{"id":143583,"date":"1981-01-06T00:00:00","date_gmt":"1981-01-05T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/new-bihar-biri-leaves-co-ors-vs-state-of-bihar-ors-on-6-january-1981"},"modified":"2019-01-22T11:45:16","modified_gmt":"2019-01-22T06:15:16","slug":"new-bihar-biri-leaves-co-ors-vs-state-of-bihar-ors-on-6-january-1981","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/new-bihar-biri-leaves-co-ors-vs-state-of-bihar-ors-on-6-january-1981","title":{"rendered":"New Bihar Biri Leaves Co. &amp; Ors vs State Of Bihar &amp; Ors on 6 January, 1981"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">New Bihar Biri Leaves Co. &amp; Ors vs State Of Bihar &amp; Ors on 6 January, 1981<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1981 AIR  679, \t\t  1981 SCR  (2) 417<\/div>\n<div class=\"doc_author\">Author: R S Sarkaria<\/div>\n<div class=\"doc_bench\">Bench: Sarkaria, Ranjit Singh<\/div>\n<pre>           PETITIONER:\nNEW BIHAR BIRI LEAVES CO. &amp; ORS.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF BIHAR &amp; ORS.\n\nDATE OF JUDGMENT06\/01\/1981\n\nBENCH:\nSARKARIA, RANJIT SINGH\nBENCH:\nSARKARIA, RANJIT SINGH\nPATHAK, R.S.\n\nCITATION:\n 1981 AIR  679\t\t  1981 SCR  (2) 417\n 1981 SCC  (1) 537\t  1981 SCALE  (1)1\n\n\nACT:\n     Constitution of  India 1950, Articles 19(6) clauses (i)\n&amp; (ii)-Clauses\twhether distinct and separate-Law covered by\nthe clauses whether to satisfy the test of reasonableness\n     Article 19(1)(g) citizen's right to enter into contract\nwith State-Whether  fundamental right can be enforced though\ncontractual\n     Bihar Kendu  Leaves (Control of Trade) Act 1973 &amp; Bihar\nKendu Leaves  (Control of  Trade) Rules,  1973-Clause 13 and\nClause\t4(bb)\tof  agreement  prescribed  by  rules-Whether\nunreasonable and violative of Articles 14 and 19\n\nHELD:\n\n     Kendu leaves used in the manufacture of bidis are grown\nas forest  produce in  several States. On March 10, 1972 the\nState of  Bihar issued\tthe Bihar  Kendu Leaves\t (Control of\nTrade) Ordinance,  1972, which\twas replaced  by  the  Bihar\nKendu Leaves  (Control of  Trade) Act, 1973. The purpose was\nto create  a State  monopoly in\t the matter of sale of Kendu\nleaves to  the manufacturers  of bidis to regulate the trade\nin  relation  to  the  grower  of  Kendu  plants  and  their\ncollection and\tsale through  the agency of the State to the\nregistered manufacturers  of bidis. Section 4, empowered the\nState Government  for the  purpose of  purchase and  sale of\nKendu leaves  on its behalf, to appoint agents in respect of\ndifferent units.  Section 9  provided  that  the  authorised\nagents will  be bound  to accept delivery of all those Kendu\nleaves which  are fit  for the\tpurpose\t of  manufacture  of\nbidis.\n     In\t exercise   of\tits  rule-making  powers  the  State\nGovernment notified  the  Bihar\t Kendu\tLeaves\t(Control  of\nTrade) Rules, 1972, which was continued by Section 23 of the\nAct even  after the  repeal  of\t the  Ordinance.  Provisions\nregarding the  disposal of Kendu leaves were made in Rule 9.\nSub-rule (I)  provided that Kendu leaves collected or likely\nto be  collected shall\tbe sold\t or otherwise disposed of by\ntender on  terms and  conditions  specified  in\t the  Tender\nNotice. The  Tender was\t required  by  sub-rule\t (2)  to  be\nadvertised in  newspapers. Sub-rule  (9) provided  that\t the\nsuccessful tenderer  or successful bidder shall be appointed\nas  purchaser  and  the\t entire\t quantity  of  Kendu  leaves\ncollected or  likely to be collected or such lesser quantity\nout of\tit as  may be  offered to  him by the State shall be\npurchased by him on terms and conditions in the agreement to\nbe executed  by the  purchaser. Sub-rule  (10) required\t the\npurchaser to execute an Agreement in Form `M' within 15 days\nof the receipt of the order of appointment.\n     By a Notification dated January 16, 1974 the Rules were\namended and  sub-clause (bb)  after clause 4(b) was added in\nForm `M'  of the Agreement which provided that the purchaser\nshall not  raise any  objection against the quality of Kendu\nleaves or  shortage of\tleaves. Condition  13 of  the Tender\nNotice was  also incorporated  in the  statutory  Agreement,\nForm `M' providing\n418\nthat for  every unit  a minimum\t royalty will be `payable by\nthe purchaser,\tand that this amount shall be payable by the\ntenderer even  if by  the end  of the  season, the  price of\nKendu leaves at the offered rate, collected and delivered to\nthe purchaser,\tfell short  of this amount, the amount being\npayable before\tthe leaves  are utilized or taken out and if\nnot paid, realisable as arrears of land revenue.\n     In\t their\twrit  petitions\t the  petitioners  who\twere\ncarrying on trade in Kendu leaves, assailed the Rules framed\nunder the  Act and  clause 13 and clause 4(bb) of the Tender\nNotice and the Statutory Agreement and the notices of demand\nissued demanding  royalty  in  respect\tof  the\t undelivered\nquantity of Kendu leaves.\n     It\t was   contended  that:\t  (i)  the   provisions\t and\nconditions contained in clause 4(bb) and clause 13 amount to\nan unreasonable\t restriction on freedom to carry on trade or\nbusiness in  Kendu leaves guaranteed under Article 19(1) (g)\nof the\tConstitution  and  that\t they  are  not\t within\t the\nprotection of  sub-clause (ii)\tin the second part of clause\n(6) of\tArticle\t 19;  (ii)  that  the  provisions  in  their\nimmediate operation  and effect,  are harsh, unconscionable,\narbitrary, unfair  and oppressive, thereby violating Article\n14, (iii)  the foreclosure  of the right of the purchaser to\nrefuse delivery\t on the\t ground of  the leaves\toffered, not\nbeing of  requisite quality, is inconsistent and ultra vires\nof the\tproviso to Section 9(1) of the Act and (iv) that the\nauctions are  held in  January, while  the  Agents  are\t not\nappointed till\tMarch or  April, the  plucking\tseason,\t and\nconsequently, no  reasonable estimate  of the expected yield\nis possible.\n     The respondents  argued that  (i) there is a paucity of\nskilled people\twho could  be employed\tas  Agents  and\t the\nprevailing practice is that the persons appointed as Agents,\nare sponsored  by the  purchasers and  that the terms of the\nAgreement, taken  as a\twhole are  not one-sided,  (ii) if a\nperson voluntarily  takes upon\thimself under the terms of a\ncontract, such risks and chances of benefit, he has no right\nin the\tevent of  suffering a  loss to be compensated for it\neven under  the ordinary  law in a suit, much less the Court\nof writ\t jurisdiction can  grant any  such relief, (iii) the\nright to  enter into a contract on particular terms with the\nState is  not a\t fundamental right,  (iv) as the petitioners\nhad not\t paid amounts  required to  be adjusted\t against the\nremuneration of\t the Agents  they are not entitled to relief\nunder Article  32, and\t(v) the\t provisions are directly and\nessentially related  to the  operation of  monopoly and,  as\nsuch are  within the protection of sub-clause (ii) of clause\n(6) of Art. 19.\n     Dismissing the petitions and appeal\n^\n     HELD: 1.  The condition  in 4(bb) in the Tender Notices\nand  the  statutory  agreement\tis  couched  in\t peremptory,\ndrastic and  absolute language,\t not qualified\tby any words\nshowing that  the bar envisaged in it will be attracted only\nin cases  where the purchaser has had an earlier opportunity\nto raise his objection but failed to do so, or, where he had\non an  earlier occasion\t raised such  an objection which was\nheard  and   overruled\tby  the\t competent  Forest  Officer.\nCondition 4(bb) therefore is inconsistent with and repugnant\nto Section  9(1), proviso of the Act which contains a built-\nin-warranty, that  the Kendu leaves offered would be fit for\nmanufacture of bidis; that is to say, the leaves would be of\nmerchantable quality and as such, invalid. [442D-H]\n419\n     2. The  scheme of the Bihar Act and the Rules and Forms\nincluding that\tof the\timpugned condition  13 was  designed\nremove the  deficiencies, infirmities  and vices pointed out\nin <a href=\"\/doc\/650511\/\">Rashbihar's Panda v. State of Orissa<\/a> [1969] 3 S.C.R. 374.\nThe  impugned\tcondition   13\t satisfied   the   test\t  of\nreasonableness under  the first\t part of Articles 19(6). The\ncontention, that in actual operation, the impugned provision\n(clause 13)  creates a\tmonopoly in  favour of\ta  class  of\nmiddlemen consisting of `Agents' and purchasers, and enables\nthem to\t earn unduly large profits at the cost of the public\nor pluckers and growers is not acceptable.[439G-H, 440A-B]\n     3. (i).  Clause (6) of Article 19 falls into two parts,\nindicating that\t the two parts of the clause are intended to\nbe   distinct\t and   separate.   The\t words\t \"reasonable\nrestrictions\" which  find pivotal mention in the first part,\nhave not  been repeated\t in the\t second part  which omission\nmakes it  clear that a law covered by sub-clause (ii) is not\nrequired to  satisfy the  test of  reasonableness under\t the\nfirst part  of the  clause and no objection to have validity\nof such a law is tenable on the ground that it infringes the\nright guaranteed  under Article 19(1)(g). Sub-clause (ii) is\nthus an\t exception to  the  main  substantive  provision  in\nclause (1) of the Article. [431G-H, 432A-B]\n     3(ii). The\t basic\tand  essential\tfeatures  which\t are\ndirectly and  immediately connected with the creation of the\nState monopoly\tare found in the body of the Act itself. The\nprovisions incorporated\t in the\t Forms of  Tender Notice and\nAgreement are  merely subsidiary  or incidental\t provisions,\ntherefore, do  not fall\t within the protection of sub-clause\n(ii) in the second part of Article 19(6). [432E-F]\n     3(iii). Where  the business  to  be  carried  on  by  a\ncitizen is  in a  commodity, the  sale of  which is  a State\nmonopoly, conditioned by some statutory terms, (analogous to\nthe impugned  conditions) which\t in operation, have a direct\nand immediate  impact on  the  fundamental  freedom  of\t the\ncitizen guaranteed  under Article  19(1)  (g),\tthe  citizen\ncannot\tenter  into  a\tcontract  with\tthe  Government\t for\npurchase of  such a  commodity except on the statutory terms\nlaid down  by the  seller-State. The  Tender Notice  and the\nAgreement  which   the\tpurchasers   enter  into   with\t the\nGovernment,  although\tcouched\t in   statutory\t Forms,\t are\ntherefore, not bereft of their contractual character. [432G-\nH, 433A &amp; C]\n     4. The  minimum royalty or price payable being fixed on\nthe basis  of 75  per cent  of the estimated annual yield in\nstandard bags  from the unit multiplied by the rates offered\nand accepted.  