PETITIONER: SRI VENKATA SEETARAMANJANEYA RICE ANDOIL MILLS AND ORS. Vs. RESPONDENT: STATE OF ANDHRA PRADESH ETC. DATE OF JUDGMENT: 25/03/1964 BENCH: GAJENDRAGADKAR, P.B. (CJ) BENCH: GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. SHAH, J.C. AYYANGAR, N. RAJAGOPALA SIKRI, S.M. CITATION: 1964 AIR 1781 1964 SCR (7) 456 CITATOR INFO : RF 1967 SC 997 (22,34,45,51) R 1989 SC2105 (7) ACT: Madras Essential Arcticales Control and Requisitioning (Temporary) Powers Act, 1949 (Mad. 29 of 1949), ss. 3(1) (2)Applicability of the Act to electricity supplied by State-Intention of Legislature, consideration of-Notified orders enhancing agreed rate by State-Whether valid under s. 3-Regulate, meaning of-Increase of tariff-If reasonable and in interest of general public-Whether contravenes Arts. 14 and 19(1)-Constitution of India, Arts. 14 and 19(1)(g) and (f). HEADNOTE: Electricity was supplied to the appellants by the respon- dent-state for many years past, and several individual agreements were passed between them prescribing the terms and conditions for the supply. One of these terms stipulated the rate at which the supply had to be charged. These agreements did not contain any provision authorising the State to increase the rates during their operation. The respondent-state issued two notified orders enhancing the agreed rates. The orders indicated that the main reason which inspired the increase was that the existing electricity tariffs which were formulated several years before, had become completely uneconomic and meant continuously growing loss to the State. A large number of consumers challenged the validity of the two orders in the High Court under Art. 226. The writ petitions were allowed and the respondent was restrained from enforcing the revised rates. These decisions were challenged by the respondent by appeals in the High Court, which took a different view and dismissed the writ petitions. On appeals to this Court, it was contended, inter alia that the respondent had no authority to increase the rate changing this important term of the contract by taking recourse to s. 3(1) of the Madras Essential Articles Control and Requisitioning (Temporary) Powers Act, that the power to regulate the supply of essential articles had to be applied in regard to transactions between citizens and citizens and could not be applied to an essential article which the State itself supplied; that the power to regulate conferred on the respondent by s. 3(1) could not include the power to increase the tariff rate, that the notified orders were invalid as they contravened the provisions of Art. 19(1)(f) and (g) and that of Art. 14 of the Constitution. Held: (i) The challenge to the validity of the notified orders on the ground that they were outside the purview of s. 3(1) of the Act could not be sustained. The State is not bound by a statute unless it is so provided in express terms or by necessary implication. In applying this rule, the court must attempt to ascertain the intention of the Legislature by considering all the relevant provisions of the statute together and not concentrating its attention on a particular provision which may be in dispute. Where the question is not so much as to whether the State is bound by the statute, but whether it can claim the benefit of the provision of a statute, the same rule of construction 457 may have to be applied' Where the statute may be for the public good and by claiming the benefit conferred on it by its provisions the State may allege that it is serving the public good, it would still be necessary to ascertain whether the intention of the legislature Was to make the relevant provisions applicable. Director of Rationing and Distribution v. Corporation of Calcutta, [1961] 1 S.C.R. 158 and Province of Bombay v. Municipal Corporation of the City of Bombay, [1945-46] L.R. 73 I.A. 271, applied. (ii) In construing s. 3 of the Act of the usual rule of con- struction must be adopted, s. 3 must not be read in isolation, but must be considered in its proper setting and due regard must be had for the other provisions of the Act and its general scheme and purpose. (iii) The purpose of the Act is to secure the supply of essential articles at fair prices, it would be irrelevant as to who makes the supply; what is relevant is to regulate the supply at a fair price. (iv) It is well-settled that the function of a clause like cl. (2) of s. 3 is merely illustrative. In other words the proper approach to adopt in construing cls. (1), and (2) of s. 3 is to assume that whatever is included in cl. (2) is also included in cl. (1). King Emperor v. Sibnath Banerjee, 72 I.A. 241 and Santosh Kumar Jain v. State, [1951] S.C.R. 303, applied. (v) The word 'regulate' is wide enough to confer power on the State to regulate either by increasing the rate or de- creasing the rate, the test being what is it that is necessary or expedient to be done to maintain, increase or secure supply of the essential articles in question and to arrange for its equitable distribution and its availability at fair prices. (vi) Having regard to all the circumstances in this case, the change made in the tariff were reasonable and in the in- terests of the general public. (vii) There was absolute no material on the record of the appeals on which a plea under Art. 14 of the Constitution could even be raised. JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 429 439,
591, 592, 597, 689, 694, 724, 725 and 727 of 1962 and 15,
139, 140, 159, 267 to 269, 331, 334, 337, 340, 342, 343,
347, 352, 389, 746 and 748 of 1963. Appeals from the judg-
ments and order dated December 19, 1958, March 7, 1959,
March 11, 1959, April 22, 1959, April 24, 1959 in Writ
Appeals Nos. 135, 122 of 1957 etc.
