{"id":208274,"date":"1970-02-05T00:00:00","date_gmt":"1970-02-04T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/district-collector-of-hyderabad-vs-ms-ibrahim-co-etc-on-5-february-1970"},"modified":"2015-03-31T21:53:43","modified_gmt":"2015-03-31T16:23:43","slug":"district-collector-of-hyderabad-vs-ms-ibrahim-co-etc-on-5-february-1970","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/district-collector-of-hyderabad-vs-ms-ibrahim-co-etc-on-5-february-1970","title":{"rendered":"District Collector Of Hyderabad & … vs M\/S. Ibrahim & Co. Etc on 5 February, 1970"},"content":{"rendered":"
Supreme Court of India<\/div>\n
District Collector Of Hyderabad & … vs M\/S. Ibrahim & Co. Etc on 5 February, 1970<\/div>\n
Equivalent citations: 1970 AIR 1275, \t\t 1970 SCR (3) 493<\/div>\n
Author: S C.<\/div>\n
Bench: Shah, J.C.<\/div>\n
           PETITIONER:\nDISTRICT COLLECTOR OF HYDERABAD & ORS.\n\n\tVs.\n\nRESPONDENT:\nM\/S.  IBRAHIM & CO.  ETC.\n\nDATE OF JUDGMENT:\n05\/02\/1970\n\nBENCH:\nSHAH, J.C.\nBENCH:\nSHAH, J.C.\nHIDAYATULLAH, M. (CJ)\nHEGDE, K.S.\nGROVER, A.N.\nRAY, A.N.\nDUA, I.D.\n\nCITATION:\n 1970 AIR 1275\t\t  1970 SCR  (3) 493\n 1970 SCC  (1) 386\n CITATOR INFO :\n E\t    1973 SC 106\t (25)\n F\t    1975 SC1443\t (6)\n RF\t    1976 SC1207\t (80,89,91,176,177,445,513,541)\n RF\t    1977 SC1825\t (12)\n\n\nACT:\nConstitution  of  India, Arts. 301, 304, 305, 358  and\t359-\nFreedom\t  of   trade  under  Art.  301\tif   guaranteed\t  to\nindividuals-If could be taken away by executive action.\nProtection  under  Arts.  358 and 359 to  orders  passed  by\nGovernment Scope of.\n\n\n\nHEADNOTE:\nThe Central Government promulgated the Sugar Control  Order,\n1963,  under r. 125(2) of the Defence of India Rules,  1962.\nThe  respondents,  who were holders of\tlicences  under\t the\nAndhra Pradesh Sugar Dealers Licensing Order, 1963,  (issued\nunder  the  Essential Commodities Act, 1955)  and  who\twere\ndealers\t  in  sugar  in\t the  cities  of  Hyderabad  and   '\nSecunderabad,  were  'recognised dealers'  under  the  Sugar\nControl Order.\tThey were allocated quotas of sugar, but, in\n1964, the State Government) ordered that the sugar allocated\nto the two cities be given in its entirety to a\t Cooperative\nStores.\t The respondents were thus prevented by an executive\norder from carrying on their business.\tThey challenged\t the\norder successfully in the High Court.\nIn  appeal to this Court on the questions : (1) whether\t the\norder  was  protected under Arts. 358 and 359,\tbecause\t the\nPresident had declared a state of emergency; and (2) whether\nthe order was violative of Art. 301,\nHELD  :\t (1) (a) Under Art. 358 the  respondents  could\t not\nchallenge  any\texecutive action which, but  for  provisions\ncontained in Art. 19, the State was competent to take.\t But\nin  the present case, the executive order was not one  which\nthe  State  was competent to make.  Since the order  of\t the\nState  Government has the effect of cancelling the  licences\nof the respondent, which could be done only after an enquiry\naccording to the procedure prescribed in the Andhra  Pradesh\nSugar  Dealers\tLicensing  Order, the  executive  order\t was\ncontrary to the statutory provisions contained in the Andhra\nPradesh Sugar Dealers Licensing Order and the Sugar  Control\nOrder.\t Such  executive  action  of  the  State,  which  is\notherwise invalid, is not immune from attack under Art. 358,\nmerely because a proclamation of emergency was in operation.\n[502 A-D]\n(a)  In\t the present case, there was discrimination  against\nthe  respondents  in  that the impugned\t order\tconferred  a\nmonopoly  on  the  Cooperative Stores in  disregard  of\t the\nsubsisting  right  of  the respondents.\t The  order  is\t not\nprotected  under Art. 359, because only if it was  shown  to\nhave  been made under the authority reserved by the  Defence\nof  India Ordinance or the Rules made thereunder,  that\t the\njurisdiction  of  the  court to\t entertain  a  petition\t for\ninfringement  of  the guarantee under Art. 14  is  excluded.