Such an estimate, is made on the basis of the\naverage actual\tyield from that unit for the preceding three\nyears. Such  an estimated yield is notified and published in\nthe Tender Notices every year. Purchasers in the trade, know\nbeforehand as  to what\tthey are  bidding for,\tand they are\ngenerally persons  who have  been in  the trade\t for several\nyears and, as such have a special knowledge of forming their\nown estimates  of the  expected yield  and  the\t chances  of\nprofit and  loss from  that particular\tunit in a particular\nyear. [433F-G]\n     5. As  the chances\t of profit  and risks  of  loss\t are\nevenly divided\tbetween the seller-state and the purchasers,\nit cannot  be said  that the impugned condition in clause 13\nof  the\t Tender\t Notice\t and  the  Agreement  is  manifestly\nunreasonable. The  impugned condition  13 is  a\t restriction\nimposed in the general public interest. [434B-C]\n     6. Although  the Act and the Rules contemplate that the\nAgents appointed  by the  Government will  be under its full\ncontrol and liable to compensate\n420\nthe Government\tfor any\t shortage, damage  or loss caused in\ncollection or  delivery or  any defect in the quality of the\nleaves\tcollected,   to\t the   Government,  yet,  in  actual\npractice, the real position is that the Agents are generally\npersons sponsored by and otherwise, deeply interested in the\npurchasers. [435B-C]\n     7. The  agents are\t to be appointed every year at short\nnotice when the plucking season is at hand and as there is a\ndearth of  suitable persons  having adequate  experience and\nskill of  work as efficient agents, the Government is driven\ninto a\tsituation in  which they  have\tto  appoint  persons\nsponsored by  the purchasers  as Agents.  The  rules  framed\nunder the Act envisage a strict and exclusive control of the\nGovernment over the Agents and their activities, and provide\nfor their  liability to\t compensate the\t Government for\t the\nloss  occasioned   by  their   misconduct  or  neglect.\t The\ncondition in  condition 13  far from  creating a monopoly in\nthe trade  in favour  of middlemen,  operates as an ironclad\nsafeguard against  leakage of the public revenue by assuring\na minimum  return to  the public  exchequer from the sale of\nKendu leaves.  The provision  is aimed\tto secure  the\tfull\nbenefit from  the trade\t to the\t State\tleaving\t chances  of\nmaking reasonable, marginal profit to the purchasers. [435C-\nD, 439B-E]\n     8. It is a fundamental principle of general application\nthat if\t a person  of his  own accord, accepts a contract on\ncertain terms  and works  out the  contract,  he  cannot  be\nallowed to  adhere to  and abide by some of the terms of the\ncontract which\tproved advantageous to him and repudiate the\nother  terms   of  the\t same  contract\t  which\t  might\t  be\ndisadvantageous to  him. The  maxim,  is  qui  approbat\t non\nreprobat. A  party to  an instrument  or transaction  cannot\ntake advantage\tof one part of a document or transaction and\nreject the rest. [441E-H]\n     Verschures\t Creameries   Ltd.  v.\tHull  &amp;\t Netherlands\nSteamship Co.  [1921] 2\t K  B.608  and\tDouglas\t Menzies  v.\nUmphelby [1908] A.C. 224 at p. 232 referred to.\n     In the  instant case  the petitioners  had by  offering\nhighest bids  at public auctions or by Tenders, accepted and\nworked out  the contracts  in the past but are now resisting\nthe demands  or other  action, arising\tout of\tthe impugned\ncondition 13  on the ground that this condition is violative\nof Article 19(1)(g) and 14 of the Constitution. The impugned\nconditions though  bearing a  statutory\t complexion,  retain\ntheir basic contractual character. Though a person cannot be\ndebarred from enforcing his fundamental rights on the ground\nof estoppel or waiver, the principle which prohibits a party\nto a  transaction from\tapprobating a part of its conditions\nand reprobating\t the rest, is different from the doctrine of\nestoppel or waiver. [442A-C]\n\n\n\nJUDGMENT:\n<\/pre>\n<p>     ORIGINAL  JURISDICTION  :\tWrit  Petitions\t Nos.  2222-<br \/>\n2252\/77 &amp; 121 to 125\/79, 405 &amp; 441\/74, 46 &amp; 47\/75.<br \/>\n\t  (Under Article 32 of the Constitution.)<br \/>\n\t\t\t    AND<br \/>\n\t      CRIMINAL APPEAL No. 300 OF 1974.\n<\/p>\n<p>     Appeal by\tSpecial Leave  from the\t Judgment and  Order<br \/>\ndated 14-2-1974\t of the\t Patna High  Court in  Criminal Writ<br \/>\nJurisdiction No.<br \/>\n<span class=\"hidden_text\">421<\/span><br \/>\n     F. S.  Nariman, Anil  B. Devan, J. B. Dadachanji, K. J.<br \/>\nJohn, J.S.  Sinha and  Tarini Prasad  for the Petitioners in<br \/>\nWPs. Nos. 121-125\/79, 2222-2252\/77 &amp; 46-47\/75.\n<\/p>\n<p>     Y. S.  Chitale, K.\t K. Sinha  and S.  K. Sinha  for the<br \/>\nPetitioners in\tW.P. Nos.  405 &amp;  441\/74  and  Crl.  A.\t No.<br \/>\n300\/74.\n<\/p>\n<p>     Lal Narain\t Sinha, Attorney General of India, Ram Balak<br \/>\nMahto, and  U. P.  Singh for the Respondents Nos. 1-2 in all<br \/>\nW.Ps. and Appeal.\n<\/p>\n<p>     Miss A.  Subhashini for  Respondent No.  3 in  WP\tNos.<br \/>\n2222-2252\/77.\n<\/p>\n<p>     The Judgment of the Court was delivered by<br \/>\n     SARKARIA,\tJ.-   The  common  question  that  has\tbeen<br \/>\nseriously pressed  into\t argument  in  this  batch  of\twrit<br \/>\npetitions  and\tcriminal  appeal  mentioned  in\t the  title,<br \/>\nrelates to  the constitutional\tvalidity  of  certain  Rules<br \/>\nframed under the State of Bihar under the Bihar Kendu Leaves<br \/>\n(Control of Trade) Act, 1973 (hereinafter referred to as the<br \/>\n&#8216;Act&#8217;) particularly  clause 13,\t clause 4 (bb) of the Tender<br \/>\nNotice and  of the Statutory Agreement notified by the Bihar<br \/>\nGovernment in  the Bihar Government Gazette, and the notices<br \/>\nof demand  issued under\t the impugned  provisions  demanding<br \/>\n&#8220;royalty&#8221; from the petitioners in respect of the undelivered<br \/>\nquantity of Kendu leaves.\n<\/p>\n<p>     All these\twrit petitions\twill be\t disposed of by this<br \/>\ncommon judgment.  The basic  question being  common, it will<br \/>\nsuffice to  state the  facts giving  rise to  Writ Petitions<br \/>\n2222 to 2252 of 1977, filed by the New Bihar Bidi Leaves Co.\n<\/p>\n<p>     The petitioners  in all these writ petitions are either<br \/>\nfirms or  individuals carrying\ton trade  in Kendu leaves in<br \/>\nthe State  of  Bihar.  However,\t petitioner  No.  31  is  an<br \/>\nassociation of\ttraders in  Kendu leaves, of which the other<br \/>\npetitioners are members.\n<\/p>\n<p>     Kendu leaves  are grown  as forest\t produce in  several<br \/>\nStates,\t including  the\t States\t of  Bihar,  Orissa,  Andhra<br \/>\nPradesh, Maharashtra,  Gujarat, Madhya Pradesh and a part of<br \/>\nUttar Pradesh.\tUnder the  old system in Bihar, the right to<br \/>\npluck and  extract Kendu  leaves from  a forest coupe carved<br \/>\nout by\tthe Forest  Department, was  auctioned by  the State<br \/>\nGovernment.\n<\/p>\n<p>     On March  10, 1972,  while the State of Bihar was under<br \/>\nthe President&#8217;s rule, the Governor of Bihar issued the Bihar<br \/>\nKendu  Leaves\t(Control  of  Trade)  Ordinance,  1972.\t The<br \/>\nprovisions of this Ordinance were continued under successive<br \/>\nOrdinances and\tultimately replaced  by the aforesaid Act of<br \/>\n1973. This  Act created State monopoly in the matter of sale<br \/>\nof Kendu leaves to the manufacturers of<br \/>\n<span class=\"hidden_text\">422<\/span><br \/>\nbidis. Its  purpose is to regulate this trade in relation to<br \/>\nthe grower  of Kendu  plants and  the collection and sale of<br \/>\nthe same  through the  agency of the State to the registered<br \/>\nmanufacturers of  bidis. Under\tits scheme, a specified area<br \/>\nof Kendu  leaves is  divided into  units.  The\t&#8216;grower&#8217;  is<br \/>\ndefined as  &#8216;a grower  who holds lands on which Kendu plants<br \/>\ngrow or\t who is in possession of such lands under a lease or<br \/>\notherwise, and includes the State Government.&#8217; Under Section<br \/>\n3, the State Government may, by notification in the Official<br \/>\nGazette, declare  any area  to be  a specified\tarea for the<br \/>\npurposes of  the Act  and divide  every such  specified area<br \/>\ninto such number of units as it may deem fit. &#8216;Unit&#8217; means a<br \/>\nsub-division of\t a specified  area constituted under Section\n<\/p>\n<p>3. Under  Section 4,  the  State  Government  may,  for\t the<br \/>\npurpose of  purchase and sale of Kendu leaves on its behalf,<br \/>\nappoint agents\tin respect  of different  units and any such<br \/>\nagent may be appointed in respect of more than, any one unit<br \/>\nbut not more than three units. The terms, conditions and the<br \/>\nprocedure for  appointment of agents have been prescribed by<br \/>\nthe Rules  framed under\t the Act,  which we  shall presently<br \/>\nnotice.\t Section   5  places   restriction  on\tpurchase  or<br \/>\ntransport of  Kendu leaves.  Section 8\tmandates the  Forest<br \/>\nOfficer incharge  of a\tDivision to  set up  in each  unit a<br \/>\nnumber of  depots. Section  9 is  important and its material<br \/>\npart runs as under:\n<\/p>\n<blockquote><p>\t  &#8220;(1)\tThe   State  Government\t or  its  authorised<br \/>\n     officer or\t agent shall  purchase Kendu  leaves offered<br \/>\n     for sale  and deliver  at the depot during the business<br \/>\n     hours at the rates fixed under Section 7:<br \/>\n     Provided that  it shall be open to the State Government<br \/>\n     or its  authorised officer\t or agent, for reasons to be<br \/>\n     communicated in  writing,\tto  refuse  to\tpurchase  or<br \/>\n     accept delivery  of any  Kendu leaves  which, in  their<br \/>\n     opinion, are  not fit for the purpose of manufacture of<br \/>\n     bidis.&#8221;\n<\/p><\/blockquote>\n<p>It will be seen that the proviso to sub-section (1) contains<br \/>\na built-in  warranty inasmuch as it says that the authorised<br \/>\nagents will  be bound  to accept delivery of all those Kendu<br \/>\nleaves which,  in their\t opinion, are fit for the purpose of<br \/>\nmanufacture of bidis. In other words, the Kendu leaves to be<br \/>\npurchased by the authorised agents of the Government must be<br \/>\nof merchantable quality.\n<\/p>\n<p>     The next  relevant provision  is to be found in Section<br \/>\n11 which is as follows<br \/>\n\t  &#8220;(1) Every  manufacturer of bidis within the State<br \/>\n     shall get\thimself registered  within  such  period  on<br \/>\n     payment of\t such fee  and in  such\t manner\t as  may  be<br \/>\n     prescribed.\n<\/p>\n<p><span class=\"hidden_text\">423<\/span><\/p>\n<p>\t  (2) Every  manufacturer of  bidis within the State<br \/>\n     registered\t under\t sub-section  (1)  shall  furnish  a<br \/>\n     declaration in  such form\tby such\t date  and  in\tsuch<br \/>\n     manner as may be prescribed.