T. V. R. Tatachari, for the appellants (in C.A. Nos. 429
to 434 and 694 of 1962 and C.A. No. 269/63).
M. C. Setalvad, P. Kodandaramayya, E. V. Bhagarathi Rao
and T. V. R. Tatachari, for the appellants (in C.A. Nos. 438
and 439/62).
M. C. Setalvad, and R. Ganapathi Iyer, for the appellants
(in C. A. Nos. 436, 437, 724, 725 and 727/62).
458
K. Srinivasamurthy and Naunit Lal, for the appellants (in C.
As. Nos. 591, 582, 597, and 689/62 and 140, 267 and 268/63).
K. Jayaram and R. Thiagarajan, for the appellants (in C.A.
Nos. 139, 159, 330, 334, 337, 340, 342, 343, 347 and
352/63).
K. R. Chaudhuri, for the appellants (in C.A. Nos. 15 and
389 of 63).
A. Vedavalli and A. V. Rangam, for the appellant (in
C. As. Nos. 746, and 748 of 63).
D. Narsaraju, T. Anantha Babu, M. V. Goswami and B. R. G.
K. Achar, for the respondents (in C. As. Nos. 435437, 724,
725 and 727/62).
D. Narsaraju, T. Anantha Babu, Yogeshwar Prasad and B. R.
G. K. Achar, for the respondents (in C. As. Nos. 429434,
438, 439 and 694/62 and 269 of 63).
D. Narsaraju, T. Anantha Babu, M. S. K. Sastri and B. R.
G. K. Achar, for the respondents (in C.A. Nos. 591, 597 and
689/62 and 140, 267 and 268/63) and respondent No. 1 (in
C.A. No. 592/62).
J.V.K. Sharma and T.Satyanarayana, for respondent No. 2 (in
C.A. No. 592/62).
D. Narsaraju, T. Anantha Babu, R. Gopalakrishnan and BR.
G. K. Achar, for the respondents (in C. As. Nos. 15, 139,
331, 334, 337, 340, 342, 343, 347, 352, 159, 389 and 746-748
/63).
March 25, 1964. The judgment of the Court was delivered by
GAJENDRAGADKAR, C. J.-The principal question of law which
arises in this group of 37 civil appeals relates to the
construction of section 3 of the Madras Essential Articles
Control and Requisitioning (Temporary Powers) Act, 1949 (No.
29 of 1949) (hereinafter called ‘the Act’). The dispute
which has given rise to these appeals centres round the
validity of two notified orders issued by the respondent,
State of Andhra Pradesh on the 28th January, 1955, and 30th
January, 1955 respectively, and it is the contention of the
appellants that the said notified orders are outside the
purview of s. 3. The appellants in all these appeals are
supplied electricity by the respondent for many years past,
and several individual agreements have been passed between
them and the respondent during the period 1946 to 1952
prescribing the terms and conditions on which the said
supply would be made to them. One of these terms stipulated
the rate at which the supply of electricity had to be
charged
459
against the consumers. The impugned orders have purported
to increase this rate, and the appellants contend that the
respondent had no authority to change this important term of
the contract to their prejudice by taking recourse to s.
