{"id":250699,"date":"1969-01-16T00:00:00","date_gmt":"1969-01-15T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/rashbihari-panda-etc-vs-state-of-orissa-on-16-january-1969"},"modified":"2017-11-08T14:16:42","modified_gmt":"2017-11-08T08:46:42","slug":"rashbihari-panda-etc-vs-state-of-orissa-on-16-january-1969","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/rashbihari-panda-etc-vs-state-of-orissa-on-16-january-1969","title":{"rendered":"Rashbihari Panda Etc vs State Of Orissa on 16 January, 1969"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Rashbihari Panda Etc vs State Of Orissa on 16 January, 1969<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1969 AIR 1081, 1969 SCR  (3) 374<\/div>\n<div class=\"doc_author\">Author: S C.<\/div>\n<div class=\"doc_bench\">Bench: Hidayatullah, M. (Cj), Shah, J.C., Ramaswami, V., Mitter, G.K., Grover, A.N.<\/div>\n<pre id=\"pre_1\">           PETITIONER:\nRASHBIHARI PANDA ETC.\n\n\tVs.\n\nRESPONDENT:\nSTATE OF ORISSA\n\nDATE OF JUDGMENT:\n16\/01\/1969\n\nBENCH:\nSHAH, J.C.\nBENCH:\nSHAH, J.C.\nHIDAYATULLAH, M. (CJ)\nRAMASWAMI, V.\nMITTER, G.K.\nGROVER, A.N.\n\nCITATION:\n 1969 AIR 1081\t\t  1969 SCR  (3) 374\n 1969 SCC  (1) 414\n CITATOR INFO :\n RF\t    1970 SC 564\t (70)\n E\t    1971 SC 733\t (5,6)\n RF\t    1971 SC1461\t (435)\n D\t    1974 SC 366\t (92)\n D\t    1974 SC 651\t (16)\n R\t    1979 SC1628\t (22,23)\n RF\t    1980 SC1789\t (36)\n R\t    1981 SC 679\t (16,37,38,42,43,49)\n R\t    1984 SC 657\t (16)\n R\t    1984 SC1527\t (23)\n RF\t    1987 SC1086\t (28)\n RF\t    1987 SC1109\t (30,34)\n\n\nACT:\nOrissa\tKendu Leaves (Control of Trade) Act (28 of 1961) <a href=\"\/doc\/1393639\/\" id=\"a_1\"> s.\n10-Scheme<\/a>  of  Government for sale and\tdisposal  of  leaves\npurchased  by  it Contracts with, and invitation  to  offer,\nrestricted  to licencees of previous year-If  violative.  of\nArts.  14  and 19(1) (g) of  Constitution-<a href=\"\/doc\/588489\/\" id=\"a_1\">Art.\t19(6)  (ii)-<\/a>\nMonopoly  of  Government-Tests for  validity-Bona  fides  of\nGovernment and error of judgment by Government-If a  defence\nto discrimination.\n\n\n\nHEADNOTE:\nKendu  tree is a wild growth and its leaf is used mainly  in\nthe manufacture of bidis.  To regulate trade in Kendu leaves\nand  prevent  exploitation  of\tgrowers\t and  pluckers\t the\nrespondent-State  adopted  diverse measures.  In  1961,\t the\nOrissa\tKendu  Leavs  (Control\tof  Trade)  Act,  1961,\t was\nenacted.   By <a href=\"\/doc\/1181548\/\" id=\"a_2\"> s.  3<\/a> of the Act no  person  other  than\t the\nGovernment,  an authorised officer of the Government, or  an\nagent\tappointed  by  the  Government\tshall  purchase\t  or\ntransport  Kendu leaves; and under-<a href=\"\/doc\/1740562\/\" id=\"a_3\"> s. 4<\/a> the Government\t is,\nauthorised  to\tfix the price at which the leaves  shall  be\npurchased  from the growers by the officer or agent  of\t the\nGovernment.   <a href=\"\/doc\/1832103\/\" id=\"a_4\">Section  10<\/a>  provides that  the  Kendu  leaves\npurchased shall be sold or disposed of in such manner as the\nGovernment may direct, and under s. II, at least one half of\nthe  net profits derived by the Government is to be paid  to\nSamitis and Gram Panchayats.  A grower of Kendu leaves chal-\nlenged\tss.  3\tand  4 and r. 7(5) made\t under\tthe  Act  as\ninfringing  his\t fundamental  rights  under  Arts.  14\t and\n19(1)(f) and (g).  This Court, in <a href=\"\/doc\/1258563\/\" id=\"a_5\">Akadasi Padhan v. State of\nOrissa<\/a>, [1963] Supp. 2 S.C.R. 691, held that<a href=\"\/doc\/1181548\/\" id=\"a_6\"> ss. 3<\/a> and <a href=\"\/doc\/1740562\/\" id=\"a_7\">4<\/a> did\nnot  infringe  <a href=\"\/doc\/588489\/\" id=\"a_8\">Art. 19(6) (ii<\/a>), but that the State  was\t in-\ncompetent  to implement the provisions of the Act  and\tgive\neffect\tto its monopoly, because, the agents appointed\twere\nnot  really agents of the Government but were authorised  to\ncarry on trade in the leaves purchased not on behalf of\t the\nGovernment  but on their own account, and that it thus\tgave\nrise  to  a monopoly in favour of the agents which  was\t not\nprotected by <a href=\"\/doc\/588489\/\" id=\"a_9\">Art. 19(6) (ii)<\/a> since the law cannot be used by\nthe  State for the private benefit of  agents.\t Thereafter,\nthe  State  made some changes in the implementation  of\t its\nmonopoly.  In 1966, it invited tenders from persons desirous\nof  purchasing\tKendu leaves purchased by the  officers\t and\nagents\tof the Government.  During the years 1966 and  1967,\nthe  prices of Kendu leaves ruled very high and\t when  sales\nwere  effected\tby public auction,  prices  considerably  in\nexcess\tof  those  at  which  tenders  were  accepted\twere\nrealised.   Early in 1968, the State evolved another  scheme\nunder  which,  the State offered to renew  the\tlicences  of\nthose\ttraders\t  who  in  the\tState's\t view\thad   worked\nsatisfactorily in the previous year and had paid the amounts\ndue  from  them regularly' The scheme was objected  to,\t and\nrealising that, the scheme arbitrarily excluded many persons\ninterested  in the trade, and hence was\t objectionable,\t the\nGovernment decided to invite offers for advance purchases of\nKendu\tleaves\tbut  restricted\t the  invitation  to   those\nindividuals  who  had  carried\tout  the  contracts  in\t the\nprevious year without default and to the satisfaction of the\nGovernment, that is, the existing contractors were given the\nexclusive right to make offers to\n\t\t\t    375\npurchase  Kendu leaves.\t This new method of offering\t  to\nenter  into agreements for advance purchases of Kendu leaves\nby  private  offers in preference to open  competition,\t was\nchallenged by writ petitions in the High Court as  violative\nof  the petitioner's fundamental rights under Arts.  14\t and\n19(1)(g).\nThe  High  Court  held\tthat under<a href=\"\/doc\/1832103\/\" id=\"a_10\"> s.  10<\/a>  of  the  Act\t the\nGovernment could dispose of the leaves in such manner as  it\nthought\t fit,  that  the only question\tfor  the  Court\t was\nwhether in adopting the new scheme of offering to enter into\nadvance\t purchase  contracts  by  private  negotiation\t the\nGovernment  had\t acted bona fide, and that  the\t petitioners\nfailed\tto  show  that\tin  exercising\tits  discretion\t the\nGovernment acted arbitrarily or without bona fides.