&#8221;\n<\/p>\n<p>Section 12 provides that Kendu leaves purchased by the State<br \/>\nGovernment or  by its  authorised officer or agent, shall be<br \/>\ndisposed of  in such  manner as\t the  State  Government\t may<br \/>\ndirect. Section 20 of the Act gives the State Government the<br \/>\npower to  make rules  subject to  the conditions of previous<br \/>\npublication, to carry out all or any of the purposes of this<br \/>\nAct. Sub-section  (2) of  that Section\tprovides  that\tsuch<br \/>\nrules may  provide for\tall or any of the following matters,<br \/>\nnamely:-\n<\/p>\n<blockquote><p>\t  &#8220;(a) procedure   to\t be   followed\t in   making<br \/>\n\t       appointment of agents;\n<\/p><\/blockquote>\n<blockquote><p>\t  (b)  to (d) &#8230;&#8230;&#8230;&#8230;..;\n<\/p><\/blockquote>\n<blockquote><p>\t  (e)  the manner of registration under Section 10;\n<\/p><\/blockquote>\n<blockquote><p>\t  (f)  the manner of registration, the period within<br \/>\n\t       which such registration shall be made and the<br \/>\n\t       fee payable  thereof under sub-section (1) of<br \/>\n\t       Section 11;\n<\/p><\/blockquote>\n<blockquote><p>\t  (g)  form of\tdeclaration, authority to whom, date<br \/>\n\t       by  which   and\tthe   manner  in  which\t the<br \/>\n\t       declaration shall  be  furnished\t under\tsub-<br \/>\n\t       section (2) of Section 11;\n<\/p><\/blockquote>\n<blockquote><p>\t  (h) &#8230;&#8230;&#8230;&#8230;.&#8221;<\/p><\/blockquote>\n<p>     In\t exercise  of  its  powers  under  the\tthen  extent<br \/>\nOrdinance analogous  to those  under Section  20, the  State<br \/>\nGovernment of Bihar notified the Bihar Kendu Leaves (Control<br \/>\nof Trade)  Rules, 1972\t(for short the &#8216;Rules&#8217;). These rules<br \/>\nwere, as  already noticed,  continued by  Section 23  of the<br \/>\nAct, event after the repeal of the Ordinance concerned.\n<\/p>\n<p>     Rule 2(8)\tdefines &#8216;Purchaser&#8217; to mean a person to whom<br \/>\nKendu leaves  have been\t sold by  the State Government under<br \/>\nSection 12 Under clause (1) of the same Rule, &#8216;Standard bag&#8217;<br \/>\nmeans a\t bag containing 1000 standard gaddis of Kendu leaves<br \/>\nand where  the standard\t gaddis are not bagged, reference to<br \/>\nstandard bag  shall be\tconstrued as  a\t reference  to\t1000<br \/>\nstandard  gaddis   or  50,000  leaves.\tUnder  clause  (11),<br \/>\n&#8220;Standard gaddi&#8221; means a bundle containing 50 Kendu leaves.\n<\/p>\n<p>     Rule 3  provides the  manner of  appointing agents. The<br \/>\napplication for\t agency is to be submitted in Form &#8220;A&#8221;. This<br \/>\nForm requires<br \/>\n<span class=\"hidden_text\">424<\/span><br \/>\nthe  applicant\t for  appointment   as\tAgent\tto  make   a<br \/>\nDeclaration, inter alia, to this effect:\n<\/p>\n<blockquote><p>\t  &#8220;I\/We &#8230;&#8230;..  hereby declare that I\/We have read<br \/>\n     and understood  all the  provisions of  the Bihar Kendu<br \/>\n     Leaves (Control of Trade) Ordinance, 1972 and the rules<br \/>\n     made thereunder  and the conditions of agency mentioned<br \/>\n     in the  notice issued under rule 3(1) and I\/we agree to<br \/>\n     abide by  the same.  I\/we have personally inspected the<br \/>\n     unit No&#8230;..  if I\/we  am\/are appointed as an agent for<br \/>\n     the unit  mentioned above,\t I\/we undertake\t to purchase<br \/>\n     from growers  and collect from land of State Government<br \/>\n     and deliver  a quantity of Kendu leaves on both counts,<br \/>\n     which shall  not be  less than  &#8230;.. Standard  bags as<br \/>\n     mentioned\tin   the  notice.  I\/we\t shall\texecute\t the<br \/>\n     agreement with  the State Government in Form &#8216;C&#8217; within<br \/>\n     15 days.\n<\/p><\/blockquote>\n<blockquote><p>     Witness:\n<\/p><\/blockquote>\n<blockquote><p>     1.\n<\/p><\/blockquote>\n<blockquote><p>     2.\t\t\t\tSignature of the applicant.&#8221;<\/p><\/blockquote>\n<p>     Under sub-rule (7) of Rule 3, if, in the opinion of the<br \/>\nState Government,  it is  not possible\tto select a suitable<br \/>\nagent for the purpose out of the persons who had applied for<br \/>\nappointment as\tagent, or where any agency is terminated and<br \/>\nthere is not sufficient time for calling fresh applications,<br \/>\nthe State  Government may appoint any person as agent who in<br \/>\ntheir opinion  is suitable for the work. Such a person to be<br \/>\nappointed as  Agent is\trequired to furnish a declaration in<br \/>\nForm &#8216;B&#8217;.  Sub-rule (9)\t requires that\ton appointment as an<br \/>\nagent, the person so appointed shall execute an agreement in<br \/>\nForm &#8216;C&#8217;  within fifteen days of the receipt of the order of<br \/>\nappointment, failing  which the\t appointment shall be liable<br \/>\nto be  cancelled and  upon such\t cancellation, the  security<br \/>\ndeposit shall be forfeited; and the agent shall be liable to<br \/>\npay the\t loss, if any, incurred by the State Government as a<br \/>\nresult of  such cancellation  of the  appointment.  Then,  a<br \/>\nformula\t has   been  provided\tas  to\t how  such  loss  on<br \/>\ncancellation of\t the appointment  shall be  calculated.\t The<br \/>\nloss so\t determined shall  be recoverable  from the agent or<br \/>\nsurety as  arrears of  land revenue.  Sub-rule (10) requires<br \/>\nthe agent  so appointed\t for a\tparticular unit\t to  deposit<br \/>\nsecurity before\t signing the Agreement. It also provides how<br \/>\nthe amount  to be  deposited should  be calculated. Sub-rule<br \/>\n(11) provides  that the\t agent shall  purchase Kendu  leaves<br \/>\nfrom growers  and from such labourers who pluck Kendu leaves<br \/>\nfrom the  Government forests  and other\t lands at  the depot<br \/>\nopened by  him or  ordered to  be opened  by the  Divisional<br \/>\nForest Officer. Clause (ii) of sub-rule (11) lays<br \/>\n<span class=\"hidden_text\">425<\/span><br \/>\ndown that unless ordered by the Divisional Forest Officer or<br \/>\nan officer authorised by him in writing, the agent shall not<br \/>\nslacken or  stop the  purchase or  collection in  any  depot<br \/>\nwithin the unit. Sub-rule (12) requires the agent to deliver<br \/>\nimmediately the\t Kendu leaves  purchased or collected by him<br \/>\nto the\tpurchaser appointed  for  the  unit.  Sub-rule\t(13)<br \/>\nprovides:\n<\/p>\n<blockquote><p>\t  &#8220;The agent  shall maintain such account and submit<br \/>\n     such  periodical\treturns\t to  the  Divisional  Forest<br \/>\n     Officer or\t to any\t other officer\tauthorised by him as<br \/>\n     may be directed by the Divisional Forest Officer.&#8221;\n<\/p><\/blockquote>\n<p>Sub-rule (14)  requires the  agent  to\tfurnish\t a  list  of<br \/>\npersons employed  by him  with the  unit, immediately to the<br \/>\nDivisional Forest  Officer, and\t he is\tbound to  remove any<br \/>\nsuch  person   whose  employment   is  objected\t to  by\t the<br \/>\nDivisional Forest  Officer. Sub-rule  (15) is  material\t and<br \/>\nreads as under:\n<\/p>\n<blockquote><p>\t  &#8220;If the agent during the period of agency has duly<br \/>\n     observed and  performed all the terms and conditions of<br \/>\n     the agency\t to the satisfaction of the State Government<br \/>\n     and if  the State\tGovernment is  satisfied that he has<br \/>\n     done his  best to\tcollect maximum\t quantity of  leaves<br \/>\n     from the unit, it may grant to the agent yearly renewal<br \/>\n     of agency\tfor a  period  to  be  fixed  by  the  State<br \/>\n     Government on  such terms\tand  conditions\t as  may  be<br \/>\n     decided upon for each year.&#8221;\n<\/p><\/blockquote>\n<p>Sub-rule (16) provides that the agent shall be advanced such<br \/>\nmoney for  the performance  of agency  as may be directed by<br \/>\nthe State Government from time to time.\n<\/p>\n<p>     Rule 6(7)\tlays down  the procedure  of  enquiry  about<br \/>\nrejected Kendu\tleaves.\t According  to\tthis  procedure,  on<br \/>\nreceipt of a complaint under sub-section (2) of Section 9 of<br \/>\nthe Act,  the officer  shall  hold  the\t enquiry  after\t the<br \/>\nnecessary notice  to the  person  concerned  and  pass\tsuch<br \/>\norders in terms of sub-section (3) or (4) of Section 9 as he<br \/>\ndeems fit.\n<\/p>\n<p>     Rule 9  makes provision regarding the disposal of Kendu<br \/>\nleaves. Under sub-rule (1), Kendu leaves collected or likely<br \/>\nto be collected by the State Government or by its authorised<br \/>\nofficer shall ordinarily be sold or otherwise disposed of by<br \/>\ntender on  such terms and conditions as are specified in the<br \/>\nTender Notice and Tender Form issued by the State Government<br \/>\nor by  an officer authorised by the State Government in this<br \/>\nbehalf. The  Tender Notice is required by sub-rule (2) to be<br \/>\nadvertised in  newspapers and  in such\tother manner  as the<br \/>\nState Government may deem-fit. Sub-rule (8)<br \/>\n<span class=\"hidden_text\">426<\/span><br \/>\nprovides:  &#8220;Notwithstanding   anything\tcontained   in\t the<br \/>\nforegoing provisions,  the  State  Government  may  sell  or<br \/>\notherwise dispose  of Kendu leaves collected or likely to be<br \/>\ncollected by  it or  by its officers or agents by auction on<br \/>\nsuch terms and conditions as may be decided by it.&#8221; Sub-rule<br \/>\n(9) reads as under:\n<\/p>\n<blockquote><p>\t  &#8220;The successful  tenderer or successful bidder, as<br \/>\n     the case  may be,\tshall be  appointed as purchaser for<br \/>\n     the particular  unit, and\tthe entire quantity of Kendu<br \/>\n     leaves collected  or likely  to be\t collected from such<br \/>\n     unit or  such lesser  quantity out of it may be offered<br \/>\n     to him by the State, its officer or agent in such unit,<br \/>\n     shall be  purchased by  him in  such manner and on such<br \/>\n     terms  and\t conditions  as\t may  be  specified  in\t the<br \/>\n     agreement to  be executed\tby such purchaser under sub-<br \/>\n     rule (10).&#8221;<\/p><\/blockquote>\n<p>     Sub-rule (10)  requires the  purchaser  to\t execute  an<br \/>\nAgreement in  Form &#8216;M&#8217;\twithin 15 days of the receipt of the<br \/>\norder of  appointment. Sub-rule (11) requires such purchaser<br \/>\nbefore\tsigning\t  the  agreement  to  deposit  the  security<br \/>\ncalculated as  provided\t in  that  sub-rule.  Sub-rule\t(13)<br \/>\nprovides that  the purchaser,  if he  desires to consume the<br \/>\nleaves within  the unit or to remove the leaves delivered to<br \/>\nhim outside  the unit  immediately or at any time before the<br \/>\n30th June,  shall pay  the purchase  price in  full for\t the<br \/>\nquantity of  leaves delivered  to him calculated at the rate<br \/>\nspecified in  the purchaser&#8217;s  agreement. If  the  purchaser<br \/>\nagrees in  writing to  keep the\t delivered leaves within the<br \/>\nunit under  his supervision  and risk  and  under  insurance<br \/>\nagainst theft, fire and wastage at his expense but under the<br \/>\ncustody and  control of the Divisional Forest Officer he may<br \/>\nat the\ttime of delivery of leaves pay only such part of the<br \/>\npurchase price\tof the delivered leaves, as may be specified<br \/>\nin the\tpurchaser&#8217;s agreement.\tThe balance  of the purchase<br \/>\nprice may  be paid  in instalments on the dates specified in<br \/>\nthe purchaser&#8217;s\t agreement or on any earlier date before the<br \/>\nleaves are  removed outside  the unit  or are  delivered for<br \/>\nconsumption within  the unit. In no case the purchaser shall<br \/>\nbe allowed  to remove  all the\tleaves unless full price has<br \/>\nbeen paid.