3(1) and issuing notified orders in that behalf. That, in
substance, is the nature of the controversy between the
parties before us.
It appears that the Government of Madras, and subsequently,
its successor, the respondent, had a single power grid
system for the whole State comprising Tungabhadra and
Machkund Hydro Electric System and the Thermal System of
Nellore. The entire energy was integrated into one power
system. The Government of Madras entered into agreements
with several consumers in the State, including the
appellants, for the supply of energy in bulk at the
specified rates which were called tariffs, for the years
1951 and 1952. These agreements were to be in operation for
ten years. It is common ground that these agreements did
not contain any provision authorising the Government to
increase the rates during their operation. The charges
fixed were calculated at graded regressive rates according
to increasing slabs of consumption units, and the overall
unit rates including the demand charge were not to exceed 66
annas without prejudice to the monthly minimum payment and
the guaranteed consumption. The Government of Andhra then
issued the two impugned orders relating to Machkund and
Nellore, and Tungabhadra and Chittoore District areas
respectively, enhancing the agreed rates. These enhanced
rates were specified in Schedules A and B attached to the
said orders. According to these orders, these increased
tariffs were to take effect from the date on which meter
readings were to be taken in the month of February, 1955 and
were to operate for the future. The increase in the rates
effected by these orders was thus to operate not
retrospectively, but prospectively. The impugned orders
indicate that the main reason which inspired the said orders
was the knowledge that the existing electricity tariffs
which were formulated nearly 15 years before, had become
completely uneconomic; the charges of labour and the price
level of all material had enormously increased; and that in-
evitably meant continuously growing loss to the Government.
The Accountant-General made queries in respect of this
recurring loss and drew pointed attention of the State
Government to the deficits in the working of the Power
System. Accordingly, the question of revision of tariffs
was considered in the State of Madras, but was not decided
because reorganisation of the States was then in
contemplation. After the respondent State wits born, its
Chief Engineer sumbitted proposals for
460
revisions of tariffs in all the areas covered by the
relevant schemes. That is how the impugned notified orders
came to be issued by the respondent.
The appellants were naturally aggrieved by these orders,
because they added to their liability to pay the rates for
the supply of electricity by the respondent to them.
Accordingly, a large number of consumers moved the Andhra
Pradesh High Court under Art. 226 of the Constitution, and
challenged the validity of the two impugned orders. The
learned single Judge who heard these writ petitions upheld
the appellants’ plea and came to the conclusion that the
impugned orders were not justified by the authority
conferred on the respondent by s. 3 of the Act, and were
unauthorised, illegal and inoperative. In the result, the
writ petition filed by some of the appellants before us were
allowed and an appropriate order was issued against the
respondent restraining it from enforcing the revised tariff
rates.
These decisions were challenged by the respondent by
preferring several Letters Patent Appeals. The Division
Bench which heard these Letters Patent Appeals took a
different view; it held that on its fair and reasonable con-
struction, s. 3 did confer authority on the respondent to
issue the impugned orders, and so, the challenge made to the
validity of the said orders could not be sustained. That is
why the Letters Patent Appeals preferred by the respondent
were allowed and the writ petitions filed by the appellants
were dismissed. It is against these orders that the appel-
lants have come to this Court with a certificate issued by
the said High Court.
After the Division Bench had pronounced its decision on this
point, several other writ petitions were filed by other
consumers, and naturally the single Judge who heard them
followed the decision of the Division Bench and dismissed
the said writ petitions. The consumers who were aggrieved
by the decision of the learned single Judge were then allow-
ed to come to this Court directly by special leave, because
the points which they wanted to raise were exactly the same
as were raised by the other consumers who had come to this
Court against the principal decision of the Division Bench.
The present group of appeals thus consists of matters which
have been decided by a Division Bench of the Andhra Pradesh
High Court, as well as those which have been decided by a
learned single Judge, and they all raise the same common
question about the construction of s. 3 of the Act, and the
validity of the impugned notified orders.
Before addressing ourselves to the question of construing s.