\nIn appeal to this Court,\nHELD : The validity of a law by which the State assumed\t the\nmonopoly  to trade in a given commodity `as to be judged  by\nthe test whether the entire benefit arising therefrom is  to\nenure to the State, and the monopoly is not used as a  cloak\nfor  conferring\t private  benefit upon a  limited  class  of\npersons.  The monopoly of purchasing Kendu leaves under<a href=\"\/doc\/1181548\/\" id=\"a_11\"> S. 3<\/a>\nmay be held to be valid if, it be administered only for\t the\nbenefit\t of  the State.\t Similarly,, the right\tto  sell  or\ndispose\t of Kendu leaves by the State under<a href=\"\/doc\/1832103\/\" id=\"a_12\"> s. 10<\/a>,  in\tsuch\nmanner as the Government may direct, would be valid if it be\nexercised  in public interest and not to serve\tthe  private\ninterests  of  any person or class of persons.\t The  profit\nresulting  from the sale must be for the public benefit\t and\nnot  for  private  gain.  <a href=\"\/doc\/1390688\/\" id=\"a_13\">Section  11<\/a>  also  emphasises\t the\nconcept that the machinery of sale or disposal of the leaves\nmust  also  be geared to serve the public interest.  if\t the\nscheme\tof disposal creates a class of middle men who  could\npurchase from the Government at concessional rates and\tearn\nlarge profits disproportionate to the nature of\t the,service\nrendered  or  duty performed by them, it  cannot  claim\t the\nprotection  of\t<a href=\"\/doc\/588489\/\" id=\"a_14\">Art.  19(6) (ii)<\/a> as it is not  open  to\t the\nGovernment  to create a monopoly in favour of third  parties\nfrom its own monopoly. [383 385A-D]\nIn the present case, the right to make offers being open  to\na limited class of persons it effectively shut out all other\npersons\t carrying  on trade in Kendu leaves as well  as\t new\nentrants  into the trade.  Both the schemes, evolved by\t the\nGovernment,  namely  the  one  of  offering  to\t enter\tinto\ncontracts  with\t certain named licencees, and the  other  of\ninviting tenders from licencees who had in the previous year\ncarried\t out their contracts satisfactorily gave rise  to  a\nmonopoly  in the trade in the leaves to certain traders\t and\nsingled\t out  other traders  for  discriminating  treatment.\nTherefore,  they were violative of the fundamental right  of\nthe  petitioners  under\t Arts. 14 and 19(1)(g)\tand  as\t the\n'schemes  were\tnot 'integrally and  essentially'  connected\nwith the creation of the monopoly they were not protected by\n<a href=\"\/doc\/588489\/\" id=\"a_15\">Art. 19(6) (ii).<\/a> [384 E-H; 385 B-D]\n(a)  If the only anxiety of the Government was to ensure due\nperformance by those who submitted tenders, Government could\ndevise\tadequate safe guards.  But the classification  based\non  the circumstance that certain existing  contractors\t had\ncarried out their obligation in the previous year ,regularly\nand  to the satisfaction of the Government is not  based  on\nany  real  and substantial distinction bearing\ta  just\t and\nreasonable  relation  to the objects sought to\tbe  achieved\nnamely,\t the effective execution of the monopoly  in  public\ninterest,  the\tprevention of exploitation of  pluckers\t and\ngrowers of Kendu leaves, or the securing of the full benefit\nfrom the trade, to the State. [384G-H; 386B-D]\n376\n(b)  The scheme could not be supported on the ground that it\nimposed reasonable-restrictions, within the meaning of\t<a href=\"\/doc\/626103\/\" id=\"a_16\">Art.\n19(6<\/a>),\ton  the fundamental rights of traders  to  carry  on\nbusiness in Kendu leaves. [38SC-D]\n(c)  The  plea\tthat the action of the Government  was\tbona\nfide cannot be an effective answer, because, the Government\nhad  not considered, the prevailing prices of  Kendu  leaves\nabout  the time when offers were made, the estimated  crop,\nthe  conditions in the market, offers of higher\t prices\t and\nthe  likelihood\t of offerors of higher prices  carrying\t out\ntheir  obligations and whether it was in the,  interests  of\nthe  State  to invite tenders in the open  market  from\t all\npersons irrespective of their having taken contracts in\t the\nprevious year. [385H; 386A-B]\n(d)  It\t could not also be said that the  Government  merely\ncommitted an   error  of judgment in adopting  the  impugned\nscheme.\t It is not a case of  the  Government erring in\t the\nexercise of its discretion, but\t       the action of   the\nGovernment was itself not valid. [386 B-D]\n\n\n\nJUDGMENT:\n<\/pre>\n<p id=\"p_1\">CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1472 to   1474<br \/>\nof 1968.\n<\/p>\n<p id=\"p_1\">Appeals\t by special leave from the judgment and order  dated<br \/>\nMay  8, 1968 of the Orissa High Court in O.J.C. Nos. 49,  52<br \/>\nand 132 of 1968.\n<\/p>\n<p id=\"p_2\">J.   B. Dadachanji, for the appellant (in CAs. Nos. 1472 and<br \/>\n1473 of 1968).\n<\/p>\n<p id=\"p_3\">A.   S.\t R. Chari, Govind Das and J. B. Dadachanji, for\t the<br \/>\nappellant (in C.A. No. 1474 of 1968).\n<\/p>\n<p id=\"p_4\">C.   K. Daphtary, Santosh Chatterjee and R. N. Sachthey, for<br \/>\nthe respondent (in all the appeals).\n<\/p>\n<p id=\"p_5\">The Judgment of the Court was delivered by<br \/>\nShah,  J. These appeals arise out of orders passed in  peti-<br \/>\ntions moved before the High Court of Orissa challenging\t the<br \/>\nscheme adopted by the Government of Orissa for sale of Kendu<br \/>\nleaves in which the State has assumed a monopoly of trading,<br \/>\nby  the\t Orissa Kendu Leaves (Control of Trade)\t Act  28  of<br \/>\n1961.\n<\/p>\n<p id=\"p_6\">Kendu tree is a wild growth.  Its leaf is used mainly in the<br \/>\nmanufacture of bidis.  To regulate the trade in Kendu leaves<br \/>\nthe  State  of\tOrissa has adopted  diverse  executive,\t and<br \/>\nlegislative  measures.\tIn exercise of the powers  conferred<br \/>\nby  S.\t3(1) of the Orissa Essential  Articles\tControl\t and<br \/>\nRequisitioning\t(Temporary Powers) Act, 1947 the  Government<br \/>\nof  Orissa  issued the Orissa kendi.   Leaves  (Control\t and<br \/>\nDistribution)  Order,  1949,  providing for  the  is-sue  of<br \/>\nlicences  to person trading in Kendu leaves.   