\n[502 E-G]\n(2)  The  impugned order trenches Won the freedom  of  trade\nand commerce guaranteed by Art. 301.\n499\nBy   this  Article  the\t freedom  of  trade,  commerce\t and\nintercourse  throughout the territory of India\tis  declared\nfree.  Under it, a restriction upon the legislative power of\nParliament   and  State\t Legislature  is  imposed   by\t the\nConstitution.\tThe guarantee of the freedom is not  in\t the\nabstract but to individuals.  Within the limits of Arts. 304\nand  305  there could be legislative restrictions  upon\t the\nindividuals'  right  to\t freedom  of  trade,  but  not,\t  by\nexecutive action. [503 D-F; 504 D-E]\nCommonwealth  of Australia v. Bank of New South Wales,\tL.R.\n[1950] A.C. 235, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos.  1285  to
\n1309 of 1966.\n<\/p>\n
Appeals\t by special leave from the judgment and order  dated
\nJune  23,  1965\t of the Andhra Pradesh High  Court  in\tWrit
\nAppeals Nos. 34 to 58 of 1965.\n<\/p>\n
P.   Ram Reddy and A. Y. Rangam, for the appellants (in\t all
\nthe appeals).\n<\/p>\n
K.   Rajendra Chaudhuri and K. R. Chaudhuri, for the respon-
\ndent (in C.A. No. 1304 of 1966).\n<\/p>\n
The Judgment of the Court was delivered by
\nShah, J. These appeals are filed with special leave  against
\nthe  order  of the High Court of  Andhra  Pradesh  declaring
\nG.O.M.\tNo.  2976 dated December 30, 1964  “null,  void\t and
\nultra vires”.\n<\/p>\n
The  respondents are dealers in sugar and other\t commodities
\nand carry on their business in the cities -of Hyderabad\t and
\nSecunderabad.  The State of Andhra Pradesh issued the Andhra
\nPradesh Sugar Dealers Licensing Order, 1963, in exercise  of
\nthe  power  conferred by s. 3 of the  Essential\t Commodities
\nAct, 1955.  Under that order no person may carry on business
\nas  a dealer except under and in accordance with  the  terms
\nand  conditions\t of  a\tlicence\t issued\t by  the   specified
\nauthority.   Grant and renewal of licence could\t be  refused
\nonly  on  grounds  reduced  to\twriting\t and  after   giving
\nopportunity to the party to state his case.  The respondents
\nwere  granted  licences\t under\tthe  Andhra  Pradesh,  Sugar
\nDealers\t Licensing  Order,  1963.   Shortly  thereafter\t the
\nCentral Government, in exercise of the power conferred under
\nsub-r.\t(2) of r. 125 of the Defence of India  Rules,  1962,
\npromulgated the Sugar Control Order, 1963.  By that order  a
\nrecognized  dealer was defined as a person carrying  on\t the
\nbusiness; of purchasing, selling ‘or distributing sugar\t and
\nlicensed under the order relating to the licensing of  sugar
\ndealers\t for the time being in force in a State.  The  order
\nprovided  for placing restrictions on sale, or agreement  to
\nsell  or  delivery  by the producers,  for  controlling\t the
\nproduction,   sale,  grading,  packing,\t  making   delivery,
\ndistribution etc. of sugar
\n500<\/span>
\nby  the producers or recognised dealers, for regulating\t the
\nmovement of sugar, for fixation of its prices, for allotment
\nof  quotas,  for  delivery  of such  quotas  and  for  other
\nincidental matters.\n<\/p>\n
The  respondents being holders of licences under the  Andhra
\nPradesh Sugar Dealers Licensing Order, 1963, were treated as
\nrecognized dealers under the Sugar Control Order, 1963.\t The
\nState Government allocated quotas of sugar received from the
\nCentral\t Government for distribution in different areas\t and
\nnominated  licensees  or  dealers to take  delivery  of\t the
\nallotted quotas from the factories.\n<\/p>\n
On  December 30, 1964 the State Government ordered that\t the
\nsugar quota -allocated to “the twin cities of Hyderabad\t and
\nSecunderabad”  be  given  in its  entirety  to\tthe  Greater
\nHyderabad  Consumers  Central  Co-operative  Stores,   Ltd.,
\nHyderabad.   On\t that  account\tthe  respondents  who\theld
\nlicences under the Andhra Pradesh Sugar Licensing Order\t for
\ndistribution of sugar and were also recognized dealers under
\nthe  Sugar  Control Order, 1963, were by an  executive\tfiat
\nprevented from carrving on their business in sugar.