3, it is necessary to recapitulate the legislative history
of the Act. It will be recalled that during the Second
World
461
War, the Government of India passed the Defence of India Act
(No. 35 of 1939) on the 29th of September, 1939. By virtue
of the powers conferred on the Central Government by s. 2 of
the said Act, several Rules came to be framed by Central
Government known as the Defence of India Rules. Amongst
these Rules was Rule 81(2) which clothed the Central
Government with power to issue orders which may appear to
the Central Government to be necessary or expedient for
securing “the defence of British India, or the efficient
prosecution of the war, or for maintaining supplies and
services essential to the life of the community”. These
Rules were in operation during the continuance of the war.
After the war came to an end, it was realised that the eco-
nomic situation in the country continued to be serious, and
for the proper regulation of economic affairs, it was
thought necessary to continue the orders issued under the
Defence of India Rule 81(2), because shortage of supply of
essential articles was very much in evidence then. The
purpose of continuing the orders was to ensure the supply of
essential articles to the community at large at reasonable
prices and to secure their equitable distribution. In due
course, the Defence of India Act came to an end in 1946, but
the Central Legislature thought it necessary to pass another
Act to take its place and that was the Essential Supplies
(Temporary Powers) Act, 1946 (No. 24 of 1946). On the same
lines, the Madras Legislature passed an Act in 1946 (No. 14
of 1946). Later, it was replaced by Act No. 29 of 1949 with
which we are concerned in the present appeals. After the
respondent State was created under the Scheme of
Reorganisation of States, it passed Act No. 1 of 1955 and
this Act received the assent of the President on the 21st of
January, 1955. By this Act, the Legislature of the
respondent State virtually adopted the Madras Act. As a
result, the impugned orders are, in substance, referable to
s. 3 of the Madras Act.
Before we part with this topic, it may be mentioned that
when the Madras Act was passed, its Schedule gave a list of
the essential articles as defined by s. 2(a) and these
articles were 12 in number. When the Andhra Legislature
passed Act No. 1 of 1955 and adopted the Schedule of essen-
tial articles for its purpose, the number of these articles
was reduced to two; they are charcoal and electrical energy.
The Andhra Act was originally intended to be in operation
until the 25th January, 1956, but it was later continued
from time to time. It is common ground that when the
impugned orders were passed, section 3 of be Act was in
operation and the present appeals have been argued on the
basis that the said section is constitutionally valid, so
that the main point which calls for our decision is the
construction of the said section.
462
Mr. Setalvad for the appellants contends that in construing
s. 3, we ought not to concentrate on the words used in s. 3
in isolation, but must look at the said section along with
the other provisions of the Act. The rule of harmonious
construction, he urges, requires that we must so construe
all the provisions of the Act as to avoid any conflict or
repugnancy between them. So construed, section 3, according
to him, cannot be said to confer power on the respondent to
enhance the tariff rate chargeable against the appellants in
respect of the supply of energy made by the respondent to
them. The whole scheme of the Act indicates clearly that
the power to regulate the supply of an essential article
which has been conferred on the State Government has to be
applied in regard to transaction between citizens and
citizens and cannot be applied to an essential article:
which the State itself supplies. It would be odd, he
suggests, if the State Government is given the power to
issue a notified order regulating the rates at which it
should supply energy which it itself produces. Therefore,
the dealings by the State Government in the matter of supply
of energy to the consumers should be deemed to be outside
the provisions of s. 3, and that would make the impugned
orders invalid.
The question as to whether the State Government would be
bound by the provisions of legislative enactments passed by
the State Legislature has sometimes led to difference in
judicial opinion; but the decision of this Court in the
Director of Rationing and Distribution v. The Corporation of
Calcutta and Ors.(1) must be taken to have settled this
question. The effect of the majority decision rendered in
that case is to recognise the validity of the rule of
interpretation of statutes enunciated by the Privy Council
in Province of Bombay v. Municipal Corporation of the City
of Bombay (2) and that rule is that the State is not bound
by a statute unless it is so provided in express terms or by
necessary implication. In applying this rule, it is
obviously necessary that the Court must attempt to ascertain
the intention of the Legislature by considernig all the
relevant provisions of the statute together and not
concentrating its attention on a particular provision which
may be in dispute between the parties. If, after reading
all the relevant provisions of the statute, the Court is
satisfied that by necessary implication the obligation
imposed by the statute should be enforced against the State,
that conclusion must be adopted. If there are express terms
to that effect, there is, of course, no difficulty. In
dealing with this vexed question, sometimes it is necessary
also to enquire whether the conclusion that the State is not
bound by the specific provision of a given statute,
(1) [1961] 1 S.C.R. 158.