The  District<br \/>\nMagistrates  were  authorised to fix the minimum  rates\t for<br \/>\npurchase  of  Kendu leaves and the Order provided  that\t the<br \/>\nlicensees shall purchase Kendu leaves from the pluckers or<br \/>\n37 7<br \/>\nowners\tof private trees and forests at rates not below\t the<br \/>\nminimum prescribed.  A trader in Kendu leaves challenged the<br \/>\nvalidity  of the Act and the Order before the High Court  of<br \/>\nOrissa\t on  the  plea\tthat  the  State   Legislature\t was<br \/>\nincompetent  to enact the Act and that in any event the\t Act<br \/>\nand the Order infringed the guarantee of fundamental freedom<br \/>\nto   carry   on\t business  under  <a href=\"\/doc\/935769\/\" id=\"a_17\">Art.\t 19(1)(g)<\/a>   of\t the<br \/>\nConstitution.\tA  Division Bench of the Orissa\t High  Court<br \/>\nupheld\tthe  validity of the Act : <a href=\"\/doc\/1391250\/\" id=\"a_18\">Jagdish  Patel  v.  Patel<br \/>\nTobacco\t Company<\/a>(1).   The  Court  observed  that  the\tmain<br \/>\npurpose\t of  the  Order was to\tprevent\t indiscriminate\t and<br \/>\nunrestricted competition in the trade in Kendu leaves and to<br \/>\nprotect the growers and pluckers from exploitation.<br \/>\nThe  Order of 1949 was replaced by another Order  issued  in<br \/>\n1960,  but without any substantial changes in its  principal<br \/>\nprovisions.   Thereafter the State Legislature\tenacted\t the<br \/>\nOrissa\tKendu Leaves (Control of Trade) Act 28 of 1961.\t  By<br \/>\ns. 3 of the Act no person other than (a) the Government; (b)<br \/>\nan  officer of Government authorised in that behalf; (c)  an<br \/>\nagent in respect of the unit in which the leaves have  grown<br \/>\nshall  purchase or transport Kendu leaves.  By<a href=\"\/doc\/1740562\/\" id=\"a_19\"> s. 4<\/a>  it\t was<br \/>\nenacted\t that the Government shall, after consultation\twith<br \/>\nthe Advisory Committee, fix the price at which Kendu  leaves<br \/>\nshall  be  purchase( any officer or agent from\tgrowers,  of<br \/>\nKendu  leaves during any year.\tBy<a href=\"\/doc\/765962\/\" id=\"a_20\"> s. 8<\/a> the  Government\t was<br \/>\nauthorised  to\t&#8216;appoint  agents  for  different  units\t  to<br \/>\npurchase Kendu leaves.\t<a href=\"\/doc\/1832103\/\" id=\"a_21\">Section 10<\/a>, provided that : .\n<\/p>\n<blockquote id=\"blockquote_1\"><p>\t      &#8220;Kendu  leaves purchased by Government  or  by<br \/>\n\t      their officers or agents under this Act  shall<br \/>\n\t      be  sold\tor  otherwise disposed\tof  in\tsuch<br \/>\n\t      manner as Government may direct.&#8221;\n<\/p><\/blockquote>\n<p id=\"p_7\">Out  of the net profits derived by the Government, from\t the<br \/>\ntrade  in Kendu leaves under the Act, by<a href=\"\/doc\/1798682\/\" id=\"a_22\"> s. 1<\/a> <a href=\"\/doc\/1798682\/\" id=\"a_23\">1<\/a>,  an  amount<br \/>\nnot  less than one half was to be paid to Samitis and  Grama<br \/>\nPanchayats.   <a href=\"\/doc\/344136\/\" id=\"a_24\">Sections 14<\/a>, <a href=\"\/doc\/1732477\/\" id=\"a_25\">15<\/a> and <a href=\"\/doc\/786611\/\" id=\"a_26\">16<\/a> dealt  with  penalties,<br \/>\nattempts  and abetment of offences and procedure of  courts.<br \/>\n<a href=\"\/doc\/523006\/\" id=\"a_27\">Section\t 18<\/a>&#8216;  conferred upon the Government  power  to\tmake<br \/>\nrules for carrying out the purposes of the Act.<br \/>\nAgents\twere appointed by the Government of Orissa  to\tpur-<br \/>\nchase  Kendu leaves.  The agents were, authorised under\t the<br \/>\nagreements to purchase the Kendu leaves and also to trade in<br \/>\nthe Kendu leaves purchased.\n<\/p>\n<p id=\"p_8\">A  grower  of Kendu leaves moved a petition  in\t this  Court<br \/>\ncontending   that  the\tprincipal  provisions  of  the\t Act<br \/>\ninfringed his<br \/>\n(1)  A.I . 1952 Ori 260.\n<\/p>\n<p><span class=\"hidden_text\" id=\"span_1\">378<\/span><\/p>\n<p id=\"p_9\">fundamental  rights under Arts. 19(1)(f) &amp; (g) and <a href=\"\/doc\/367586\/\" id=\"a_28\">Art.\t 14.<\/a><br \/>\nHe  challenged<a href=\"\/doc\/1181548\/\" id=\"a_29\"> ss. 3<\/a> and <a href=\"\/doc\/1740562\/\" id=\"a_30\">4<\/a> and rule 7(5) as  infringing\t the<br \/>\nfundamental right under <a href=\"\/doc\/258019\/\" id=\"a_31\">Art. 19(1)(f)<\/a> and <a href=\"\/doc\/237570\/\" id=\"a_32\">(g)<\/a> of the Consti-<br \/>\ntution,\t and <a href=\"\/doc\/1974110\/\" id=\"a_33\"> ss. 5<\/a>, <a href=\"\/doc\/594031\/\" id=\"a_34\">6<\/a> and <a href=\"\/doc\/1822316\/\" id=\"a_35\">9<\/a> as\t contravening  the  equality<br \/>\nclause\tof  the Constitution.  This Court  held\t in  <a href=\"\/doc\/1258563\/\" id=\"a_36\">Akadasi<br \/>\nPadhan\tv.  The\t State of Orissa<\/a>(1) that  the  Orissa  Kendu<br \/>\n(Control  of  Trade)  Act,  1961,  was\ta  valid  piece\t  of<br \/>\nlegislation,  and  creation  of a State\t monopoly  in  Kendu<br \/>\nleaves\twas  protected\tby  <a href=\"\/doc\/626103\/\" id=\"a_37\">Art. 19(6)<\/a>\tas  amended  by\t the<br \/>\nConstitution (First Amendment) Act, 1951.  In the opinion of<br \/>\nthe  Court,  fixation  of  prices prescribed  by <a href=\"\/doc\/1740562\/\" id=\"a_38\"> S.  4<\/a>\t was<br \/>\nreasonable  and in the &#8216;interest of the general public\tboth<br \/>\nunder  <a href=\"\/doc\/1801593\/\" id=\"a_39\">Art. 19(5)<\/a> and <a href=\"\/doc\/626103\/\" id=\"a_40\">Art. 19(6)<\/a> and<a href=\"\/doc\/1740562\/\" id=\"a_41\"> S. 4<\/a> of the Act was  on<br \/>\nthat  account valid.  The Court further held that <a href=\"\/doc\/1181548\/\" id=\"a_42\">section  3<\/a><br \/>\nwhich allowed the Government or an officer of the Government<br \/>\nauthorised  in\tthat behalf or an agent in. respect  of\t the<br \/>\nunit  in  which\t the  leaves  were  grown,  to\tpurchase  or<br \/>\ntransport  Kendu leaves for and on behalf of the  Government<br \/>\nwas  not open to attack.  