\nThe respondents moved petitions in the High Court of  Andhra
\nPradesh\t challenging the validity of the order.\t  The  State
\nresisted  the petitions principally on the ground  that\t the
\norder  made by the State Government was in  conformity\twith
\nthe provisions of the Sugar Control Order and was issued  in
\npursuance of the policy laid down by the Central  Government
\nto entrust the work of distribution of sugar exclusively  to
\ncooperative societies and thereby to eliminate in the public
\ninterest  the  agency  of private  dealers  in\tlifting\t and
\ndistributing sugar.  It was urged that the respondents could
\nnot  seek  any\trelief complaining of  infraction  of  their
\nrights under Arts. 14 and 19 because the emergency  declared
\nby the President in October 1962 had not been withdrawn.
\nThe  petitions\tWere heard by Gopalakrishnan  Nair,  J.\t The
\nlearned\t Judge\theld  that  the\t executive  order  was\t not
\nsupported  either  by the provisions of\t the  Sugar  Control
\nOrder,\t1963,  issued by the Central Government, or  by\t the
\nAndhra Pradesh Sugar Dealers Licensing Order, 1963, that the
\nstep taken by the Government was not permitted by law;\tthat
\n‘as  a\tresult of the order of the Government  the  licences
\nheld by the respondents were cancelled without following the
\nprocedure  laid\t down in cl. 7 of the Andhra  Pradesh  Sugar
\nDealers\t Licensing  Order; and that the\t provisions  of\t the
\norder  could not be circumvented by  executive\tinstructions
\nand  since the order discriminated between  the\t respondents\n<\/p>\n
-and  the  Central Consumers Cooperative Stores in  that  it
\nconferred  a monopoly in disregard of the subsisting  rights
\nof  the respondents and amounted to “hostile and  invidious”
\ndiscrimination in the admi-\n<\/p>\n
501<\/span><\/p>\n
nistration of the Sugar Control Order.\tHe further held that
\nsince the Government had not taken action under the  Defence
\nof  India Rules or under any Control Order made under  those
\nRules,\tthe respondents were not debarred under Arts. 358  &
\n359  of\t the Constitution from claiming\t protection  against
\nimpairment of their rights by the order issued by the State.
\nIn appeal to a Division Bench of the High Court the  grounds
\non  which the decision was recorded by Gopalakrishnan  Nair,
\nJ., were confirmed.\n<\/p>\n
In these appeals counsel for the State of Andhra Pradesh has
\nnot contended that the impugned order could be issued dither
\nunder  the  Andhra Pradesh Sugar  Dealers  Licensing  Order,
\n1963,  or  the\tSugar Control Order,  1963,  issued  by\t the
\nCentral\t Government.  Indisputably it is an executive  order
\nmade  by the State Government.\tThe State Government  it  is
\nclaimed\t acted\tin pursuance of the policy  of\tthe  Central
\nGovernment   to\t  distribute   sugar   through\t cooperative
\nsocieties.  But the order was still unauthorised.  Under the
\nEssential  Commodities Act, 1955, the State  Government\t had
\nissued\tan order for distribution of sugar through  licensed
\ndealers\t and the respondents had obtained licences  in\tthat
\nbehalf.\t Their licences could only be cancelled after making
\nthe  enquiry according to the procedure prescribed by cl.  7
\nof the Sugar Dealers licensing Order.  The respondents\twere
\nalso  recognised  dealers within the meaning  of  the  Sugar
\nControl Order issued by the Central Government.\t The  rights
\nof the respondents could not be taken away by ‘an  executive
\norder in a manner plainly contrary to, the provisions of the
\nstatutory orders.\n<\/p>\n
It  is\ttrue that under Art. 352 of  the  Constitution,\t the
\nPresident declared a state of emergency on October 26, 1962.
\nBy  Art-  358  while  a\t proclamation  of  emergency  is  in
\noperation,  nothing’ in Art. 19 shall restrict the power  of
\nthe  State  (as defined in Part 111) to make any law  or  to
\ntake any executive action which the State would but for\t the
\nprovisions  contained in that Part ‘be competent to make  or
\nto  take.  By Art. 359 the President is authorised, where  a
\nproclamation of emergency was in operation, to declare\tthat
\nthe  right to move any court for the enforcement of such  of
\nthe  rights conferred by Part III as may be mentioned  shall
\nremain\t suspended   for  the  period\tduring\t which\t the
\nproclamation was in force or for such shorter period as\t may
\nbe specified in the order.\n<\/p>\n
On the issue of the proclamation of emergency the State\t is,
\nfor  the  duration  of the  emergency,\tcompetent  to  enact
\nlegislation,  notwithstanding that it impairs  the  freedoms
\nguaranteed  by\tArt. 19 of the Constitution.  The  State  is
\nalso  competent\t to take executive action  which  the  State
\nwould,\tbut for the provisions contained in Art. 19  of\t the
\nConstitution,  be competent to take.  The impugned order  in
\nthis case was issued while the proclamation of emergency
\n502<\/span>
\nwas  in operation.  The respondents could not challenge\t the
\nvalidity of any law enacted by the State Legislature so long
\nas  the proclamation of emergency was in operation,  on\t the
\nground that it impaired the freedoms guaranteed by Art.\t 19.