(2)73 I.A. 271.
463
would hamper the working of the statute, or would lead to
the anomalous position that the statute may lose its effi-
cacy, and if the answer to either of these two questions
indicates that the obligation imposed by the statute should
be enforced against the State, the Court would be inclined
to infer by necessary implication that the State, in fact,
is bound by the statute.
Where, however, the question is not so much as to whether
the State is bound by the statute, but whether it can claim
the benefit of the provision of a statute, the same rule of
construction may have to be applied. Where the statute may
be for the public good, and by claiming the benefit
conferred on it by its provisions the State may allege that
it is serving the public good, it would still be necessary
to ascertain whether the intention of the legislature was to
make the relevant provisions applicable to the State. This
position is also established by the decision of the Privy
Council in Province of Bomboy(1) and it still continues to
be a law in this Country.
Incidentally, we may add that where the Crown seeks to take
advantage of a statute and urges that though it is not bound
by the statute, it is at liberty to take advantage of it,
English Law does not easily entertain such a plea, though
there are observations made in some judicial pronouncements
to the contrary. As Halsbury points out, “it has been said
that, unless it is expressly or impliedly prohibited from
doing so, the Crown may take advantage of a statute not-
withstanding that it is not bound thereby.” Having made this
statement, Halsbury has added a note of caution by ,,saying
that “there is only slender authority for this rule, and
since both the rule and such authority as does exist have
also been doubted, the rule cannot, perhaps, be regarded as
settled law(2)”.
To the same effect is the comment made by Maxwell when be
quotes with approval the view expressed by Sir John Simon
that the decisions which recognise the right of the Crown to
take advantage of a statutory provision “start with a
passage in an unsuccessful argument of a law officer which
was not even relevant to the case before the court, but
which has been taken out by a text-writer and repeated for
centuries until it was believed that it must have some
foundation(3)”.
Therefore, in construing s. 3 of the Act, we cannot permit
the respondent to rely upon the artificial rule that since
(1) 73 T.A. 271.
(2)”, Halsbury’s Laws of England, Vol. 36, p. 432, para 654.
(3) Maxwell on Interpretation of Statutes, 11th Ed. p. 136
464
the respondent claims a benefit under s. 3, that construc-
tion should be adopted which supports such a claim. Thus,
the position is that when we construe s. 3, we must adopt
the usual rule of construction; we must not read s. 3 in
isolation, but must consider it in its proper setting and
must have due regard for the other provisions of the Act,
and its general scheme and purpose.
Reverting then to Mr. Setalvad’s main argument, it may be
conceded that when the Act was passed in 1949, mainly and
primarily the power conferred by s. 3 on the State
Government must have been intended to regulate the supply of
essential articles made by one citizen to another. The
State had not then entered commercial activities on a large
scale and when s. 3(1) contemplated notified orders issued
for the purpose of securing equitable distribution and
availability at fair prices of essential articles, the
legislature could not have in its mind supply of essential
articles made by the State itself. That is one point in
favour of Mr. Setalvad’s construction. If we examine the
scheme of the Act, it may also have to be conceded that some
of the provisions may not be applicable to the State. Take,
for instance, the provision of s. 4 which relate to the
powers of requisitioning and acquisition of properties, and
the subsequent two sections that deal with payment of
compensation and release from requisition respectively;
these provisions may not be applicable to the State. Take,
again, the control of agriculture which is contemplated by
s. 7; it would not be applicable to the State. Section 12
which deals with penalties may also be inapplicable to the
State, and so, would s. 13 be inapplicable, because it deals
with abetment and assistance of contravention of the
provisions of the Act. Therefore, the general scheme of the
Act and some of its provisions seem to suggest that the
State may not have been within the contemplation of the Act.