But in the view of the  Court\t the<br \/>\ncategories  of persons mentioned in cls. (b) &amp; (c) of <a href=\"\/doc\/1181548\/\" id=\"a_43\"> S.  3<\/a><br \/>\ni.e. officers of the Government and agents were intended  to<br \/>\nwork  for the Government and all their actions and  dealings<br \/>\nin pursuance of the provisions of the Act had to be  actions<br \/>\nand  dealings  on  behalf  of and for  the  benefit  of\t the<br \/>\nGovernment, and since under the agreement obtained from\t the<br \/>\nagent under r. 7 (5) to work the monopoly of the State,\t the<br \/>\nappointees were not made agents in the strict sense of-\t the<br \/>\nterm,  and  were appointed to carry on trade  on  their\t own<br \/>\naccount, the agreements were invalid.  The Court accordingly<br \/>\nheld that the State Government was incompetent to  implement<br \/>\nthe provisions of the Act through the Agents appointed under<br \/>\nthose agreements.\n<\/p>\n<p id=\"p_10\">Thereafter the Government of Orissa made some changes in the<br \/>\nmachinery  for\timplementation of the monopoly\tand  entered<br \/>\ninto  agreements,  of sale of Kendu  leaves  after  inviting<br \/>\ntenders\t from traders.\tEven against this scheme  objections<br \/>\nwere  raised.  It was claimed by persons interested  in\t the<br \/>\nProduction and trade in Kendu leaves that the Government  of<br \/>\nOrissa merely resorted to a device of introducing purchasers<br \/>\nwho  were  mere\t associates or nominees of  the\t &#8220;so  called<br \/>\nagents,&#8221; and that the position remained practically the same<br \/>\nas in the days before the judgment of this Court.<br \/>\nOn  February  2,  1966, the  Government\t of  Orissa  invited<br \/>\ntenders\t from  persons desirous of purchasing  Kendu  leaves<br \/>\npurchased or collected by Government or by their officers or<br \/>\nAgents\tunder  the  provisions of the  Orissa  Kendu  Leaves<br \/>\n(Control of<br \/>\n(1)  [1963] Supp. 2 S.C.R. 691.\n<\/p>\n<p id=\"p_11\">37 9<br \/>\n<a href=\"\/doc\/1017213\/\" id=\"a_44\">Trade) Act<\/a>, 1961, in the units as constituted under<a href=\"\/doc\/1974110\/\" id=\"a_45\"> s. 5<\/a>  of<br \/>\nthe Act.  In the last paragraph of the tender notice it\t was<br \/>\nstated<br \/>\n\t      &#8220;If  the person appointed as Purchaser  during<br \/>\n\t      the  currency of his agreement in\t respect  of<br \/>\n\t      any  Unit duly observes and performs  all\t the<br \/>\n\t      terms  and conditions to the  satisfaction  of<br \/>\n\t      the  Government  and  if\tthe  Government\t are<br \/>\n\t      satisfied\t that the Purchaser has been  prompt<br \/>\n\t      in  taking  delivery  of\tleaves\tand   making<br \/>\n\t      payments,\t the  Government may  grant  to\t the<br \/>\n\t      Purchaser\t a renewal of &#8216;his  appointment\t for<br \/>\n\t      one  year on such terms and conditions as\t may<br \/>\n\t      be mutually agreed upon.&#8221;\n<\/p>\n<p id=\"p_12\">During\tthe years 1966 and 1967 the prices of  Kendu  leaves<br \/>\nruled  very high and when sales were effected on  behalf  of<br \/>\nthe  Government\t of  Orissa  in\t certain  cases\t by   public<br \/>\nauctions,  prices considerably in excess of those  at  which<br \/>\ntenders were accepted were realized.  Early in 1968  letters<br \/>\nwere  addressed\t to certain traders intimating that  it\t had<br \/>\nbeen decided by the-Government of Orissa to renew &#8220;leases of<br \/>\nKendu  leaf Units&#8221; held by them, for the year 1968  if\tthey<br \/>\naccepted  the terms set out therein.  Under this scheme\t the<br \/>\nGovernment &#8216;Offered to those licensees who in their view had<br \/>\nworked satisfactorily in the previous year and had paid\t the<br \/>\namounts\t due from them regularly to continue their  licences<br \/>\nwith the added provision that the agents with whom they\t had<br \/>\nbeen working in 1967, will also work during 1968.  The\tlink<br \/>\nbetween\t the  agent  and the purchaser which  had  been\t the<br \/>\nsubject\t matter\t of  agitation in  previous  years.  it\t was<br \/>\nclaimed, was extended by the scheme.\n<\/p>\n<p id=\"p_13\">On  January  24, 1968, a petition was  moved  by  Rashbihari<br \/>\nPanda in the High Court of Orissa under <a href=\"\/doc\/1712542\/\" id=\"a_46\">Art. 226<\/a> of the Con-<br \/>\nstitution  challenging the action, of the  Government.\t The<br \/>\nGovernment,  it appears, had second thoughts and the  offers<br \/>\nto  renew  the\tprevious licenses  were\t withdrawn  and\t the<br \/>\nlicensees  were informed that the Government had decided  to<br \/>\ninvite\toffers\tfor advance-purchases from persons  who\t had<br \/>\npurchased Kendu leaves from individual units during the year<br \/>\n1967  and had not committed default in payment of the  dues.<br \/>\nOther writ petitions were filed challenging the legality  of<br \/>\nthe  new method adopted by the State Government of  offering<br \/>\nto  enter  into agreements for advance\tpurchases  of  Kendu<br \/>\nleaves by private offers in preference to open competition.<br \/>\nIt was urged on behalf of the petitioners that in seeking to<br \/>\nenter  into agreements for advance purchase  contracts,\t for<br \/>\nKendu  leaves  by private negotiation the  State  Government<br \/>\nsought\tI to support their party interests in preference  to<br \/>\npublic\t&#8216;benefit envisaged by the State monopoly,  and\tthat<br \/>\nthe so-called State<br \/>\n<span class=\"hidden_text\" id=\"span_1\">380<\/span><br \/>\nmonopoly  trade in Kendu leaves &#8220;was a colourable device  to<br \/>\nmake,  &#8216;it appear constitutional and permissible under\t<a href=\"\/doc\/588489\/\" id=\"a_47\">Art.<br \/>\n19(6)  (ii)<\/a>  of the Constitution&#8221;, whereas in truth  it\t was<br \/>\nintended  to  benefit only the supporters of  the  party  in<br \/>\npower,\tand the scheme on that account &#8220;was a fraud  on\t the<br \/>\nConstitution&#8221;.\tThe new scheme, it was said, was devised for<br \/>\nthe  purpose of increasing the party funds to the  detriment<br \/>\nof public revenue, and on that account the act of the  State<br \/>\nGovernment  was\t &#8220;mala\tfide  and  unconstitutional&#8221;.\t The<br \/>\npetitioners  claimed  that  the\t Government  of\t Orissa\t had<br \/>\nclassified the units into five sections raising the  royalty<br \/>\nor  share of profit from the purchaser from Rs.\t 44  to\t a<br \/>\nmaximum\t amount\t of Rs. 64 whereas the offer of one  of\t the<br \/>\npetitioners who offered Rs. 1 00 per bag in addition to\t the<br \/>\nrates  offered\tby  the Government by a\t telegram  early  in<br \/>\nJanuary 1968 and followed by a confirmatory letter, was\t not<br \/>\naccepted.   