\n<\/p>\n<p>     By Notification,  dated January  16, 1974, published in<br \/>\nthe Extra-ordinary  Gazette of\tBihar Government of the same<br \/>\ndate, the  Rules were  amended, and  sub-clause\t (bb)  after<br \/>\nclause 4(b)  was added\tin Form\t &#8216;M&#8217; of\t the Agreement. This<br \/>\nsub-clause (bb) reads as under:\n<\/p>\n<blockquote><p>\t  &#8220;The\tpurchaser  shall  not  raise  any  objection<br \/>\n     against the  quality of  Kendu leaves  or\tshortage  of<br \/>\n     leaves in the standard gaddis.&#8221;\n<\/p><\/blockquote>\n<p><span class=\"hidden_text\">427<\/span><\/p>\n<p>This is\t one of\t the impugned provisions. The other impugned<br \/>\nprovision is  to be  found in  condition (13)  of the Tender<br \/>\nNotices published  in the  Bihar Government  Gazette,  every<br \/>\nyear inviting tenders for the purchase of Kendu leaves. This<br \/>\ncondition (13)\twhich is  also incorporated in the statutory<br \/>\nAgreement (Form-M), runs as follows:\n<\/p>\n<blockquote><p>\t  &#8220;For every  unit a minimum royalty will be payable<br \/>\n     by the purchaser. The amount of minimum royalty will be<br \/>\n     75%  of  the  amount  arrived  at\tby  multiplying\t the<br \/>\n     notified yield  in standard  bags by  the offer made by<br \/>\n     the purchaser  per standard  bag. This  amount shall be<br \/>\n     payable by\t the tenderer  even if\tby the\tend  of\t the<br \/>\n     season, the  price of Kendu leaves at the offered rate,<br \/>\n     collected and delivered to the purchaser, fell short of<br \/>\n     this amount.  This whole  amount will be payable before<br \/>\n     the leaves\t are utilized or taken out and, if not paid,<br \/>\n     will be realised as arrears of land revenue.&#8221;<\/p><\/blockquote>\n<p>     The  first\t  proposition  canvassed   by  Mr.   Nariman<br \/>\nappearing for  the petitioners in Writ Petitions 405 and 441<br \/>\nof 1974,  is  the  Petitioners\targued\tthat  the  aforesaid<br \/>\nimpugned provisions\/conditions\tcomprised in  the  aforesaid<br \/>\nclause 4(bb)  and clause  (13)\tamount\tto  an\tunreasonable<br \/>\nrestriction on the petitioners&#8217; fundamental freedom to carry<br \/>\non trade  or business  in  Kendu  leaves;  guaranteed  under<br \/>\nArticle 19(1)(g)  of the  Constitution;\t that  the  impugned<br \/>\nprovisions are\tnot within the protection of sub-clause (ii)<br \/>\nin the\tsecond part  of clause (6) of Article 19 because the<br \/>\nimpugned provisions  are  not  &#8220;integrally  and\t essentially<br \/>\nconnected&#8221; with\t the creation  of the  monopoly in favour of<br \/>\nthe State,  but are  only incidental  or subsidiary  to\t the<br \/>\noperation of the monopoly.\n<\/p>\n<p>     In support\t of this  proposition, learned\tcounsel\t has<br \/>\nreferred to the decisions of this Court in <a href=\"\/doc\/1258563\/\">Akadesi Padhan v.<br \/>\nState of  Orissa and  Rashbihari  Panda<\/a>\t etc.  v.  State  of<br \/>\nOrissa.\n<\/p>\n<p>     The second\t proposition propounded\t by Mr.\t Nariman  is<br \/>\nthat the  impugned provisions violate the fundamental rights<br \/>\nof the\tpetitioners&#8217; guaranteed\t under\tArticle\t 14  of\t the<br \/>\nConstitution,  because\tin  their  immediate  operation\t and<br \/>\neffect, they are harsh, unconscionable, arbitrary unfair and<br \/>\noppressive; that  even where  the quantity  offered  to\t the<br \/>\npurchaser is  far less\tthan 75%  of the  notified estimated<br \/>\nyield,\tor  the\t leaves\t offered  are  not  of\tmerchantable<br \/>\nquality, the  impugned provisions  unreasonably obligate the<br \/>\npurchaser to  pay royalty  for 75  per cent of the estimated<br \/>\nyield irrespective of whether the shortfall in the quantity<br \/>\n<span class=\"hidden_text\">428<\/span><br \/>\noffered\/delivered  or  the  unmerchantable  quality  of\t the<br \/>\nleaves offered\tis due\tto the\tfraud or  negligence of\t the<br \/>\nAgent who, under the Rules, is supposed to be independent of<br \/>\nthe  purchaser\tand  under  the\t exclusive  control  of\t the<br \/>\nGovernment;   that    the   impugned\tprovisions   operate<br \/>\nirrationally  and   unfairly  as  they\tmake  no  discerning<br \/>\ndistinction between  honest purchasers\twho are not blamable<br \/>\nfor the shortfall and dishonest purchasers who through their<br \/>\nfraud or  collusion  with  the\tagent  or  officers  of\t the<br \/>\nGovernment contribute  to the  shortfall. Thus, the impugned<br \/>\nprovisions tar\thonest and dishonest purchasers with one and<br \/>\nthe same brush which results in procrustean cruelty.\n<\/p>\n<p>     Third, the\t impugned  provision  which  forecloses\t the<br \/>\nright of  the purchaser\t to refuse delivery on the ground of<br \/>\nthe leaves  offered, not  being\t of  requisite\tquality,  is<br \/>\ninconsistent with  and ultra vires of the Proviso to Section<br \/>\n9(1) of\t the Act which contains a built-in warranty that the<br \/>\nleaves offered\tor delivered shall be fit for the purpose of<br \/>\nmanufacture of bidis.\n<\/p>\n<p>     Dr. Chitale,  appearing for  the  petitioners  in\tWrit<br \/>\nPetitions 121  to 125  of 1979, has by and large adopted the<br \/>\narguments of  Mr. Nariman.  He has  drawn our  attention  to<br \/>\nAnnexure &#8216;C&#8217;  to Writ  Petition 47  of 1975, wherein quite a<br \/>\nlarge number  of  instances  are  given\t to  show  that\t the<br \/>\nshortfall in  the actual delivery of the Kendu leaves to the<br \/>\npurchasers as  against the  estimated yield is considerable.<br \/>\nLearned counsel has emphasised that the auctions are held in<br \/>\nJanuary, while\tthe Agents  are not  appointed till March or<br \/>\nApril, which  is the  plucking season,\tand in\tJanuary,  no<br \/>\nreasonable estimate of the expected yield is possible. It is<br \/>\nmaintained that\t the allegations  in  the  counter-affidavit<br \/>\nfiled on  behalf of  the  State\t to  the  effect,  that\t the<br \/>\npurchasers inspect the units and make their own estimates of<br \/>\nthe expected yield is factually incorrect because in January<br \/>\nno such estimate is possible.\n<\/p>\n<p>     Dr.  Dewan,   who\thas   appeared\tfor   some  of\t the<br \/>\npetitioners, cited  Maneka Gandhi&#8217;s  case in  support of his<br \/>\ncontention, that the impugned provisions in their direct and<br \/>\ninevitable effect,  impinge upon  the fundamental  rights of<br \/>\nthe petitioners\t guaranteed under  Articles 14 and 19(1) (g)<br \/>\nof the Constitution. Learned counsel contrasted the impugned<br \/>\nprovisions with\t the Rules  in vogue  in the State of Andhra<br \/>\nPradesh, which, according to him, have a reasonable basis.\n<\/p>\n<p>     Mr.  K.  S.  Sinha,  appearing  for  the  appellant  in<br \/>\nCriminal Appeal\t 300 of 1974, submitted that the validity of<br \/>\nthe impugned  provisions was  indirectly  involved  in\tthis<br \/>\nappeal, though\tin a  different context.  It is\t pointed out<br \/>\nthat the permit to remove the leaves was refused to<br \/>\n<span class=\"hidden_text\">429<\/span><br \/>\nthe appellant  on the  ground that  he had  taken  away\t the<br \/>\nleaves without\tpaying 75  per cent  of the  royalty and had<br \/>\ncontravened Rule 16. The point sought to be made out is that<br \/>\nif the\timpugned Rules are not held to be valid, this appeal<br \/>\nmust, in consequence, succeed.\n<\/p>\n<p>     On the  other hand,  Mr. L. N. Sinha, learned Attorney-<br \/>\nGeneral submits on behalf of the respondents that there is a<br \/>\npaucity of  skilled people  who could be employed as Agents;<br \/>\nthat in\t actual practice the persons appointed as Agents are<br \/>\nsponsored by the purchasers.\n<\/p>\n<p>     (i) It  is submitted  that the  terms of the Agreement,<br \/>\ntaken as  a whole,  are not  one-sided.\t Whereas  under\t the<br \/>\nconditions of  the  Tender  Notice  and\t the  Agreement\t the<br \/>\npurchasers voluntarily bind themselves to pay the full price<br \/>\nof  the\t  unit\twhich  is  fixed  according  to\t the  Rules,<br \/>\nirrespective of\t any shortfall\tin the\tquantity offered and<br \/>\ndelivered, they,  under the  terms of the same Agreement get<br \/>\nthe benefit  of purchasing Kendu leaves offered in excess of<br \/>\n75 per\tcent of the estimated yield at the concessional rate<br \/>\nof 55 per cent only of the purchase price. It is argued that<br \/>\nif the\tconditions of  the Tender  Notice and  the statutory<br \/>\nAgreement are  considered as a whole, it is evident that the<br \/>\nrisks of  loss and  chances of\tbenefit are  equally divided<br \/>\nbetween the purchasers and the State.\n<\/p>\n<p>     (ii) It  is stressed  that what  is sold at the time of<br \/>\nauction is  the estimated  produce from a unit, as such, and<br \/>\nthe highest bidder or tenderer gets the contract to purchase<br \/>\nthat unit at a price the minimum of which is fixed at 75% of<br \/>\nthe amount  arrived at by multiplying the notified estimated<br \/>\nyield in  terms of standard bags from that unit. It is urged<br \/>\nthat (if  a person  voluntarily takes upon himself under the<br \/>\nterms of  a contract,  such risks and chances of benefit, he<br \/>\nhas no\tright in  the  event  of  suffering  a\tloss  to  be<br \/>\ncompensated for\t it even  under the  ordinary law in a suit,<br \/>\nmuch less  the Court  of writ jurisdiction can grant him any<br \/>\nsuch relief). It is pointed out that actually, in 110 out of<br \/>\n1000 units,  that yield\t exceeded in the notified estimates,<br \/>\nand as\ta result,  the purchasers reaped full benefit of the<br \/>\nexcess supply at concessional rates.\n<\/p>\n<p>     (iii) (a)\tIt is  emphasised that\tthe liability of the<br \/>\npetitioners to\tpay the whole price for the unit arises from<br \/>\nthe contract and, as such, it cannot be considered to have a<br \/>\ndirect impact on the fundamental right of the petitioners to<br \/>\ncarry on  their trade  or business;  that the right to enter<br \/>\ninto a\tcontract on particular terms with the State is not a<br \/>\nfundamental right.  Even this  Court-proceeds the  argument-<br \/>\ncannot reconstruct  the\t terms\tand  conditions\t voluntarily<br \/>\nagreed between the petitioners and the State.\n<\/p>\n<p><span class=\"hidden_text\">430<\/span><\/p>\n<p>     (iii) (b)\tIt is argued that it is not a fit case to be<br \/>\ndecided under  Article 32  of the  Constitution, because  in<br \/>\nseveral of these petitions the purchasers (petitioners) were<br \/>\nin default,  inasmuch  as  they\t did  not  pay\tthe  amounts<br \/>\nrequired to  be adjusted  against the  remuneration  of\t the<br \/>\nAgents; that in most of the cases the purchasers reaped that<br \/>\nfull benefits  of the contract and only in stray cases, they<br \/>\nsuffered loss;\tthat since they had availed of the chance of<br \/>\nreaping and  advantage, they could not turn round and attack<br \/>\nthe validity  of the  terms and\t conditions of\tthe contract<br \/>\nwhich they had voluntarily made and worked out.