But it is obvious that the rule of harmonious construction
on which Mr. Setalvad has solely rested his case, can be
invoked successfully by him only if the words used in s. 3
are capable of the construction which he suggests. If the
said words are capable of two constructions one of which
supports the appellants’ case and the other that of the res-
pondent, it would be legitimate to adopt the first construc-
tion, because it has the merit of harmonising the provisions
of s. 3 with the general scheme and purpose of the Act. On
the other hand, if the words used in s. 3(1) are not reason-
ably capable of the construction for which the appellants
contend, then it would be unreasonable and illegitimate for
the Court to limit the scope of those words arbitrarily
solely for the purpose of establishing harmony between the
465
assumed object and the scheme of the Act. Therefore, it is
necessary to examine the words used in s. 3 very carefully.
Let us first read s. 3(1):-
“The State Government so far as it appears to
them to be necessary or expedient for
maintaining, increasing or securing supplies
of essential articles or for arranging for
their equitable distribution and availability
at fair prices may, by notified order, provide
for regulating or prohibiting the supply,
distribution and transport of essential
articles and trade and commerce therein”.
Sub-section (2) provides that without prejudice to the gene-
rality of the powers conferred by sub-section (1), an order
made thereunder may provide for objects specified in clauses
(a) to (k). The majority of these objects may not be appli-
cable to the State, while, conceivably, some may be appli-
cable to it.
Section 3(1) is obviously intended to secure supplies of
essential articles and to arrange for their equitable
distribution and availability at fair prices. If electrical
energy is one of the essential articles mentioned in the
Schedule, there can be no difficulty in holding that a
notified order can be issued under s. 3(1) for regulating
the supply of the said energy and making it available at a
fair price. Indeed, it is not disputed and cannot be
disputed that if electrical energy is produced by a private
licensee and is then supplied to the consumers, such a
supply would fall within the mischief of s. 3(1), and the
terms on which it can and should be made to the consumers
can be regulated by a notified order. There can also be no
serious dispute that the terms of a contract entered into
between a private supplier of electrical energy and the
consumer could be modified by a notified order. Section
3(1) undoubtedly confers power on the State Government to
vary and modify contractual terms in respect of the supply
or distribution of essential articles. If that be so, on a
plain reading of s. 3(1) it seems very difficult to accept
the argument that the supply of electrical energy which is
included in s. 3(1) if it is made, by a private producer
should go outside the said section as soon as it is produced
by the State Government. The emphasis is not on who pro-
duces and supplies, but on the continuance of the equitable
distribution and supply of essential articles at fair
prices. If the object which s. 3(1) has in mind is such
equitable distribuiton and availability at fair prices of
essential articles, then that object would still continue to
attract the provisions of s. 3(1) even though the essential
article may be produced by the State and may be supplied by
it to the consumers.
466
The words used in s. 3(1) are so clear, unambiguous and wide
that it would be unreasonable to limit their scope arti-
ficially on the ground that by giving effect to the wide
language of the section, we might reach a result which is
not completely harmonious or consistent with the assumed
object and purpose of the Act. Indeed, as we have just
indicated, if the purpose of the Act is to secure the supply
of essential articles at fair prices, it would be irrelevant
as to who makes the supply; what is relevant is to regulate
the supply at a fair price. Therefore, we are not prepared
to accede to Mr. Setalvad’s argument that s. 3(1) does not
confer on the respondent the power to modify the terms of
agreements between it and the appellants.
Mr. Setalvad, no doubt, contended that in construing s.
3(1), we may have regard to the fact that most of the
clauses under s. 3(2) would be inapplicable to the
respondent State, and so, he virtually suggests that even
though the words in s. 3(1) may be wide, their width should
be controlled by the limited scope of the clauses prescribed
by subsection (2). We are not prepared to accept this
argument. After the decision of the Privy Council in King
Emperor v. Sibnath Banerjee(1), it is well-settled that the
function of a clause like clause (2) of s. 3 merely
illustrative (vide also Santosh Kumar Jain v. The State(3)).