It\twas further said that an offer\tmade by\t a<br \/>\nmanufacturer  of  bidis to purchase the entire\tcrop  for  a<br \/>\ntotal amount of rupees three crores was also not accepted.<br \/>\nOn  behalf of the State it was submitted that till  1967  no<br \/>\nrate  was fixed for dried and processed leaves in the  hands<br \/>\nof  the growers but when the new Ministry assumed office  in<br \/>\n1967  the  minimum  price was fixed at Rs.  35\tper  bag  of<br \/>\nprocessed  leaves  in the hands of the\tgrowers,  which\t was<br \/>\nlater raised to Rs. 45 per bag, and the remuneration payable<br \/>\nto  pluckers  was  also raised under orders  issued  by\t the<br \/>\nGovernment, and as a result thereof it was anticipated\tthat<br \/>\nthe pluckers and growers would earn Rs. 47 lakhs in addition<br \/>\nto  the amount they had earned in 1967; that the  scheme  of<br \/>\nmaking an offer to established licensees was evolved with  a<br \/>\nview to &#8220;close the channels of corruption and the policy had<br \/>\neliminated all sorts of negotiations or personal approach in<br \/>\nthe  matter of sale of Kendu leaves by the Government&#8221;,\t and<br \/>\nafter  careful consideration, the Government determined\t the<br \/>\nfair  price  that may be realized by selling  Kendu  leaves,<br \/>\nthat  the dealers who were given contracts for two years  by<br \/>\nthe previous Ministries had been offered options to purchase<br \/>\nthe leaves at rates higher than &#8216;those obtaining during\t the<br \/>\nlast  few  years and that under the new policy\tthe  profits<br \/>\nearned\trose  from  Rs.\t 1,  00,75,000\tin  1962-63  to\t Rs.<br \/>\n1,91,00,000 in 1968-69.\t It was also submitted that under s.<br \/>\n10  of\tthe  Kendu  Leaves  (Control  of  Trade)  Act,\t the<br \/>\nGovernment was authorised to dispose of the Kendu leaves  in<br \/>\nsuch  manner  as the Government may direct and\tthereby\t the<br \/>\nauthority  vested in the Government to use their  discretion<br \/>\n&#8220;was  not  amenable  to the writ jurisdiction  of  the\tHigh<br \/>\nCourt&#8221;,\t and that from the data furnished it was clear\tthat<br \/>\nthe Government had acted in the best interests of the  State<br \/>\nand the &#8220;figures showed their bona fides in the matter&#8221;.\n<\/p>\n<p><span class=\"hidden_text\" id=\"span_2\">381<\/span><\/p>\n<p id=\"p_14\">The High Court Was of the view that the State having assumed<br \/>\nmonopoly  of trading &#8216;in Kendu leaves was alone entitled  to<br \/>\npurchase  the Kendu leaves from the primary  producers,\t and<br \/>\nwas  by\t<a href=\"\/doc\/1832103\/\" id=\"a_48\"> s. 10<\/a> authorise to dispose of the leaves  &#8220;in\tsuch<br \/>\nmanner\tas the Government &#8216;may direct&#8217;.\t <a href=\"\/doc\/1832103\/\" id=\"a_49\">Section 10<\/a>, in\t the<br \/>\nview  of the High Court Placed no restriction on the  manner<br \/>\nin which the Government may sell Kendu leaves, and the\tonly<br \/>\nquestion  which\t the Court had to consider  was\t whether  in<br \/>\nadopting  the new scheme of offering to enter  into  advance<br \/>\npurchase contracts by private negotiations for selling Kendu<br \/>\nleaves\tin  1968 the, Government had acted bona\t fide.\t The<br \/>\nHigh Court observed:\n<\/p>\n<blockquote id=\"blockquote_1\"><p>\t      &#8220;.  .  .\t. . we hold  that  the\tGovernment&#8217;s<br \/>\n\t      exercise of the power or discretion under<a href=\"\/doc\/1798682\/\" id=\"a_50\"> s. 1<\/a><br \/>\n\t      <a href=\"\/doc\/1393639\/\" id=\"a_51\">0<\/a> cannot be said to be arbitrary as it is open<br \/>\n\t      to  the  Government  to  direct  the  sale  or<br \/>\n\t      disposal\tof Kendu leaves in any\tmanner\tthey<br \/>\n\t      may   direct-either   by\t advance    purchase<br \/>\n\t      contracts by private negotiations or by public<br \/>\n\t      auction  or by tender; it is not a case  where<br \/>\n\t      the State Government has exercised this  power<br \/>\n\t      or discretion without jurisdiction.  The Court<br \/>\n\t      is  not  concerned with the propriety  of\t the<br \/>\n\t      Government&#8217;s action in adopting the particular<br \/>\n\t      manner of sale or disposal as it purported  to<br \/>\n\t      direct.\tEvidently, the Government acted,  as<br \/>\n\t      any  prudent  businessman would  do,  for\t the<br \/>\n\t      purpose  of  getting the\tmaximum\t revenue-net<br \/>\n\t      profits-from   the  trade\t in  Kendu   leaves.<br \/>\n\t      Government&#8217;s  direction,\tin exercise  of\t the<br \/>\n\t      power of discretion conferred on them under<a href=\"\/doc\/1832103\/\" id=\"a_52\"> s.<br \/>\n\t      10<\/a>, as to whether a particular-manner of\tsale<br \/>\n\t      or  disposal will be suitable in a  particular<br \/>\n\t      year, will depend entirely on their subjective<br \/>\n\t      satisfaction,  upon consideration of a  number<br \/>\n\t      of  factors which may vary from year to  year.<\/p><\/blockquote>\n<p id=\"p_15\">\t      Such  direction by the State Government as  to<br \/>\n\t      the particular manner of sale or disposal in a<br \/>\n\t      particular   year,   as\tdependent   on\t the<br \/>\n\t      subjective  satisfaction of the Government  as<br \/>\n\t      aforesaid, is not justiciable.  There is\talso<br \/>\n\t\t\t    nothing on record to show lack of bona<br \/>\n fides on<br \/>\n\t      the  part of the State Government in  adopting<br \/>\n\t      the manner it did private negotiations-in\t the<br \/>\n\t      matter  of sale of Kendu leaves in  1968;\t nor<br \/>\n\t      have  we been shown any material to hold\tthat<br \/>\n\t      its  action was capricious or arbitrary or  in<br \/>\n\t      excess of its jurisdiction.&#8221;\n<\/p>\n<p id=\"p_16\"><a href=\"\/doc\/258019\/\" id=\"a_53\">Article\t 19  (1) (f )<\/a> guarantees the citizens the  right  to<br \/>\nacquire,  hold and dispose of property, and <a href=\"\/doc\/935769\/\" id=\"a_54\">Art.  19(1)\t (g)<\/a><br \/>\nguarantees the right to practise any profession, or to carry<br \/>\non  any occupation, trade or business.\tThe right under\t cl.