideration of the
various aspects of the matter, restrictions put by the
impugned order can by no means be said to be unreasonable.
It is only regulatory and not prohibitory.
We now take up the last contention, namely, the
impugned order being violative of Article 14 of the
Constitution. The learned counsel seeks to invoke Article 14
on two grounds: (1) the impugned order applies two
standards, one for the dealers, at Calcutta, who had been
authorised to keep 3,500 quintals at one time, while the
dealers at other places have been authorised to keep only
250 quintals in cities with a population of one lakh or
more, and only 100 quintals in other towns with a population
of less than one lakh. F
The fixation of limits for storing sugar in Calcutta
and other places is not arbitrary but is based on reasonable
classification. The government is the best judge of the
situation in a particular State and that quantity of sugar
will meet the exigencies of the situation at a particular
place is purely a governmental function. For one, Calcutta
serves as a feeder line to meet the requirements of sugar to
the eastern part of the country, and therefore, the stocks
of sugar to be held by the dealers in Calcutta are not
required for consumption in Calcutta alone Besides, Calcutta
being far away from the sugar manufacturing units in Bihar
and Uttar Pradesh, from where bulk of supplies are obtained,
sugar is transported by the wholesale
520
dealers in railway wagons which take sometime unusually
longer time in transit. These and various other factors have
been taken into consideration by the Government while fixing
the storage limits of sugar for the dealers in Calcutta.
His second ground for invoking Article 14 of the
Constitution is that the impugned order is unreasonable and
impracticable in that no dealer can be sure of the sale of
sugar on any particular day. If per chance a dealer is not
able to dispose of the excess sugar on a particular. day he
would expose himself to punishment under the Act. No
provision has been made in the order or in the rules for the
purchase by the Government of the excess sugar. For the
State it was contended that similar orders with regard to
wheat came up for consideration in this Court in Suraj Mal
Kailash Chand Ors. v. Union of India & Anr. and Bishambhar
Dayal Chandra Mohan Ors. etc. v. State of Uttar Pradesh &
ors. etc.(2) when this Court upheld the validity of these
orders. In view of the decision of this Court in those cases
it is not open to Shri Shanti Bhushan to challenge the
constitutional validity of the impugned order.
Shri Shanti Bhushan, however, refutes the argument and
says that those decisions do not stand in the way of the
petitioners. The situation with regard to wheat was quite
different inasmuch . s clause 25 of the impugned order in
Sutlaj Mal’s case (supra) provided that the State Government
or the Collector or the Licensing Authority may issue
directions to any dealer with regard to purchase, sale,
disposal, storage or exhibition of the price and stock list
of all or any of the trade articles. But there is no such
provision in the impugned order in the instant case and,
therefore, the dealers can expose themselves to punishment
merely because at any particular point of time the stock was
in excess of the prescribed limits. Bishambhar Dayal’s case
(supra) also related to wheat. There was a scheme for the
procurement of wheat by the State Government but there is no
such scheme in respect of sugar. This fact distinguishes the
present case for the facts-of the aforesaid decision.
The argument though attractive cannot be accepted. Over
the years sugar has become a scare commodity and people have
to
521
purchase it even at a prohibitive price. In the
circumstances it A cannot be expected that the dealers would
not be able to sell the sugar in their stock. There is
absolutely no difficulty in selling the sugar at any time at
the prevalent market price. If in a rare case there is
difficulty on that score we hope and trust that the
concerned Government would allow a reasonable time within
which the petitioners are permitted to dispose of the excess
quantity of sugar, if any. In any case, in some given case
there may be some hardship but it cannot be said on that
account that the impugned order is violative of Article 14
of the Constitution.
For the foregoing discussion the writ petitions must
fail. They are accordingly dismissed. In the circumstances
of the case there shall, however, be no order as to costs.
S.R. Petitions dismissed.
522