In other words, the proper approach to adopt in construing
clauses (1) and (2) of s. 3 is to assume that whatever is
included in clause (2) is also included in clause (1). That
is not to say that if the words of clause (1) are wide
enough to include cases not included in clause (2), they
must, for that reason, receive a narrower construction.
Therefore, we must ultimately go back to clause (1) to
decide whether the supply of electrical energy made by the
respondent to the appellants can be regulated by a notified
order issued under it or not, and the answer to that
question must, in our opinion, be in the affirmative.
In this connection, it may be pertinent to refer to s.
3(2)(b) which provides for controlling the prices at which
any essential article may be bought or sold. It is not easy
to see why this clause cannot take in articles which may be
purchased or sold by the State. The clause is so worded
that the transactions of sale and purchase of all essential
articles would be included in it. It is true that where the
State wants to sell its essential articles, it may be able
to regulate the prices and control them by means of an
executive order; but that is not relevant and material in
construing the effect
(1) 72 I.A. 241 at p. 248.
(2) 1951 S.C.R. 303.
467
of the words; if the words take within their sweep essential
articles sold by the State, there is no reason why it should
not be competent to the State to issue a notified order con-
trolling the prices in that behalf.
In regard to the purchase of essential articles by the
State, the position is still clearer. If the State wants to
purchase essential articles, power to regulate the prices of
such, articles would seem to be clearly included in s.
3(2)(b). In-‘ deed, during the course of his arguments, Mr.
Setalvad did not seriously dispute this position.
Therefore, when the State wants to purchase essential
articles, it can regulate the price in that behalf by means
of a notified order issued under s. 3(1) and that shows that
in the cases of both sale and purchase of essential articles
by the State, s. 3(2)(b) read with s. 3(1) would clothe the
State with the power to issue the relevant notified order.
Then, it was faintly argued by Mr. Setalvad that the power
to regulate conferred on the respondent by s. 3(1) cannot
include the power to increase the tariff rate; it would
include the power to reduce the rates. This argument is en-
tirely misconceived. The word “regulate” is wide enough to
confer power on the respondent to regulate either by in-
creasing the rate, or decreasing the rate, the test being
what is it that is necessary or expedient to be done to
maintain, increase, or secure supply of the essential
articles in question and to arrange for its equitable
distribution and its availability at fair prices. The
concept of fair prices to which s. 3(1) expressly refers
does not mean that the price once fixed must either remain
stationary, or must be reduced in order to attract the power
to regulate. The power to regulate can be exercised for
ensuring the payment of a fair price, and the fixation of a
fair price would inevitably depend upon a consideration of
all relevant and economic factors which contribute to the
determination of such a fair price. If the fair price
indicated on a dispassionate consideration of all relevant
factors turns out to be higher than the price fixed and
prevailing, then the power to regulate the price must
necessarily include the power to increase the price so as to
make it fair. That is why we do not think Mr. Setalvad is
right in contending that even though the respondent may have
the power to regulate the prices at which electrical energy
should be supplied by it to the appellants, it had no power
to enhance the said price. We must, therefore, hold that
the challenge to the validity of the impugned notified
orders on the ground that they are outside the purview of s.
3(1) cannot be sustained.
That takes us to the next question as to whether the im-
pugned notified orders are invalid, because they contravene
468
the provisions of Art. 19(1)(f) and (g) of the Constitution.