\nThey  could not also challenge any executive  action  which,
\nbut  for the provisions contained in Art. 19, the State\t was
\ncompetent to take.\n<\/p>\n
In the present case, the State did not enact any legislation
\nimpairing the -fundamental right of the respondents to carry
\non  business  which is guaranteed by Art. 19 (1)  (g),\tthey
\nproceeded  to  make an executive order.\t But  the  executive
\norder immune from attack is only that order which the  State
\nwas competent, but for the provisions contained in Art.\t 19,
\nto make.  Executive action of the State Government which  is
\notherwise invalid is not immune from attack, merely  because
\na  proclamation\t of  emergency is in operation\twhen  it  is
\ntaken.\tSince the order of the State Government was  plainly
\ncontrary to the statutory provisions contained in the Andhra
\nPradesh Sugar Dealers Licensing Order and the Sugar  Control
\nOrder,\t it  was  not  protected  under\t Art.  358  of\t the
\nConstitution.\n<\/p>\n
Nor  had it the protection under Art. 359.  On\tNovember  3,
\n1962 the President issued an order in exercise of the  power
\nunder  Art. 359, that “the right of any person to  move\t any
\ncourt  for  the\t enforcement  of  the  rights  conferred  by\n<\/p>\n
-article  14, article 21 and article 22 of the\tConstitution
\nshall  remain  suspended  for the period  during  which\t the
\nProclamation of Emergency issued under clause (1) of article
\n352 thereof on the 26th October, 1962, is in force, if\tsuch
\nperson\thas  been  deprived of any  such  rights  under\t the
\nDefence of India Ordinance, 1962 (4 of 1962) or any rule  or
\norder made thereunder.” Only if the impugned order was shown
\nto  be made under the authority reserved by the\t Defence  of
\nIndia  Ordinance or rules made thereunder, the\tjurisdiction
\nof  the Court to entertain a petition for impairment of\t the
\nguarantee under Art. 14 may be excluded.  But the action was
\nnot  shown to be taken under the Defence of India  Ordinance
\nor under the rule or order made thereunder.
\nAgain it may be pointed out that under Art. 301 the  freedom
\nof trade, commerce and intercourse throughout the  territory
\nof India is declared free. -That freedom is declared in\t the
\nwidest terms and applies to all forms of trade, commerce and
\nintercourse.  But it is subject to certain restrictions\t (if
\nwhich  Arts.  304 and 305 are relevant.\t It is\tprovided  by
\nArt. 304 :\n<\/p>\n
“Notwithstanding anything in article 301 or article 303, the
\nLegislature of ‘a State may by law-\n<\/p>\n
\t (a)………………………………..
\n\t    ………………………………\n<\/p>\n
503<\/span><\/p>\n
(b)  impose  such reasonable restrictions on the freedom  of
\ntrade, commerce or intercourse with or within that State  as
\nmay be required in the public interest
\nProvided  that\tno  Bill or amendment for  the\tpurposes  of
\nclause\t(b) shall be introduced or moved in the\t Legislature
\nof a State without the previous sanction of the President.”
\nIt  is\talso provided by Art. 305 that the existing  law  or
\nlaws  which  may be made by the State  providing  for  State
\nmonopolies, i.e. relating to any matter as is referred to in
\nsub-cl.\t (ii)  of  cl.\t(6) of\tArt.  19,  are\toutside\t the
\nguarantee  of Art. 301.\t In the present case the  State\t had
\nnot  assumed  a monopoly to deal in sugar.  It\thad  granted
\nmonopoly to a Central Consumers Cooperative Stores which was
\nnot  a corporation owned or controlled by the  State  within
\nthe  meaning of Art. 19 (6) (ii).  The order was  challenged
\non the ground that it trenches upon the freedom of trade and
\ncommerce  guaranteed  by Art. 301 of the  Constitution.\t  By
\nArt. 304 even by legislature restrictions on the freedom  of
\ntrade, commerce and intercourse with or within the State may
\nonly be imposed, if such restrictions are reasonable and are
\nrequired in the public interest and the Bill or amendment is
\nintroduced  or moved in the Legislature of a State with\t the
\nprevious sanction of the President.  Obviously the guarantee
\nunder  Art.  301 cannot be taken away by  executive  action.