\n<\/p>\n<p>     (iv) Another  point sought\t to be\tmade out is that the<br \/>\nimpugned provisions  are directly and essentially related to<br \/>\nthe operation  of the monopoly and, as such, fall within the<br \/>\nprotection of sub-clause (ii) of clause (6) of Art. 19.\n<\/p>\n<p>     (v) In  the  alternative,\tit  is\tsubmitted  that\t the<br \/>\nimpugned provisions satisfy the test of reasonableness under<br \/>\nthe first  part of  clause (6)\tof the\tsaid Article, and in<br \/>\napplying that  test the voluntary nature of the contract and<br \/>\nthe obligations\t willingly undertaken  by the purchaser with<br \/>\nall the risks of loss and chances of gain should not be lost<br \/>\nsight of that a purchaser who acts on a contract voluntarily<br \/>\nentered into  by him  is precluded  from repudiating some of<br \/>\nits conditions\twhich involve  risk of\tloss and  to  accept<br \/>\nthose which are advantageous to him.\n<\/p>\n<p>     In support of the proposition that one who has received<br \/>\nthe benefits  of statute  is precluded\tfrom  attacking\t the<br \/>\nconstitutionality of  a condition  attached by\tthe statute,<br \/>\nthe learned Attorney-General has referred to these decisions<br \/>\nof the\tSupreme Court  of United States: Berth Fisheries Co.<br \/>\nv. Industrial  Commission of  the State\t of  Wisconian;\t St.<br \/>\nLouis Casting  Co. v. Construction Co.; and United Food Fuel<br \/>\nGas Co. v. Rail Road Commission.\n<\/p>\n<p>     In reply,\tMr. Nariman submits that writ petitions have<br \/>\nbeen filed  from  1973\tonwards\t by  various  purchasers  to<br \/>\nchallenge  the\tvalidity  of  the  impugned  provisions,  as<br \/>\nnotified every\tyear for inviting tenders, in the High Court<br \/>\nor in  this Court,  and from  time to  time  interim  orders<br \/>\nstaying the  operation of  the impugned provisions have been<br \/>\nissued either  by the High Court or this Court; that in view<br \/>\nof  this,  it  cannot  be  said\t that  the  petitioners\t are<br \/>\nprecluded from\tchallenging the\t validity  of  the  impugned<br \/>\nprovisions  on\t the  ground   of  acquiescence,  waiver  or<br \/>\nestoppel. It is maintained that fundamental rights cannot be<br \/>\nwaived,<br \/>\n<span class=\"hidden_text\">431<\/span><br \/>\nparticularly those  under Article 14 of the Constitution and<br \/>\nthe  principle\t of  estoppel  enunciated  in  the  American<br \/>\ndecisions is  not applicable  in India.\t In support  of this<br \/>\nargument, reference  has been  made to\tthe decision of this<br \/>\nCourt in  Basheshar Nath  v. The Commissioner of Income-tax,<br \/>\nDelhi &amp; Rajasthan &amp; Anr.\n<\/p>\n<p>     The learned Attorney-General further submitted that his<br \/>\nargument was  not to  the effect  that the  petitioners were<br \/>\nincompetent to enforce their fundamental right on the ground<br \/>\nof waiver  or estoppel;\t but that  a person  who voluntarily<br \/>\nenters into  a contract cannot retain the benefit accrued to<br \/>\nhim thereunder\tand repudiate the other part of the contract<br \/>\nwhich might have occasioned loss to him; that this principle<br \/>\nis different from that of waiver or estoppel.\n<\/p>\n<p>     The first\tquestion for  consideration is,\t whether the<br \/>\nimpugned provisions fall within the protection of sub-clause\n<\/p>\n<p>(ii) of Article 19(6) and therefore, it is not necessary for<br \/>\nthose provisions to satisfy the test of reasonableness under<br \/>\nthe first part of clause (6) of the Article.\n<\/p>\n<p>     The relevant part of clause (6) reads thus:<br \/>\n\t  &#8220;(6) Nothing\tin sub-clause (g) of the said clause<br \/>\n     shall affect  the operation  of any  existing law in so<br \/>\n     far as it imposes, or prevent the State from making any<br \/>\n     law imposing,  in the  interests of the general public,<br \/>\n     reasonable restrictions  on the  exercise of  the right<br \/>\n     conferred by  the said  sub-clause, and, in particular,<br \/>\n     nothing  in   the\tsaid  sub-clause  shall\t affect\t the<br \/>\n     operation of  any existing\t law in so far as it relates<br \/>\n     to, or  prevent the  State from making any law relating<br \/>\n     to,-\n<\/p>\n<p>\t  (i) &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;\n<\/p>\n<p>\t  (ii) the  carrying  on  by  the  State,  or  by  a<br \/>\n\t       Corporation owned or controlled by the State,<br \/>\n\t       of any  trade, business, industry or service,<br \/>\n\t       whether\tto   the  exclusion,   complete\t  or<br \/>\n\t       partial, of citizens or otherwise.&#8221;\n<\/p>\n<p>     It will  be seen  that clause (6) falls into two parts.<br \/>\nThe first  part commences  with the phrase: &#8220;Nothing in sub-<br \/>\nclause (g) of the said clause (1) of the Article&#8221;. Phrase to<br \/>\nthe same  effect, with the addition of pre-fixed words &#8220;and,<br \/>\nin particular&#8221;\tare repeated  at  the  commencement  of\t the<br \/>\nsecond part,  also. This indicates that the two parts of the<br \/>\nclause are  intended to\t be distinct  and separate. Further,<br \/>\nthe  words  &#8220;reasonable\t restrictions&#8221;\twhich  find  pivotal<br \/>\nmention in the<br \/>\n<span class=\"hidden_text\">432<\/span><br \/>\nfirst part, have not been repeated in the second part, which<br \/>\nomission makes\tit clear  that a  law covered  by sub-clause\n<\/p>\n<p>(ii) is\t not required  to satisfy the test of reasonableness<br \/>\nunder the  first part  of the clause and no objection to the<br \/>\nvalidity of  such a  law is  tenable on\t the ground  that it<br \/>\ninfringes the right guaranteed under Article 19(1) (g). Sub-<br \/>\nclause (ii)  is thus  in the  nature of\t an exception to the<br \/>\nmain substantive provision in clause (1) of the Article. Its<br \/>\nlanguage therefore,  which is explicitly restrictive, has to<br \/>\nbe strictly  construed. The protection of sub-clause (ii) in<br \/>\nthe second  part is, in terms, available to the law only &#8220;in<br \/>\nso far as it relates to&#8221; the carrying on by the State, or by<br \/>\na Corporation  owned or\t controlled by\tthe  State,  of\t any<br \/>\ntrade, business,  industry, or\tservice\t to  the  exclusion,<br \/>\ncomplete or  partial of the citizens or otherwise. The ambit<br \/>\nof the\twords &#8220;in so far as it relates to&#8221; in the context of<br \/>\nsub-clause (ii)\t in the\t second part  of clause (6), came up<br \/>\nfor consideration before this Court in Akadasi Padhan&#8217;s case<br \/>\n(ibid). Gajendragadkar, J., as he then was, speaking for the<br \/>\nCourt, held  that only those provisions of the law which are<br \/>\n&#8220;integrally and\t essentially&#8221; connected with the creation of<br \/>\nthe monopoly  are protected  under the second part of clause<br \/>\n(6), but those provisions which are not absolutely essential<br \/>\nfor  creating  the  monopoly,  but  are\t merely\t incidental,<br \/>\nsubsidiary or  helpful to  the operation  of the monopoly do<br \/>\nnot fall  under the  second part  of clause  (6)  and  their<br \/>\nvalidity must  be judged,  under the  first part  of Article<br \/>\n19(6).\n<\/p>\n<p>     Now, let us apply this test to the provisions which are<br \/>\nimpugned  in   the  instant   case.  These   provisions\t are<br \/>\nincorporated in the Forms of Tender Notice and the Agreement<br \/>\nby Rules  framed under\tthe Act.  The  basic  and  essential<br \/>\nfeatures which\tare directly  and immediately connected with<br \/>\nthe creation  of the  State monopoly  are to be found in the<br \/>\nbody  of   the\tAct,  itself.  In  any\tcase,  the  impugned<br \/>\nprovisions are\tmerely subsidiary  or incidental  provisions<br \/>\nrelating to  the operation  of the  monopoly.  The  impugned<br \/>\nprovisions, therefore,\tdo not fall within the protection of<br \/>\nsub-clause (ii) in the second part of Article 19 (6).\n<\/p>\n<p>     The question,  however, still remains whether the right<br \/>\nto enter  into a contract with the State on particular terms<br \/>\nis a fundamental right falling within the purview of Article<br \/>\n19 (1)\t(g). The  learned Attorney-General maintains that it<br \/>\nis not.\n<\/p>\n<p>     Whatever may  be the  position with regard to contracts<br \/>\nrelating to  other matters, where the business to be carried<br \/>\non by  a citizen  is in\t a commodity, the sale of which is a<br \/>\nState  monopoly,   conditioned\tby   some  statutory  terms,<br \/>\nanalogous to  the impugned  conditions, which, in operation,<br \/>\nhave a direct and immediate impact on the fundamental<br \/>\n<span class=\"hidden_text\">433<\/span><br \/>\nfreedom of  the citizen\t guaranteed under  Article 19(1)(g),<br \/>\nthe citizen cannot enter into a contract with the Government<br \/>\nfor purchase  of such  a commodity  except on  the statutory<br \/>\nterms laid  down by  the seller-State.\tSale of Kendu leaves<br \/>\nfor  manufacture  of  bidis  being  a  State  monopoly,\t the<br \/>\npetitioners-purchasers could,  if they\tso desired, purchase<br \/>\nthe Kendu  leaves only\tin  the\t manner\t prescribed  by\t the<br \/>\nstatutory rules\t on terms  and conditions  notified  in\t the<br \/>\nTender Notices.\t Even so,  these conditions leave sufficient<br \/>\nroom to\t the free  volition  of\t the  intending\t purchasers,<br \/>\nparticularly in\t the matter  of fixing\tthe  rates  and\t the<br \/>\nminimum\t price\tpayable\t for  the  estimated  yield  from  a<br \/>\nparticular unit in terms of standard bags. The Tender Notice<br \/>\nand the\t Agreement which  the purchasers enter into with the<br \/>\nGovernment, although  couched in  statutory Forms,  are\t not<br \/>\nbereft of their contractual character, either.\n<\/p>\n<p>     Since  the\t impugned  provisions  do  not,\t as  already<br \/>\nnoticed, fall  within the  protection of  sub-clause (ii) in<br \/>\nthe second part of clause (6), they must satisfy the test of<br \/>\nbeing a\t reasonable restriction under the first part of that<br \/>\nclause.\n<\/p>\n<p>     The first point in this connection to be determined is,<br \/>\nwhat actually  is sold\tto the purchasers under the terms of<br \/>\nthe Tender  Notice and\tthe statutory  Agreement ?  Is it an<br \/>\nestimated yield of a unit in terms of standard bags which is<br \/>\nsold or\t the actual  yield in terms of standard bags offered<br \/>\nor delivered  ? From  the scheme  of the Rules, particularly<br \/>\nRule 9(9) extracted in a foregoing part of this judgment, it<br \/>\nis clear  that what  is sold to the successful bidder at the<br \/>\nannual auction\tis  the\t entire\t quantity  of  Kendu  leaves<br \/>\ncollected or  likely to\t be collected from a particular unit<br \/>\nor such\t lesser quantity  out of that unit as may be offered<br \/>\nto him by the State or its agent or officer for a particular<br \/>\nyear at\t a price  called `royalty&#8217;.  