\n<\/p>\n<p id=\"p_17\">(f)  is subject to reasonable restrictions which  the  State<br \/>\nmay impose on the exercise of the right in the interests  of<br \/>\nthe general public or for the pro<br \/>\nP C.1.169-6<br \/>\n<span class=\"hidden_text\" id=\"span_3\">382<\/span><br \/>\ntection of the interests of any scheduled tribe.  Clause (6)<br \/>\nof  <a href=\"\/doc\/1218090\/\" id=\"a_55\">Art. 19<\/a> which was amended, by the,\tConstitution  (First<br \/>\nAmendment) Act, 1951, sets out the restrictions which may be<br \/>\n,up  1 on the right to practise a profession or to carry  on<br \/>\nany occupation, trade or business.  It states<br \/>\n\t      &#8220;Nothing in sub-clause (g) of the said  clause<br \/>\n\t      shall affect the operation of any existing law<br \/>\n\t      in-  so  far as it ,imposes,  or\tprevent\t the<br \/>\n\t      State  from  making any law imposing,  in\t the<br \/>\n\t      interests\t of the general\t public,  reasonable<br \/>\n\t      restrictions on the exercise of the right con-<br \/>\n\t      ferred   by  the\tsaid  sub-clause,  and,\t  in<br \/>\n\t      particular,  nothing  in the  said  sub-clause<br \/>\n\t      shall affect the operation of any existing law<br \/>\n\t      in  so  far as it relates to, or\tprevent\t the<br \/>\n\t      State from making any law relating to,\n<\/p>\n<p id=\"p_18\">\t      (ii)  the\t 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 to the exclusion, complete or partial,<br \/>\n\t      of citizens or otherwise.&#8221;\n<\/p>\n<p id=\"p_19\">In  Akadsi  Padhan&#8217;s  case(1) this Court held  that  by\t the<br \/>\namendments  in\t<a href=\"\/doc\/626103\/\" id=\"a_56\">Art. 19(6)<\/a> it was intended  that  the  State<br \/>\nmonopoly  in respect  of any trade  or\tbusiness  must\tbe<br \/>\npresumed  to  be  reasonable and in  the  interests  of\t the<br \/>\ngeneral\t public;  that\tthe  expression\t &#8220;law  relating\t to&#8221;<br \/>\noccurring in cl. (ii) means &#8220;essential and basic provisions&#8221;<br \/>\nenacted\t to  give  effect to the  monopoly  i.e.  provisions<br \/>\n&#8220;integrally and essentially connected with the creation\t ,of<br \/>\nthe monopoly &#8220;; that the provisions which are incidental  or<br \/>\nsubsidiary to the creation or operation of the monopoly must satis<br \/>\nfy.  the test of the main clause, and that if the  law<br \/>\ninfringes any other fundamental right in cl. (1) of <a href=\"\/doc\/1218090\/\" id=\"a_57\">Art.  19<\/a><br \/>\nit must be tested under the appropriate provision governing<br \/>\nit.  &#8216;Me Court accordingly held that<a href=\"\/doc\/1181548\/\" id=\"a_58\"> ss. 3<\/a> and <a href=\"\/doc\/1740562\/\" id=\"a_59\">4<\/a> of the\t Act<br \/>\nwere  valid but declined in substance to give effect to\t the<br \/>\nmonopoly because the agents appointed were not agents of the<br \/>\nGovernment  merely  for\t purchasing Kendu  leaves  but\twere<br \/>\n&#8216;authorised  to carry on trade in leaves purchased on  their<br \/>\nown account.  The operation of the State monopoly was in the<br \/>\nview  of the Court to give rise to a monopoly in  favour  of<br \/>\nthe agents which had not the protection of <a href=\"\/doc\/588489\/\" id=\"a_60\">Art. 19 (6) (ii).<\/a><br \/>\nThe  Court observed that the appointee must be &#8220;an agent  of<br \/>\nthe Government strictly so-called&#8221; acting-for and on  behalf<br \/>\nof  the\t Government and not on his own behalf.,\t the  &#8216;Court<br \/>\nwhile upholding the grant of monopoly by<a href=\"\/doc\/1181548\/\" id=\"a_61\"> S. 3<\/a> of the Act  to<br \/>\nthe Government to carry on the business of purchasing  Kendu<br \/>\nleaves\twas of the view that the law cannot be used  by\t the<br \/>\nState  for the- private benefit of agents; it must  only  be<br \/>\nadministered<br \/>\n(1)  [1963] Supp. 2 S.C.R. 691.\n<\/p>\n<p><span class=\"hidden_text\" id=\"span_4\">\t\t\t    383<\/span><\/p>\n<p id=\"p_20\">for the benefit of the general public, and any,\t arrangement<br \/>\nin which under the guise of a monopoly the State permitted a<br \/>\nSet of persons to make profit for themselves by carrying  on<br \/>\nbusiness in Kendu leaves on their own behalf was invalid.<br \/>\nIt is urged by the appellants that the machinery devised  by<br \/>\nthe  Government for sale of Kendu leaves in which  they\t had<br \/>\nacquired   a  monopoly\tto  trade  was\tviolative   of\t the<br \/>\nfundamental, rights guaranteed under Arts. 14 and 19 (1) (g)<br \/>\nof  the\t Constitution.\tIt is said that the  purchasers\t are<br \/>\nmerely\tnominees  of the agents.  &#8216;It is also  claimed\tthat<br \/>\nafter this Court struck down a scheme under,which the agents<br \/>\nwere  to  carry\t on business in Kendu leaves  on  their\t own<br \/>\naccount\t and to make profit for themselves,  the  Government<br \/>\nwith a view to help their party-men set up a body of persons<br \/>\nwho were to be purchasers to whom the monopoly sales were to<br \/>\nbe  made  at concessional rates and that the  benefit  which<br \/>\nwould  have  otherwise been earned by the State\t accrued  to<br \/>\nthose purchasers.\n<\/p>\n<p id=\"p_21\"><a href=\"\/doc\/1832103\/\" id=\"a_62\">Section\t 10<\/a>  of\t the  Act is a\tcounter-part  of <a href=\"\/doc\/1181548\/\" id=\"a_63\"> s.  3<\/a>\t and<br \/>\nauthorises  the Government to sell or Otherwise\t dispose  of<br \/>\nKendu  leaves in such manner as the Government\tmay  direct.<br \/>\nIf the monopoly of purchasing Kendu leaves by<a href=\"\/doc\/1181548\/\" id=\"a_64\"> s. 3<\/a> is valid,<br \/>\ninsofar\t as it: is intended to be administered only for\t the<br \/>\nbenefit\t of the State, the sale or disposal of Kendu  leaves<br \/>\nby  the Government must also be in the public  interest\t and<br \/>\nnot to serve the private interests of any person or class of<br \/>\npersons.   It is true that it is for the Government,  having<br \/>\nregard\tto  all\t the  circumstances, to\t act  as  a  prudent<br \/>\nbusiness-man  would,  and to sell or otherwise\tdispose\t  of<br \/>\nKendu leaves purchased under the monopoly acquired under  S.\n<\/p>\n<p id=\"p_22\">3.  