1953 (7) TMI 19 - HC - Indian Laws

Summary

Issues Involved:

1. Whether the Madras Commercial Crops Markets Act 20 of 1933 and the rules framed thereunder have become void and unenforceable as being repugnant to the Constitution.
2. Whether the Act and the rules encroach on the right of citizens to carry on trade and are repugnant to Article 19(1)(g) and are in consequence void.
3. Whether the Act and the rules are opposed to Article 301 of the Constitution as interfering with the freedom of trade within the territory of India and therefore void.
4. Whether the Act and the rules are in contravention of Article 286 as they authorize the levy of a tax on inter-State sales.
5. Whether the provisions in the Act and in the rules are discriminatory and obnoxious to Article 14 and they vitiate the entire Act.

Issue-wise Detailed Analysis:

1. Constitutionality of the Madras Commercial Crops Markets Act 20 of 1933:

The primary issue is whether the Act and the rules framed thereunder have become void and unenforceable as being repugnant to the Constitution. The court examined the provisions of the Act and rules in detail, focusing on their implications on fundamental rights and constitutional provisions. The Act was challenged on the grounds that it imposed unreasonable restrictions on trade, commerce, and intercourse, thus violating Article 19(1)(g), Article 301, and Article 286 of the Constitution.

2. Encroachment on the Right to Trade (Article 19(1)(g)):

The petitioners argued that the Act and the rules constituted a serious invasion of the fundamental right of a citizen to carry on business and were therefore void as repugnant to Article 19(1)(g) of the Constitution. The court examined the material provisions of the Act and the rules, which fell into two groups: those providing for governmental control of trade in commercial crops and those imposing restrictions on the carrying on of business in commercial crops. The court found that while the Act did restrict the freedom of a citizen to trade, it was enacted for the purpose of controlling business in commercial crops, which was deemed necessary for the protection of producers from exploitation by middlemen and profiteers. The court held that the Act and the rules were reasonable and enacted in the interests of the general public, thus falling within the scope of Article 19(6).

3. Interference with Freedom of Trade (Article 301):

The petitioners contended that the Act and the rules were opposed to Article 301 of the Constitution as they interfered with the freedom of trade within the territory of India. The court considered whether the Act and the rules imposed restrictions that were more than regulatory and thus violated Article 301. The court noted that under the Indian Constitution, marketing legislation must be upheld under Article 19(6) as reasonable and enacted in the interests of the general public. The court concluded that the Act and the rules were valid under Article 19(6) and did not violate Article 301.

4. Levy of Tax on Inter-State Sales (Article 286):

The petitioners argued that the Act and the rules authorized the levy of a tax on inter-State sales, which was in contravention of Article 286. The court examined the relevant provisions, including Section 11 and Rule 28(1), which provided for the levy of fees on the notified commercial crops bought and sold in the notified area. The court held that the levy under Section 11 was in the nature of a tax and not a fee, as it was intended to raise funds for constructing the market. However, the court found that the explanation to Section 11 did not authorize the levy of a tax on inter-State sales, as it merely raised a presumption that goods leaving the notified area were sold within that area. The court concluded that the levy under Section 11 was valid, as it did not impose a tax on inter-State sales.

5. Discrimination and Violation of Article 14:

The petitioners contended that some provisions of the Act and the rules were discriminatory and thus void under Article 14. They argued that the exemptions granted in favor of cooperative societies and small producers were unreasonable. The court held that these exemptions were based on considerations relevant to the object of the legislation and were not unreasonable. The court also rejected the argument that the notifications under Section 4 were discriminatory, as the marketing legislation was for the welfare of the general public, and the omission to notify other areas did not result in discrimination against merchants in the notified area.

Conclusion:

The court concluded that Section 5(4)(a) of the Act was void to the extent that it conferred on the Collector the power to refuse a license at his own discretion. Rule 37 was also void in so far as it prohibited persons whose names had not been registered as buyers and sellers from carrying on business in the notified area. Subject to these findings, the court upheld the validity of the Act and the rules under Article 19(6) of the Constitution. The applications were dismissed, and there was no order as to costs.