The minimum  royalty or<br \/>\nprice payable being fixed on the basis of 75 per cent of the<br \/>\nestimated annual  yield\t in  standard  bags  from  the\tunit<br \/>\nmultiplied by  the  rates  offered  and\t accepted.  Such  an<br \/>\nestimate, as  it appears  from the counter-affidavit is made<br \/>\non the\tbasis of the average actual yield from that unit for<br \/>\nthe preceding  three  years.  Such  an\testimated  yield  is<br \/>\nnotified and  published in  the Tender\tNotices every  year.<br \/>\nPurchasers in  the trade,  therefore, know before-hand as to<br \/>\nwhat they  are bidding for. Purchasers are generally persons<br \/>\nwho have  been in  the trade  for several years and as such,<br \/>\nhave a\tspecial knowledge  of forming their own estimates of<br \/>\nthe expected  yield and\t the chances of profit and loss from<br \/>\nthat particular\t unit in a particular year. While it is true<br \/>\nthat the  bidders have\tto enter into Agreement on the terms<br \/>\nand conditions\tnotified by the Government, yet it cannot be<br \/>\nlost sight of that in spite of the fact that<br \/>\n<span class=\"hidden_text\">434<\/span><br \/>\nthe impugned provisions in Condition 13 of the Agreement and<br \/>\nthe Tender  Notice in  1973 and the impugned Condition 4(bb)<br \/>\nhas been  notified  annually  since  the  amendment  of\t the<br \/>\nstatutory Forms\t in January  1974, the petitioners and their<br \/>\nfellowmen in  the trade have been offering rates of bids and<br \/>\nentering  into\t agreement  on\t the  notified\t terms\t and<br \/>\nconditions, including  the impugned  provisions. Only  a few<br \/>\nwrit petitions\thave been  filed now  and  then\t by  certain<br \/>\npurchasers who\tsuffered loss,\tto challenge  these impugned<br \/>\nprovisions since  1973. In view of the fact that the chances<br \/>\nof profit  and risks  of loss are evenly divided between the<br \/>\nseller-State and  the purchasers  and in  the light  of\t the<br \/>\naforesaid historical  background, it cannot be said that the<br \/>\nimpugned condition in clause 13 of the Tender Notice and the<br \/>\nAgreement is manifestly unreasonable. The impugned Condition<br \/>\n13 is  a restriction imposed in the general public interest.<br \/>\nFixation of  a minimum price on the basis of estimated yield<br \/>\nfrom a\tparticular unit\t in a particular year operates as an<br \/>\ninsurance against  loss or  leakage of public Revenue due to<br \/>\nconnivance or  collusion between purchasers on the one hand,<br \/>\nand the\t servants and  agents of  the  seller-State  on\t the<br \/>\nother. This  method also  assures  a  minimum  wage  to\t the<br \/>\npluckers of  the Kendu\tleaves who,  as has been affirmed in<br \/>\nthe counter-affidavit of the respondent-State, are generally<br \/>\nAdivasis  or  persons  belonging  to  economically  backward<br \/>\nclasses.\n<\/p>\n<p>     We are  unable to\taccept the contention of the learned<br \/>\ncounsel for  the petitioners,  that the\t impugned provisions<br \/>\nare harsh  and unreasonable  inasmuch as  they obligate\t the<br \/>\npurchasers to  pay for\tthe undelivered\t shortfall of  Kendu<br \/>\nleaves even where such shortfall is due to the negligence or<br \/>\nfraud of  the Agent of the Government. The real position has<br \/>\nbeen explained\tin the\tcounter-affidavit filed on behalf of<br \/>\nthe State in Writ Petitions 2222 to 2252 of 1977, thus :\n<\/p>\n<blockquote><p>\t  &#8220;Technically speaking the Agents were appointed by<br \/>\n     the State\tGovernment but the persons so appointed were<br \/>\n     actually sponsored\t by the\t respective purchasers.\t The<br \/>\n     Agents were  the persons  of the  purchasers  and\twere<br \/>\n     loyal to their old masters. This is an incontrovertible<br \/>\n     fact. In  most of\tthe cases  the agents  got the\tfull<br \/>\n     amount  of\t  their\t commission   and  handling  charges<br \/>\n     adjusted towards the purchase price of the units at the<br \/>\n     end of  collection season.\t Specific instances  are  on<br \/>\n     record  that  in  many  cases  the\t Agents\t were  close<br \/>\n     relatives\tsuch   as  father,  sons,  brothers  of\t the<br \/>\n     purchasers. In  the case  of  firms,  the\tAgents\twere<br \/>\n     partners in the same firm. In some cases the purchasers<br \/>\n     and the Agents interchanged their positions. Purchasers<br \/>\n     became Agents while the latter<br \/>\n<span class=\"hidden_text\">435<\/span><br \/>\n     became purchasers. This was a common trick of the trade<br \/>\n     which is still in vogue.<\/p><\/blockquote>\n<p>     Some of  the instances showing the relationship between<br \/>\nthe petitioners\/purchasers  and the  Agents are tabulated in<br \/>\nAnnexure `A&#8217; hereto.&#8221;\n<\/p>\n<p>     Although  the   Act  and\tthe  Rules  noticed  earlier<br \/>\ncontemplate that the Agents appointed by the Government will<br \/>\nbe under  its full  control and\t liable\t to  compensate\t the<br \/>\nGovernment for\tany  shortage,\tdamage\tor  loss  caused  in<br \/>\ncollection or  delivery or  any defect in the quality of the<br \/>\nleaves\tcollected,   to\t the   Government,  yet,  in  actual<br \/>\npractice, the real position is that the Agents are generally<br \/>\npersons sponsored by and otherwise, deeply interested in the<br \/>\npurchasers. In\ttheir counter-affidavit,  the Government has<br \/>\nexplained that\tthere is a dearth of suitable persons having<br \/>\nadequate experience  and skill\tof work as efficient Agents.<br \/>\nThe Agents  are to  be appointed  every year at short notice<br \/>\nwhen the  plucking season  is at  hand. Circumstances  being<br \/>\nwhat they  are, the Government is driven into a situation in<br \/>\nwhich  they   have  to\tappoint\t persons  sponsored  by\t the<br \/>\npurchasers as Agents. From this real factual position, viz.,<br \/>\nthe close  bond and  rapport between  the purchasers and the<br \/>\nagents, two  inferences arise.\tFirst, that  at the  time of<br \/>\nauction, the  intending purchasers are in a position to form<br \/>\na reasonable estimate of the return which they are likely to<br \/>\nhave for  the year  concerned from  that particular  unit or<br \/>\nunits for  which they offered the rates. Second, that if the<br \/>\npurchase price\twere to\t be fixed  not on  the basis  of any<br \/>\nestimated annual  yield from  a particular  unit but  on the<br \/>\nbasis of  the quantity\tactually delivered, the risk of loss<br \/>\nor  leakage  of\t public\t revenue  by  reason  of  fraud\t and<br \/>\ncollusion  between   the  purchasers  and  the\tagents\twill<br \/>\nmanifestly increase. Looked at from this angle also, against<br \/>\nthe real  factual  background,\tthe  impugned  Condition  13<br \/>\ncannot be said to be unreasonable.\n<\/p>\n<p>     Mr. Nariman  contended that if the factual position, as<br \/>\nstated in  the counter-affidavit  filed\t on  behalf  of\t the<br \/>\nState, is  correct, then  the impugned\tcondition 13 will be<br \/>\nhit by\tthe ratio  of this  Court&#8217;s decisions  in Rashbihari<br \/>\nPanda etc.  v. State  of Orissa\t (ibid) and Akadasi Padhan&#8217;s<br \/>\ncase (ibid),  because in that situation the conclusion would<br \/>\nbe ineluctable\tthat the  monopoly is  being worked  by\t the<br \/>\nState not  for\tits  exclusive\tbenefit\t or  in\t the  public<br \/>\ninterest but  to benefit  a class of profiteers comprised of<br \/>\nthe purchasers and their agents, thereby creating a monopoly<br \/>\nwithin a monopoly.\n<\/p>\n<p>     In order to appreciate this contention, it is necessary<br \/>\nto notice  Rashbihari Panda&#8217;s  case. To\t regulate  trade  in<br \/>\nKendu  leaves\tand  prevent  exploitation  of\tgrowers\t and<br \/>\npluckers, the State of Orissa enacted<br \/>\n<span class=\"hidden_text\">436<\/span><br \/>\nthe Orissa  Kendu Leaves  (Control of  Trade) Act.  1961. By<br \/>\nSection 3  of that  Act, which\tis analogous to Section 3 of<br \/>\nthe Bihar  Act, no  person other  than\tthe  Government,  an<br \/>\nauthorised officer  of the Government, or an agent appointed<br \/>\nby the\tGovernment, is\tentitled to  purchase  or  transport<br \/>\nKendu  leaves;\t and  under  Section  4\t of  that  Act,\t the<br \/>\nGovernment is  authorised to  fix the  price  at  which\t the<br \/>\nleaves shall be purchased from the growers by the officer or<br \/>\nagent of  the Government.  Section 10  of that\tAct provided<br \/>\nthat the Kendu leaves purchased shall be sold or disposed of<br \/>\nin such\t manner as  the Government  may\t direct,  and  under<br \/>\nSection 11,  at least one-half of the net profits derived by<br \/>\nthe Government is to be paid to Samitis and Gram Panchayats.<br \/>\nIn Akadasi  Padhan&#8217;s case  (ibid), a  grower of Kendu leaves<br \/>\nchallenged Sections  3 and  4 and  Rule 7(5) made under that<br \/>\nAct on\tthe ground that it contravened his fundamental right<br \/>\nunder Articles 14 and 19(1)(a) and (g) in this Court. It was<br \/>\nheld that  Sections 3  and 4  did not infringe Article 19(6)\n<\/p>\n<p>(ii), but  the State Government was incompetent to implement<br \/>\nthe provisions\tof the\tAct and give effect to its monopoly,<br \/>\nbecause the  agents appointed  were not really agents of the<br \/>\nGovernment but\twere authorised\t to carry  on trade  in\t the<br \/>\nleaves purchased  not on  behalf of  the Government  but  on<br \/>\ntheir own  account, and that it thus gave rise to a monopoly<br \/>\nin favour  of the  agents which was not protected by Article<br \/>\n19(6) (ii) since the law cannot be used by the State for the<br \/>\nprivate benefit\t of agents.  After the\tdecision in  Akadasi<br \/>\nPadhan&#8217;s case,\tthe Orissa  State made\tsome changes  in the<br \/>\nimplementation of  its monopoly. In 1966, it invited tenders<br \/>\nfrom persons  desirous of  purchasing Kendu leaves purchased<br \/>\nby the\tofficers and  agents of\t the Government.  During the<br \/>\nyears 1966  and 1967,  the prices of Kendu leaves ruled very<br \/>\nhigh and  when sales were effected by public auction, prices<br \/>\nconsiderably in\t excess\t of  those  at\twhich  tenders\twere<br \/>\naccepted were  realised. Early\tin 1968,  the State  evolved<br \/>\nanother scheme under which, it offered to renew the licences<br \/>\nof  those  traders  who\t in  the  State&#8217;s  view\t had  worked<br \/>\nsatisfactorily in the previous year and had paid the amounts<br \/>\ndue from  them regularly.  The scheme  was objected  to, and<br \/>\nrealising that, the scheme arbitrarily excluded many persons<br \/>\ninterested in  the trade,  and hence  was objectionable, the<br \/>\nGovernment decided to invite offers for advance purchases of<br \/>\nKendu  leaves\tbut  restricted\t  the  invitation  to  those<br \/>\nindividuals  who  had  carried\tout  the  contracts  in\t the<br \/>\nprevious year without default and to the satisfaction of the<br \/>\nGovernment that\t is, the existing contractors were given the<br \/>\nexclusive right\t to make  offers to  purchase Kendu  leaves.