but the profit resulting from the sale must be  for\t the<br \/>\npublic\tbenefit and not for private gain&#8217; <a href=\"\/doc\/1390688\/\" id=\"a_65\">Section  11<\/a>  which<br \/>\nprovides  that\tout  of\t the  net  profits  derived  by\t the<br \/>\nGovernment from the trade in Kendu leaves an amount not less<br \/>\nthan  one  half\t is  to be paid to  the\t Samitis  and  Grama<br \/>\nPanchayats emphasises the concept that the machinery of sale<br \/>\nor disposal of Kendu leaves must also be geared to serve the<br \/>\npublic interest.  If the scheme of disposal creates a  class<br \/>\nof  middle-men who would purchase from the Government  Kendu<br \/>\nleaves\tat concessional rates and would earn  large  profits<br \/>\ndisproportionate  to the nature of the service\trendered  or<br \/>\nduty  performed by them, it cannot claim the  protection  of<br \/>\n<a href=\"\/doc\/588489\/\" id=\"a_66\">Art. 19(6) (ii).<\/a>\n<\/p>\n<p id=\"p_23\"><a href=\"\/doc\/1832103\/\" id=\"a_67\">Section\t 10<\/a> leaves the method of sale or disposal  of  Kendu<br \/>\nleaves\tto the Government as they think fit.  The action  of<br \/>\nthe Government if conceived and executed in the interest  of<br \/>\nthe general public is not open to judicial scrutiny.  But it<br \/>\nis not given to the Government thereby to create a  monopoly<br \/>\nin favour of third parties from their own monopoly.\n<\/p>\n<p><span class=\"hidden_text\" id=\"span_5\">384<\/span><\/p>\n<p id=\"p_24\">Validity of the schemes adopted by the Government of  Orissa<br \/>\nfor  sale of Kendu leaves must be adjudged in the  light  of<br \/>\n<a href=\"\/doc\/935769\/\" id=\"a_68\">Art. 19(1)(g)<\/a> and <a href=\"\/doc\/367586\/\" id=\"a_69\">Art. 14.<\/a>  Instead of inviting tenders\t the<br \/>\nGovernment offered to certain old contractors the option  to<br \/>\npurchase Kendu leaves for the years 1968 on terms  mentioned<br \/>\ntherein.  The reason suggested by the, Government that these<br \/>\noffers\twere  made because the purchasers  had\tcarried\t out<br \/>\ntheir  obligations in the previous year to the\tsatisfaction<br \/>\nof  the\t Government is not of any  significance.   From\t the<br \/>\naffidavit filed by the State Government it appears that\t the<br \/>\nprice  fetched at public auctions before and  after  January<br \/>\n1968 were much higher than the prices at which Kendu  leaves<br \/>\nwere  offered  to  the\told  contractors.   The\t  Government<br \/>\nrealised that the scheme of offering to enter into contracts<br \/>\nwith the old licensees and to renew their terms was open  to<br \/>\ngrave  objection,  since it sought, arbitrarily\t to  exclude<br \/>\nmany  persons interested in the trade.\tThe Government\tthen<br \/>\ndecided\t to  invite offers for advance\tpurchases  of  Kendu<br \/>\nleaves\tbut restricted the invitation to  those\t individuals<br \/>\nwho  had  carried  out the contracts in\t the  previous\tyear<br \/>\nwithout\t default and to the satisfaction of the\t Government.<br \/>\nBy  the new  scheme instead of the  Government\tmaking\tan<br \/>\noffer,\tthe  existing contractors were given  the  exclusive<br \/>\nright to make offers to purchase Kendu leaves.\tBut insofar-<br \/>\nas  the\t right to make tender-, for the\t purchase  of  Kendu<br \/>\nleaves\twas  restricted to those persons  who  had  obtained<br \/>\ncontracts  in the previous year. the scheme was open to\t the<br \/>\ngame objection.\t The right to make offers being open to\t a<br \/>\nlimited\t class of persons it effectively shut out all  other<br \/>\npersons\t carrying  on  trade in Kendu leaves  and  also\t new<br \/>\nentrants   into\t  that\t business.    It   was\t ex    facie<br \/>\ndiscriminatory,\t and imposed unreasonable restrictions\tupon<br \/>\nthe  right  of persons other than  existing  contractors  to<br \/>\ncarry on business.  In our view, both the schemes evolved by<br \/>\nthe  Government were violative of the fundamental  right  of<br \/>\nthe petitioners under <a href=\"\/doc\/935769\/\" id=\"a_70\">Art. 19(1)(g)<\/a> and <a href=\"\/doc\/367586\/\" id=\"a_71\">Art. 14<\/a> because\t the<br \/>\nschemes gave rise to a monopoly in the trade in Kendu leaves<br \/>\nto  certain  traders,  and singled  out\t other\ttraders\t for<br \/>\ndiscriminatory treatment.\n<\/p>\n<p id=\"p_25\">The  classification based on the circumstance that  existing<br \/>\ncontractors  had carried out their obligations in  the\tpre-<br \/>\nvious  year  regularly\tand  to\t the  satisfaction  of\t the<br \/>\nGovernment  is\tnot  based  on\tany  real  and\t substantial<br \/>\ndistinction  bearing a just and reasonable relation  to\t the<br \/>\nobject\tsought to be achieved i.e., effective  execution  of<br \/>\nthe  monopoly  in  the public interest.\t  Exclusion  of\t all<br \/>\npersons\t interested  in\t the  trade, who  were\tnot  in\t the<br \/>\nprevious  year licensees is ex facie arbitrary : it  had  no<br \/>\ndirect relation to the object of preventing exploitation  of<br \/>\npluckers and growers of Kendu leaves, nor had it any just or<br \/>\nreasonable relation to the securing of the full benefit from<br \/>\nthe trade, to the State.\n<\/p>\n<p id=\"p_26\">385,<br \/>\nValidity of the law by which the State assumed the  monopoly<br \/>\nto trade in a given commodity has to be judged by the,\ttest<br \/>\nwhether the entire benefit arising therefrom is to enure  to<br \/>\nthe  State,  and  the monopoly is not used as  a  cloak\t for<br \/>\nconferring private benefit upon a limited class of  persons.<br \/>\nThe  scheme adopted by the Government first of\toffering  to<br \/>\nenter into contracts with certain named licensees, and later<br \/>\ninviting tenders from licensees who had in the previous year<br \/>\ncarried\t out their contracts satisfactorily is liable to  be<br \/>\nadjudged  void on the ground that it  unreasonably  excludes<br \/>\ntraders\t in  Kendu leaves from carrying on  their  business.<br \/>\nThe scheme of selling Kendu leaves to selected purchasers or<br \/>\nof  accepting  tenders\tonly  from  a  specified  class\t  of<br \/>\npurchasers  was not &#8220;integrally and  essentially&#8221;  connected<br \/>\nwith the creation of the monopoly and was not on ,,the\tview<br \/>\ntaken by this Court in Akadasi Padhan&#8217;s case(1) protected by<br \/>\n<a href=\"\/doc\/588489\/\" id=\"a_72\">Art. 19(6)(ii):<\/a> it had therefore to satisfy the\t requirement<br \/>\nof  reasonableness under the first part of <a href=\"\/doc\/626103\/\" id=\"a_73\">Art.