The impugned orders have been notified by virtue of the
fore, be treated as law for the purpose of Art. 19. We may
also assume in favour of the appellants that the right to
receive the supply of electricity at the rates specified in
the agreements is a right which falls within Art. 19(1)(f)
or (g). Even so, can it be said that the impugned notified
orders are not reasonable and in the interests of the
general public’? That is the question which calls for an
answer in dealing with the present contention. It is true
that by issuing the impugned notified orders, the respondent
has successfully altered the rates agreed between the
parties for their respective contracts and that, prima
facie, does appear to be unreasonable. But, on the other
hand, the evidence shows that the tariff which was fixed
several years ago had become completely out of date and he
reports made by the Accountant-General from time to time
clearly indicate that the respondent was supplying
electricity to the appellants at the agreed rates even
though it was incurring loss from year to year. Therefore,
it cannot be said that the impugned notified orders were not
justified on the merits. The prices of all commodities and
labour charges having very much increased meanwhile, a case
had. certainly been made out for increasing the tariff for
the supply of electrical energy. But it could not be
possible to hold that the restriction imposed on the
appellants’ right by the increase made in the rates is
reasonable and in the interests of the general public solely
because the impugned orders have saved the recurring loss
incurred by the respondent under the contracts. If such a
broad and general. argument were accepted, it may lead to
unreasonable and even anomalous consequences in some cases.
This question, however, has to be considered from the point
of view of the community at large; and thus considered, the
point which appears to support the validity of the impugned
orders is that these orders were passed solely for the pur-
pose of assuring the supply of electrical energy and that
would clearly be for the good of the community at large.
Unless prices were increased, there was risk that the supply
of electrical energy may itself have come to an end. If the
respondent thought that the agreements made with the appel-
lants were resulting in a heavy loss to the public treasury
from year to year, it may have had to consider whether the
supply should not be cut down or completely stopped. It may
well be that the respondent recognised its obligation to the
public at large and thought that supplying electrical energy
to the consumers who were using it for profit-making
purposes, at a loss to the public exchequer would not be
reasonable and legitimate, and it apprehended that the
legislature may well question the propriety or wisdom of
such
469
a course; and so, instead of terminating the contracts, de-
cided to assure the supply of electrical energy at a fair
price and that is why the impugned notified orders were
issued. We ought to make it clear that there has been no
suggestion before us that the prices fixed by the impugned
notified orders are, in any sense, unreasonable or
excessive, and it is significant that even the revised
tariff has to come into operation prospectively and not
retrospectively. Therefore,( having regard to all the
circumstances in this case, we are disposed to hold that the
change made in the tariff by the notified orders must be
held to be reasonable and in the interests of the general
public.
Mr. Setalvad also attempted to challenge the validity of the
impugned orders on the ground that they contravene Art. 14
of the Constitution. In support of this contention, he
invited our attention to the allegation made in Writ
Petition No. 923 of 1956. In that writ petition, one of the
petitioners stated that the rate prescribed under the agree-
ments had not changed and had remained stationary as far as
consumers under the State Government’s licensees were
concerned. The affidavit appears to concede that certain
,other licensees had increased their rates, but that
increase, it is claimed, was negligible or nominal; and so,
the argument was that the rates which are widely divergent
between consumer and consumer constitute a contravention of
Art. 14. Mr. Setalvad fairly conceded that these allegations
are vague and indefinite and no other material has been pro-
duced either by the petitioner who has made this affidavit,
or by any of the other petitioners who moved the High Court
for challenging the validity of the impugned orders. In
fact, we do not know what the rates charged by other
licensees are and have been, and how they compare with the
rates prescribed by the original contracts as well as the
rates enhanced by the impugned notified orders. We ought to
add that the Division Bench of the High Court appears to be
in error when it assumed that the respondent was the sole
supplier of electrical energy in the State of Andhra. It is
true that the bulk of the energy is supplied by the respon-
dent; but there are some other private licensees which are
licensed to supply electrical energy to the consumers and in
that sense, at the relevant time the respondent was not a
monopolist in the matter of supply of electricity. This
Court has repeatedly pointed out that when a citizen wants
to challenge the validity of any statute on the ground that
it contravenes Art. 14, specific, clear and unambiguous alle
gations must be made in that behalf and it must be shown
that the impugned statute is based on discrimination and
that such discrimination is not referable to any
classification
470
which is rational and which has nexus with the object in-
tended to be achieved by the said statute. Judged from that
point of view, there is absolulety no material on the record
of any of the appeals forming the present group on which a
plea under Art. 14 can even be raised. Therefore, we do not
think it is necessary to pursue this point any further.
The result is the appeals fail and are dismissed with costs.
One set of hearing fees.
Appeals dismissed.
471