<br \/>\nThis new  method of  offering to  enter into  agreements for<br \/>\nadvance purchases  of Kendu  leaves  by\t private  offers  in<br \/>\npreference to  open  competition,  was\tchallenged  by\twrit<br \/>\npetitions in the High Court as<br \/>\n<span class=\"hidden_text\">437<\/span><br \/>\nviolative  of  the  petitioner&#8217;s  fundamental  rights  under<br \/>\nArticles 14 and 19(1) (g).\n<\/p>\n<p>     Reversing the  decision of\t the High Court, this Court,<br \/>\nin appeal, held,<br \/>\n\t  The validity\tof a  law by which the State assumed<br \/>\n     the monopoly  to trade  in a  given commodity has to be<br \/>\n     judged by\tthe test  whether the entire benefit arising<br \/>\n     therefrom is to enure to the State, and the monopoly is<br \/>\n     not used as a cloak for conferring private benefit upon<br \/>\n     a limited\tclass of persons. The monopoly of purchasing<br \/>\n     Kendu leaves  under Section  3 may\t be held to be valid<br \/>\n     if, it  be administered  only for\tthe benefit  of\t the<br \/>\n     State. Similarly, the right to sell or dispose of Kendu<br \/>\n     leaves by the State under Section 10, in such manner as<br \/>\n     the Government  may direct,  would be  valid if  it  be<br \/>\n     exercised in  public interest  and\t not  to  serve\t the<br \/>\n     private interest and not to serve the private interests<br \/>\n     of any person or class of persons. The profit resulting<br \/>\n     from the  sale must  be for  the public benefit and not<br \/>\n     for  private  gain.  Section  11  also  emphasises\t the<br \/>\n     concept that  the machinery  of sale or disposal of the<br \/>\n     leaves  must   also  be  geared  to  serve\t the  public<br \/>\n     interest. If  the scheme of disposal creates a class of<br \/>\n     middlemen who  could purchase  from the  Government  at<br \/>\n     concessional   rates    and    earn    large    profits<br \/>\n     disproportionate to  the nature of the service rendered<br \/>\n     or\t duty\tperformed  by  them,  it  cannot  claim\t the<br \/>\n     protection of  Article 19(6)  (ii) as it is not open to<br \/>\n     the Government  to create a monopoly in favour of third<br \/>\n     parties from its own monopoly.\n<\/p>\n<p>\t\t\t  (Head-note of the Official Report)<br \/>\nIt was further held :\n<\/p>\n<blockquote><p>\t  &#8220;The right  to make offers being open to a limited<br \/>\n     class of  persons the  schemes effectively shut out all<br \/>\n     other persons carrying on trade in Kendu leaves as well<br \/>\n     as new  entrants into  the\t trade.\t Both  the  schemes,<br \/>\n     evolved by\t the Government, namely, the one of offering<br \/>\n     to enter  into contracts  with certain named licencees,<br \/>\n     and the  other of\tinviting tenders  from licencees who<br \/>\n     had in  the previous  year carried\t out their contracts<br \/>\n     satisfactorily gave  rise to a monopoly in the trade in<br \/>\n     the leaves\t to certain  traders and  singled out  other<br \/>\n     traders for  discriminating treatment.  Therefore, they<br \/>\n     were  violative   of  the\t fundamental  right  of\t the<br \/>\n     petitioners under\tArticles 14 and 19(1) (g) and as the<br \/>\n     schemes were not integrally and<br \/>\n<span class=\"hidden_text\">438<\/span><br \/>\n     essentially&#8217;  connected   with  the   creation  of\t the<br \/>\n     monopoly, they  were not  protected  by  Article  19(6)\n<\/p><\/blockquote>\n<blockquote><p>     (ii).<\/p><\/blockquote>\n<p>     It was further observed that if the only anxiety of the<br \/>\nGovernment was\tto  ensure  due\t performance  by  those\t who<br \/>\nsubmitted  tenders,   Government   could   devise   adequate<br \/>\nsafeguards. But the classification based on the circumstance<br \/>\nthat certain  existing contractors  had\t carried  out  their<br \/>\nobligation  in\tthe  previous  year  regularly\tand  to\t the<br \/>\nsatisfaction of the Government, is not based on any real and<br \/>\nsubstantial  distinction   bearing  a  just  and  reasonable<br \/>\nrelation to  the objects  sought to  be achieved namely, the<br \/>\neffective execution  of the monopoly in public interest, the<br \/>\nprevention of  exploitation of pluckers and growers of Kendu<br \/>\nleaves, or  the securing of the full benefit from the trade,<br \/>\nto the State.\n<\/p>\n<p>     On the  basis of  this reasoning,\tit was\tfinally held<br \/>\nthat the scheme could not be supported on the ground that it<br \/>\nimposed\t reasonable  restrictions,  within  the\t meaning  of<br \/>\nArticle 19(6), on the fundamental rights of traders to carry<br \/>\non business in Kendu leaves. Hence, the plea that the action<br \/>\nof the\tGovernment was\tbona fide  could not be an effective<br \/>\nanswer to that challenge.\n<\/p>\n<p>     It may  be noted  that the\t decision of  this Court  in<br \/>\nRashbihari&#8217;s case  (ibid) was announced on January 16, 1969.<br \/>\nThe Bihar  Act, with  which we\tare concerned, was passed in<br \/>\n1973. The  Bihar Legislature,  therefore could\tnot  but  be<br \/>\naware of  the unconstitutional\tfeatures pointed out by this<br \/>\nCourt in  the schemes of the Orissa Act and the Rules framed<br \/>\nthereunder. Care  has been  taken by  the Bihar Legislature,<br \/>\nand the\t Government to\texercise the scheme of the Bihar Act<br \/>\nand the\t Rules and Forms framed or prescribed thereunder, of<br \/>\nthe vices  from which  the  schemes  of\t Orissa\t Legislation<br \/>\nsuffered. This will be clear from a comparative study of the<br \/>\nOrissa schemes\tand the\t Bihar scheme.\tFirstly,  under\t the<br \/>\nOrissa schemes,\t the monopoly  was not\tbeing worked for the<br \/>\nentire benefit\tof  the\t State\tor  in\tthe  general  public<br \/>\ninterest, but  was being  used as  a  cloak  for  conferring<br \/>\nprivate benefit\t upon a limited class of persons. The offers<br \/>\nfor purchasing\tKendu leaves were restricted to a particular<br \/>\nclass of  contractors and  were\t not  open  to\tthe  general<br \/>\npublic. This  vice  does  not  exist  in  the  Bihar  scheme<br \/>\nincluding  the\t scheme\t of  the  impugned  provisions.\t The<br \/>\nnotified estimate  annual yield\t for a unit or units is sold<br \/>\neither by  inviting tenders  from the public by publishing a<br \/>\nTender Notice  or by  public auction after a similar notice.<br \/>\nAny person  who wants to carry on the business of purchasing<br \/>\nKendu leaves  for the  purpose of  manufacture of  Bidis  is<br \/>\nentitled to  submit his\t offer in the prescribed Tender Form<br \/>\nin response  to the public notice inviting tenders, or offer<br \/>\nhis bid at the auction, if the disposal is by public<br \/>\n<span class=\"hidden_text\">439<\/span><br \/>\nauction. Secondly,  the scheme\tof disposal envisaged by the<br \/>\nimpugned provisions  of the  Orissa Act and the Orissa rules<br \/>\ncreated a  class of  middlemen who  could purchase  from the<br \/>\nGovernment at  concessional rates  and\tearn  large  profits<br \/>\ndisproportionate to  the service  rendered or duty performed<br \/>\nby them. In contrast with this, the Bihar scheme in question<br \/>\ndoes not  operate to  create any  monopoly in  favour of any<br \/>\nparticular class  of purchasers.  Nor does  the Bihar scheme<br \/>\nenable the  purchasers to  make unduly\tlarge profits at the<br \/>\ncost of the public revenue or others. Even if the agents, in<br \/>\nactual practice,  are persons  sponsored by  the purchasers,<br \/>\nthen also,  the rules  framed under the Bihar Act envisage a<br \/>\nstrict and  exclusive control  of the  Government  over\t the<br \/>\nAgents and their activities, and provide for their liability<br \/>\nto compensate  the Government  for the\tloss  occasioned  by<br \/>\ntheir misconduct  or neglect.  Under the  impugned Condition<br \/>\n13,  the  minimum  price  payable  for\tthe  unit  or  units<br \/>\nconcerned by  a purchaser  is 75  per cent  of the  notified<br \/>\nestimated yield\t from  that  unit  or  units,  in  terms  of<br \/>\nstandard bags  multiplied by the rates or bid offered by the<br \/>\npurchaser and accepted by the Government, even if the actual<br \/>\nyield from  that unit or units falls short of 75 per cent of<br \/>\nthe estimated  yield. This  condition far  from\t creating  a<br \/>\nmonopoly in the trade in favour of middlemen, operates as an<br \/>\nironclad safeguard  against leakage of the public revenue by<br \/>\nassuring a  minimum return  to the public exchequer from the<br \/>\nsale of\t Kendu leaves.\tThe provision is aimed to secure the<br \/>\nfull benefit  from the trade to the State leaving chances of<br \/>\nmaking reasonable, marginal profit to the purchasers.\n<\/p>\n<p>     It was  observed in Rashbihari&#8217;s case, that it would be<br \/>\nin the\tinterest of  State to  invite tenders  in  the\topen<br \/>\nmarket from  all persons  irrespective of their having taken<br \/>\ncontracts in  the previous  year. This\tsuggestion has\tbeen<br \/>\nadopted by the scheme of the Bihar Act and the Rules and the<br \/>\nForms of  Tender Notice and Agreement prescribed thereunder.<br \/>\nSome  other  defects  pointed  out  by\tthis  Court  in\t the<br \/>\noperation of  the Orissa  schemes, were\t that the Government<br \/>\nhad not\t estimated the\tcrop and  the prevailing  prices  of<br \/>\nKendu leaves  about the\t time when offers were made, nor the<br \/>\nconditions in  the market,  nor offers\tof higher prices and<br \/>\nthe likelihood\tof offerers  of higher\tprices carrying\t out<br \/>\ntheir obligations.  The scheme\tof the\tBihar  Act  and\t the<br \/>\nRules, and Forms including that of the impugned condition 13<br \/>\nis designed  to remove\tthe  deficiencies,  infirmities\t and<br \/>\nvices pointed out by this Court in Rashbihari&#8217;s case.\n<\/p>\n<p>     For  these\t  reasons,  we\tare  unable  to\t accept\t the<br \/>\ncontention, that in actual operation, the impugned provision<br \/>\n(clause 13)  creates a\tmonopoly in  favour of\ta  class  of<br \/>\nmiddlemen consisting of `Agents&#8217; and pur-\n<\/p>\n<p><span class=\"hidden_text\">440<\/span><\/p>\n<p>chasers, and  enables them  to earn  unduly large profits at<br \/>\nthe cost of the public or pluckers and growers.\n<\/p>\n<p>     The  impugned   Condition\t13  satisfies  the  test  of<br \/>\nreasonableness under  the first\t part of  Article 19(6). We,<br \/>\ntherefore, repel  the challenge\t to  the  validity  of\tthat<br \/>\ncondition on the ground of Article 19(6).\n<\/p>\n<p>     The next  question is  whether the\t impugned provisions<br \/>\nare violative  of the  fundamental rights of the petitioners<br \/>\nunder Article  14 of  the Constitution. The argument is that<br \/>\nthese provisions treat unequals as equals, even where crying<br \/>\ndissimilarities exist  and thus\t their operation  results in<br \/>\nProcrustean cruelty.