\t 19(6).<\/a>\t  No<br \/>\nattempt was made to support the scheme on the ground that it<br \/>\nimposed reasonable restrictions on the fundamental rights of<br \/>\nthe traders to carry on business in Kendu leaves.  The\tHigh<br \/>\nCourt also did not consider whether the restrictions imposed<br \/>\nupon per.sons excluded from the benefit of trading satisfied<br \/>\nthe  test  of reasonableness under the first  part  of\t<a href=\"\/doc\/626103\/\" id=\"a_74\">Art.<br \/>\n19(6).<\/a>\t The High Court examined the problem from the  angle<br \/>\nwhether\t the action of the State Government was vitiated  on<br \/>\naccount of any oblique motive, and whether it was such as  a<br \/>\nprudent person carrying on business may adopt.<br \/>\nNo explanation has been attempted on behalf of the State  as<br \/>\nto  why an offer made by a well-known manufacturer of  bidis<br \/>\ninterested in the trade to purchase the entire crop of Kendu<br \/>\nleaves for the year 1968 for rupees three crores was  turned<br \/>\ndown.  If the interests of the State alone were to be  taken<br \/>\ninto consideration, the State stood to gain more than rupees<br \/>\none  crore by accepting that offer.  We are  not  suggesting<br \/>\nthat merely because that offer was made, the Government\t was<br \/>\nbound  to accept it.  The Government had to consider,  as  a<br \/>\nprudent\t  businessman,\t whether,  having  regard   to\t the<br \/>\ncircumstances, it should accept the offer, especially in the<br \/>\nlight of the financial position of the offeror, the security<br \/>\nwhich  he  was\twilling to give and  the  effect  which\t the<br \/>\nacceptance  of the offer may have on the other\ttraders\t and<br \/>\nthe general public interest.\n<\/p>\n<p id=\"p_27\">The  learned Judges of the High Court have observed that  in<br \/>\ntheir  view the exercise of the discretion was not shown  to<br \/>\nbe arbitrary, nor was the action shown to be lacking in bona<br \/>\nfides.\tBut  that conclusion is open to\t criticism   at\t the<br \/>\ngovernment  is not shown to have considered  the  prevailing<br \/>\nprices of Kendu<br \/>\n(1)[1963] Sup 2 S.C.R. 691<br \/>\n<span class=\"hidden_text\" id=\"span_6\">386<\/span><br \/>\nleaves\tabout the time when offers were made, the  estimated<br \/>\ncrop  of Kendu leaves, the conditions in the market and\t the<br \/>\nlikelihood  of offerors at higher prices carrying out  their<br \/>\nobligations,  and  whether it was in the  interests  of\t the<br \/>\nState to invite tenders in the open market from all  persons<br \/>\nwhether they had or hid not taken contracts in the  previous<br \/>\nyear.\t If  the  Government  was  anxious  to\tensure\t due<br \/>\nperformance  by those who submitted tenders for purchase  of<br \/>\nKendu  leaves,\tit  was open to\t the  Government  to  devise<br \/>\nadequate  safeguards in that behalf.  In our  judgment,\t the<br \/>\nplea that the action of the Government was bona fide  cannot<br \/>\nbe an effective answer to a claim made by a citizen that his<br \/>\nfundamental rights were infringed by the action of the\tGov-<br \/>\nernment, nor can the claim of the petitioners be defeated on<br \/>\nthe plea that the Government in adopting the impugned scheme<br \/>\ncommitted  an  error  of  judgment.   The  plea\t would\thave<br \/>\nassisted  the Government if the action was in law valid\t and<br \/>\nthe objection was that the Government erred in the  exercise<br \/>\nof  its discretion.  It is unnecessary in the  circumstances<br \/>\nto consider whether the Government acted in the interest  of<br \/>\ntheir party-men and to increase party funds in devising\t the<br \/>\nschemes for-sale of Kendu leaves in 1968.\n<\/p>\n<p id=\"p_28\">During the pendency of these proceedings the entire year for<br \/>\nwhich (the contracts were given has expired.  The persons to<br \/>\nwhom  the  contracts were given are not before\tus,  and  we<br \/>\ncannot declared the contracts which had been entered into by<br \/>\nthe  Government\t for the sale of Kendu leaves for  the\tyear<br \/>\n1968  unlawful\tin  these  proceedings.\t  Counsel  for\t the<br \/>\nappellants  agree  that\t it would be  sufficient  if  it  be<br \/>\ndirected  that the tenders for, purchase of Kendu leaves  be<br \/>\ninvited\t by  the  Government in the  next  season  from\t all<br \/>\npersons interested in the trade.  We trust that in accepting<br \/>\ntenders,  the State Government will act in the interest\t of,<br \/>\nthe  general public and not of any class of traders so\tthat<br \/>\nin  the next season the State may get the entire benefit  of<br \/>\nthe   monopoly\tin  the\t trade\tin  Kendu  leaves   and\t  no<br \/>\ndisproportionate  share\t thereof  may  be  diverted  to\t any<br \/>\nprivate\t agency.  Subject to these observations we  make  no<br \/>\nfurther\t order in the petitions out of which  these  appeals<br \/>\narise.\n<\/p>\n<p id=\"p_29\">There  will  be no order as to costs in\t all  these  appeals<br \/>\nthroughout.\n<\/p>\n<pre id=\"pre_1\">V.P.S.\t\t\t\t  Scheme declared invalid.\n<span class=\"hidden_text\" id=\"span_7\">387<\/span>\n\n\n\n<\/pre>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Rashbihari Panda Etc vs State Of Orissa on 16 January, 1969 Equivalent citations: 1969 AIR 1081, 1969 SCR (3) 374 Author: S C. Bench: Hidayatullah, M. (Cj), Shah, J.C., Ramaswami, V., Mitter, G.K., Grover, A.N. PETITIONER: RASHBIHARI PANDA ETC. Vs. RESPONDENT: STATE OF ORISSA DATE OF JUDGMENT: 16\/01\/1969 BENCH: SHAH, J.C. [&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-250699","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>Rashbihari Panda Etc vs State Of Orissa on 16 January, 1969 - 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\/rashbihari-panda-etc-vs-state-of-orissa-on-16-january-1969\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Rashbihari Panda Etc vs State Of Orissa on 16 January, 1969 - Free Judgements of Supreme Court &amp; 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