\nThe  guarantee\tunder Art. 301 which imposes  a\t restriction
\nupon  legislative  power  of the  Parliament  or  the  State
\nLegislature and the declaration of freedom is not merely  an
\nabstract  declaration.\t There is no reason  to\t think\tthat
\nwhile  placing\ta  restriction upon  legislative  power\t the
\nConstitution  guaranteed freedom in the abstract and not  of
\nthe  individuals.   Article  301  of  the  Constitution\t  is
\nborrowed  almost verbatim from s. 92 of the Commonwealth  of
\nAustralia  Constitution Act 63 and 64 Vict. c. 12 of  1.900.
\nIn dealing with the contention that no individual right\t was
\nguaranteed  by\ts.  92\tof  the\t Commonwealth  of  Australia
\nConstitution  Act the Judicial Committee in Commonwealth  of
\nAustralia v. Bank of New South Wales(1) observed at p. 305
\n“The  necessary\t implications of these decisions  (James  v.
\nCowan-(1932)  A.C.  542-and  James v.  The  Commonwealth  of
\nAustralia-(1936)  A.C.\t578) are important.   First  may  be
\nmentioned an argument strenuously maintained on this  appeal
\nthat  s.  92  of the Constitution  does\t not  guarantee\t the
\nfreedom\t of  individuals.  Yet James was an  individual\t and
\nJames vindicated his, ‘freedom in hard won fights.
\n(1)  L.R. 1950 A. C. 235-\n<\/p>\n
504<\/span><\/p>\n
Clearly\t there is here a misconception.\t It is true  as\t has
\nbeen said more than once in the High Court, that s. 92\tdoes
\nnot  create  any new juristic rights but it  does  give\t the
\ncitizen\t of State or Commonwealth, as the case may  be,\t the
\nright to ignore, and, if necessary, to call on the  judicial
\npower to help him to resist, legislative or executive action
\nwhich  offends against the section.  And this is  just\twhat
\nJames successfully did.”\n<\/p>\n
Our Constituent Assembly borrowed the concept of freedom  of
\ntrade,\t commerce  and\tintercourse  from   the\t  Australian
\nConstitution.\tIt  is true that the  limitations  upon\t the
\namplitude of the guarantee are not expressed in s. 92 of the
\nAustralian   Constitution,  as\tare  to\t be  found  in\t our
\nConstitution.\t Again,\t there\tis  no\tguarantee   in\t the
\nAustralian  Constitution of a fundamental right to carry  on
\ntrade.\tBut this departure from the scheme of the Australian
\nConstitution  does  not\t alter the  true  character  of\t the
\nguarantee  and it cannot be inferred that  the\tConstitution
\nimposed restrictions upon legislative, power, but denied  to
\nthe  individuals  affected  by\tunauthorised  assumption  of
\nexecutive power the right to challenge the exercise of\tthat
\npower.\t A vital constitutional provision cannot be so\tcon-
\nstrued\tas to make a mockery of the declared  guarantee\t and
\nthe   constitutional  restrictions  on\tthe  power  of\t the
\nlegislature.   If  the\tpower of the  State  Legislature  is
\nrestricted  in the manner provided by Art. 301,\t but  within
\nlimits provided by Arts. 303 to 305, it would be  impossible
\nto  hold that the State by executive order can do  something
\nwhich it is incompetent to do by legislation.
\nIn  any view of the case, these -appeals must fail  and\t are
\ndismissed.   Only one respondent has appeared in this  case,
\nbut  even he has not filed a statement of the case.  In\t the
\ncircumstances, there will be no order as to costs.\n<\/p>\n
V.P.S.\t\t\t Appeals dismissed.\n505<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India District Collector Of Hyderabad & … vs M\/S. Ibrahim & Co. Etc on 5 February, 1970 Equivalent citations: 1970 AIR 1275, 1970 SCR (3) 493 Author: S C. Bench: Shah, J.C. PETITIONER: DISTRICT COLLECTOR OF HYDERABAD & ORS. Vs. RESPONDENT: M\/S. IBRAHIM & CO. ETC. DATE OF JUDGMENT: 05\/02\/1970 BENCH: SHAH, […]<\/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-208274","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nDistrict Collector Of Hyderabad & ... vs M\/S. Ibrahim & Co. 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