\n<\/p>\n<p>     The point\tsought to  be made  out is  that even if the<br \/>\nshortfall in the quantity supplied or the substandard nature<br \/>\nof the quality offered to the purchaser is solely due to the<br \/>\nfraud, negligence  or misconduct  of the Agent or servant of<br \/>\nthe Government, the loss due to such shortfall or deficiency<br \/>\nin quality  must fall  on the purchaser, notwithstanding the<br \/>\nfact that he (purchaser) was in no way privy or contributory<br \/>\nto that\t fraud, negligence  or misconduct  of the  Agent  or<br \/>\nGovernment servant  and thus  the impugned provisions do not<br \/>\nmake any  discerning distinction  between honest  purchasers<br \/>\nand  dishonest\t purchasers,  but   tar\t those\tdissimilarly<br \/>\nsituated classes  with one  and the same brush. The argument<br \/>\nthough attractive, does not stand a close examination.\n<\/p>\n<p>     At the  time of inviting Tenders in the prescribed Form<br \/>\nor inviting  purchasers\t to  bid  at  the  publication,\t all<br \/>\ntenderers or  bidders are  treated equally in the sense that<br \/>\nthey can  offer their rates or bids subject to the statutory<br \/>\nconditions  including\tthe   impugned\t provisions.   While<br \/>\naccepting the  highest Tender  of rates\t per standard bag or<br \/>\nthe  highest  bid,  it\tis  not\t possible  to  classify\t the<br \/>\npurchasers  whose   offers\/bids\t have\tbeen  accepted\tinto<br \/>\n`honest&#8217; purchasers  and `dishonest&#8217;  purchasers.  Everybody<br \/>\nwhose offer or bid is accepted, is assumed to be honest.\n<\/p>\n<p>     Secondly, in  entering into  a contract  of purchase of<br \/>\nthe notified  estimated yield in terms of standard bags, the<br \/>\ndiscretion and\tvolition of  the tenderer  or bidder,  also,<br \/>\nplays an  important part  in calculating  the minimum  price<br \/>\npayable for  the estimated  yield from\tthe particular unit.<br \/>\nAccording to the impugned Condition 13 of the Tender Notice,<br \/>\nwhich also  forms a  part of  the prescribed  Form in  which<br \/>\ntenders are invited, the successful tenderer or bidder whose<br \/>\ntender or  bid is  accepted by\tthe Department, has to pay a<br \/>\nminimum royalty, also described as `revenue&#8217; or price, which<br \/>\nwill be 75 per cent of the notified estimated yield in terms<br \/>\nof standard bag by the tenderer or bidder.\n<\/p>\n<p><span class=\"hidden_text\">441<\/span><\/p>\n<p>Thus, the  volition of\tthe purchaser also plays a prominent<br \/>\npart in fixing the rate or price payable by him. By means of<br \/>\nhis offer  in the  Tender Form or by bidding at the auction,<br \/>\nthe purchaser binds himself to pay this minimum royalty even<br \/>\nif by  the end\tof the year, the number of bags collected is<br \/>\nless than  the notified estimated yield. The purchasers form<br \/>\ntheir own  estimates of the expected yield from a particular<br \/>\nunit for  a particular\tyear and  then make  their offers of<br \/>\nrates in the prescribed Tender Form, or when the disposal is<br \/>\nby public auction, the purchasers make their bids subject to<br \/>\nthe terms  published in\t the Tender  or Auction Notices. If,<br \/>\naccording to  the estimate  of an  intending purchaser,\t the<br \/>\nunit concerned is not likely to yield the quantity notified,<br \/>\nit is  open to\thim either not to submit any tender or offer<br \/>\nor rates  at all,  or not to offer a bid or an amount higher<br \/>\nthan  that   which,  according\t to  his   own\testimate  or<br \/>\ncalculation, would  be a reasonable price of the bargain. In<br \/>\nother words,  if a  person with\t his eyes  open tenders\t the<br \/>\nhighest rates  per standard bag or offers the highest bid at<br \/>\npublic auction,\t as the\t case may  be, of his own accord, it<br \/>\nwill be assumed that he did so because in his own estimation<br \/>\nthe acceptance of the contract at those rates and subject to<br \/>\nthe  notified\tterms  and  condition  would  afford  him  a<br \/>\nreasonable scope  for making  profit. Furthermore, under the<br \/>\nscheme\tof  the\t Bihar\tAct  and  Rules,  the  sale  is\t not<br \/>\nrestricted  to\t any  particular  class\t of  persons  as  in<br \/>\nRashbiharis  case.  Anyone  who\t wants\tto  do\tbusiness  of<br \/>\npurchase of  Kendu leaves  can submit his tender of rates in<br \/>\nthe prescribed Form, or offer his bid at the auction, as the<br \/>\ncase may  be, subject  to the  notified\t conditions  of\t the<br \/>\nTender Notice\/Auction Notice.\n<\/p>\n<p>     It is  a fundamental  principle of\t general application<br \/>\nthat if\t a person  of his  own accord, accepts a contract on<br \/>\ncertain terms  and works  out the  contract,  he  cannot  be<br \/>\nallowed to  adhere to  and abide by some of the terms of the<br \/>\ncontract which\tproved advantageous to him and repudiate the<br \/>\nother  terms   of  the\t same  contract\t  which\t  might\t  be<br \/>\ndisadvantageous to  him.  The  maxim  is  qui  approbat\t non<br \/>\nreprobat,  (one\t  who  approbates  cannot  reprobate).\tThis<br \/>\nprinciple, though originally borrowed from Scots Law, is now<br \/>\nfirmly embodied\t in English  Common Law.  According to it, a<br \/>\nparty to  an instrument or transaction cannot take advantage<br \/>\nof one\tpart of\t a document  or transaction  and reject\t the<br \/>\nrest. That  is to  say, no  party can  accept and reject the<br \/>\nsame instrument or transaction (Per Scrutton L.J. Verschures<br \/>\nCreameries, Ltd.  v. Hull  &amp; Netherlands  Steamship Co.; See<br \/>\nDouglas Menzies\t v. Umphelby;  See  also  Stroud&#8217;s  Judicial<br \/>\nDictionary, Vol. I, page 169, 3rd Edn.).\n<\/p>\n<p><span class=\"hidden_text\">442<\/span><\/p>\n<p>     The aforesaid  inhibitory principle squarely applies to<br \/>\nthe cases  of those  petitioners who had by offering highest<br \/>\nbids at\t public auctions  or by Tenders, accepted and worked<br \/>\nout the\t contracts in  the past\t but are  now resisting\t the<br \/>\ndemands\t or  other  action,  arising  out  of  the  impugned<br \/>\nCondition 13  on the ground that this condition is violative<br \/>\nof Articles  19(1)(g) and  14 of  the Constitution.  In this<br \/>\nconnection, it will bear repetition, here, that the impugned<br \/>\nconditions though  bear a statutory complexion, retain their<br \/>\nbasic contractual  character, also. It is true that a person<br \/>\ncannot be  debarred from enforcing his fundamental rights on<br \/>\nthe  ground   of  estoppel  or\twaiver.\t But  the  aforesaid<br \/>\nprinciple which\t prohibits a  party to\ta  transaction\tfrom<br \/>\napprobating, a\tpart of\t its conditions\t and reprobating the<br \/>\nrest, is different from the doctrine of estoppel or waiver).\n<\/p>\n<p>     For  the\tforegoing  reasons,  the  challenge  to\t the<br \/>\nimpugned Condition  No. 13,  on the  ground of\tArticle\t 14,<br \/>\nalso, is unsustainable and is rejected.\n<\/p>\n<p>     Now, we  take  up\tthe  impugned  Condition  4(bb).  It<br \/>\nprovides that no objection from the purchaser with regard to<br \/>\nthe quantity or quality of the leave in the gaddis (bundles)<br \/>\noffered would  be tenable.  This  condition  is\t couched  in<br \/>\nperemptory,  drastic   and  absolute  language.\t It  is\t not<br \/>\nqualified by  any words showing that the bar envisaged in it<br \/>\nwill be\t attracted only in cases where the purchaser has had<br \/>\nan earlier opportunity to raise this objection but failed to<br \/>\ndo so,\tor, where  he had on an earlier occasion raised such<br \/>\nan objection  which was heard and overruled by the competent<br \/>\nForest Officer.\t We have  already noticed that Section 9(1),<br \/>\nproviso, of  the Act  contains a built-in-warranty, that the<br \/>\nKendu leaves  offered would be fit for manufacture of bidis;<br \/>\nthat is to say, the leaves would be of merchantable quality.<br \/>\nCondition  4(bb)   therefore,  is   inconsistent  with\t and<br \/>\nrepugnant to  Section 9(1), proviso of the Act and, as such,<br \/>\ninvalid.  It  is,  therefore,  not  necessary  to  test\t its<br \/>\nvalidity on  the  ground  of  Articles\t19  and\t 14  of\t the<br \/>\nConstitution.\n<\/p>\n<p>     In the  light of the above discussion, we would dismiss<br \/>\nall the\t Writ petitions, namely, Writ Petitions 2222 to 2252<br \/>\nof 1977,  Writ Petitions  121 to 125 of 1979, Writ Petitions<br \/>\n405 and\t 441 of\t 1974, Writ  Petitions 46  and 47  of  1975,<br \/>\nexcepting to  this extent that the aforesaid clause 4(bb) in<br \/>\nthe Tender  Notices and the statutory Agreement in question.<br \/>\nbeing inconsistent  with the  proviso to Section 9(1) of the<br \/>\nAct, is declared to be invalid.\n<\/p>\n<p>     In Criminal  Appeal 300 of 1974, the prosecution of the<br \/>\nappellants for\tan offence under Section 379, Penal Code has<br \/>\nalready been quash-\n<\/p>\n<p><span class=\"hidden_text\">443<\/span><\/p>\n<p>ed by  the High\t Court by  its judgment\t dated February\t 14,<br \/>\n1974; but  the Order  dated September  11, 1973\t of the Sub-<br \/>\nDivisional Magistrate,\tSaheb Ganj,  taking cognizance\tof a<br \/>\ncase instituted by the Divisional Forest Officer, Dumka, for<br \/>\noffences under Section 409, Penal Code and Section 5(2) read<br \/>\nwith Section 16 of the Bihar Kendu Leaves (Control of Trade)<br \/>\nOrdinance (46 of 1973) was not quashed.\n<\/p>\n<p>     The main  contention of  appellant\t 1,  Shankar  Prasad<br \/>\nBhagat, was  that he  received only  650  standard  bags  as<br \/>\nagainst the  notified estimated 1500 bags, and the Condition<br \/>\n13 of the statutory Agreement under which he was required to<br \/>\npay for\t the undelivered or unoffered quantity of the leaves<br \/>\nwas unconstitutional.\n<\/p>\n<p>     Since we  have held  that the aforesaid Condition 13 is<br \/>\nvalid, this  contention must  fail. We,\t therefore,  dismiss<br \/>\nthis appeal.  The  case\t shall\tnow  go\t back  to  the\tSub-<br \/>\nDivisional Magistrate  for disposal  in accordance with law.<br \/>\nWe advisedly abstain from making any observation with regard<br \/>\nto the merits of the case.\n<\/p>\n<pre>N.K.A.\t\t\t     Petitions and Appeal dismissed.\n<span class=\"hidden_text\">444<\/span>\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India New Bihar Biri Leaves Co. &amp; Ors vs State Of Bihar &amp; Ors on 6 January, 1981 Equivalent citations: 1981 AIR 679, 1981 SCR (2) 417 Author: R S Sarkaria Bench: Sarkaria, Ranjit Singh PETITIONER: NEW BIHAR BIRI LEAVES CO. &amp; ORS. Vs. RESPONDENT: STATE OF BIHAR &amp; ORS. DATE OF [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-143583","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>New Bihar Biri Leaves Co. &amp; Ors vs State Of Bihar &amp; Ors on 6 January, 1981 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/new-bihar-biri-leaves-co-ors-vs-state-of-bihar-ors-on-6-january-1981\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"New Bihar Biri Leaves Co. &amp; 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