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TMI Blog1959 (12) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Art. 14, Art. 19(1)(f) and Art. 19(1)(g) thereof are dealers in imported copper and carry on their business at Jagadhri in the State of Punjab. On different dates prior to April 3, 1958, they entered into contracts of purchase of copper with importers at Bombay and Calcutta. Before, however, they could take delivery from the importers the Government of India issued on April 2, 1958, an order called the " Non-ferrous Metal Control Order, 1958 " hereafter referred to as " the order " in exercise of its powers under s. 3 of the Essential Commodities Act (Act X of 1955)-referred to hereafter as " the Act ". In this order " non-ferrous metal " was defined to mean " imported copper, lead, tin and zinc in any of the forms specified in the Schedule of the order." The Order was from the very beginning made applicable to imported copper. The price was controlled by cl. 3 of the Order which provides in its first sub-clause that " no person shall sell or offer to sell any non-ferrous metal at a price which exceeds the amount represented by an addition of 3 1/2% to its landed cost," and in its second sub-clause that " no person shall purchase or offer to purchase from any person non-ferrou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1/2% thereof and that no person could acquire or agree to acquire such copper except under a permit issued by the Controller. In issuing such permits the Controller was to be governed by such principles as the Central Government would specify. After the principles were specified in the letter of the 18th of April, the Controller could no longer issue any permit to a dealer and could issue permits only to certain. manufacturers as indicated in paras. 1 and 2 of the letter. In view of the requirement of cl. 4 of the Order the petitioners applied on April 14, 1958, for permits to enable them to take delivery of the copper in respect of which they had entered into contracts with different parties. Though no formal order appears to have been passed on these applications, it is not disputed that the applications for permits were refused and no permits were issued to these petitioners. The main contention of the petitioners is twofold. First, it is said that cl. 4 of the Order read with the principles specified in the letter of the 18th April violates the right conferred on them as citizens of India by Art. 19(1)(f) of the Constitution of India to acquire property and also the right confe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 of the Order and the " principles " specified are laws -which impose reasonable restrictions on the exercise of rights conferred by Arts. 19(1)(f) and 19(1)(g) in the interest of the general public. While this was the main contention on behalf of the respondents, it was also contended that as the petitioners have not challenged the validity of the Essential Commodities Act and have admitted the power of the Central Government to make an order in exercise of the powers conferred by s. 3 of the Act it is not open to the Court to consider whether the law made by the Government in making the nonferrous metal control order and in specifying the principles under cl. 4 of the order violates any of the fundamental rights under the Constitution. It is urged that once it is found that the Government has power under a valid law to provide for regulating or prohibiting the production, supply and distribution of an essential commodity and trade and commerce therein as soon as it is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of the essential commodity or for securing its equitable distribution and availability at fair prices, the order made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary for us to consider, even though mala fides on the part of the Government are not alleged, whether the law made by the Central Government by way of subordinate legislation, is a law, which though abridging or taking away the rights conferred by Art. 19(1)(f) and (g), is within the saving provisions of 19(5) and 19(6). On the face of it cl. 4 of the Order read with the principles specified in the letter of the 18th April has the effect of completely eliminating the dealers from the trade in imported copper. It is also reasonably clear that independently of Cl. 4 read with the principles, the fixation of the price at which the copper can be bought and sold at 3 1/2% above the landed cost has the effect of driving the dealer out of business in imported copper. The statement made on behalf of the Union of India in paragraph 11 of the counter affidavit that an addition of 3 1/2% of the landed cost was made in fixing the price in para. 3 of the Order in order to enable the importers to earn a margin of profit justifies the conclusion that this will be the minimum price at which the importers will sell. Any dealer would have thus to pay at the rate of landed cost plus 3 1/2% ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se observations were made in the context of an argument of conflict between Art. 19(5) and Art. 21 of the Constitution and could not have been intended for general application. Chintaman Rao v. The State of Madhya Pradesh ([1950] S.C.R. 759) the constitutionality of the Central Provinces and Berar Regulation of Manufacture of Bidis (Agricultural Purposes) Act, came up for consideration, Mahajan, J., delivering the judgment of the Court, after pointing out that the question was whether the total prohibition of carrying on the business of manufacture of bidis within the agricultural season amounted to a reasonable restriction of the fundamental rights mentioned in Art. 19(1)(g) of the Constitution, based his decision that the impugned law did not come within the saving provisions of Art. 19(6) of the Constitution on the view that the test of reasonableness was not satisfied and not on a view that " prohibition " went beyond " restriction ". At p. 764 of the Report the learned Judge says: " The effect of the provisions of the Act, however, has no reasonable relation to the object in view but is so drastic in scope that it goes much in excess of that object. Not only are the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of the Court said " Cotton being a commodity essential to the life of the community, it is reasonable to have restrictions which may, in certain circumstances, extend to total prohibition for a time, of all normal trading in the commodity." It is clear that in these three cases, viz., Chintaman Rao's Case ([1950] S.C.R. 759), Cooverjee's Case ([1954] 873. 879) and Madhya Bharat Cotton Association Ltd. Case (A.I.R. 1954 S.C. 634) the Court considered the real question to be whether the interference with the fundamental right, was " reasonable " or not in the interests of the general public and that if the answer to the question was in the affirmative, the law would be valid and it would be invalid if the test of reasonableness was not passed. Prohibition was in all these cases treated as only a kind of " restriction ". Any other view would, in our opinion, defeat the intention of the Constitution. After Art. 19(1) has conferred on the citizen the several rights set out in its seven sub-clauses, action is at once taken by the Constitution in cls. 2 to 6 to keep the way of social control free from unreasonable impediment. The raison detre of a State being the welfare of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interests of the different matters mentioned in the clause. There can be no doubt therefore that they intended the word " restriction " to include cases of " prohibition " also. The contention that a law prohibiting the exercise of a fundamental right is in no case saved, cannot therefore be accepted. It is undoubtedly correct, however, that when, as in the present case, the restriction reaches the stage of prohibition special care has to be taken by the Court to see that the test of reasonableness is satisfied. The greater the restriction, the more the need for strict scrutiny by the Court. In applying the test of reasonableness, the Court has to consider the question in the background of the facts and circumstances under which the order was made, taking into account the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual citizens by the proposed remedy, to the beneficial effect reasonably expected to result to the general public. It will also be necessary to consider in that connection whether the restraint caused by the law is more than was necessary in the interests of the general public. The position of the copper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown however that if nothing else is done it is practically impossible to make the control of price effective. The essential subsidiary step therefore was to introduce a system of permits so that the persons acquiring copper could be known. A system of permits would also be of great help in ensuring that the raw material would go to those industries where it was needed most and distributed in such quantities to several industries in different parts of the country as would procure the greatest benefit to the general public. Clause 3 of the Order fixes a pi-ice while cl. 4 introduces a system of permits for the acquisition of the material., Some fixation of price, being essential to keep prices within reasonable limits, must therefore be held to be a reasonable restriction in the interests of the general public. Was it necessary, however, that the prices should be fixed in such a manner as to eliminate the dealer completely, as has been done in the instant case ? The introduction of a system of permits was also clearly necessary in the interests of the general public. Was it necessary however to specify the principles that would drive the dealer out of business? These questions requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elimination of the dealer from the trade is a reasonable restriction in the interests of the general public. Clause 4 read with the principles specified must also be held for the same reason to be a reasonable restriction. It was next urged that these principles are discriminatory as between manufacturers and dealers and so violate Art. 14 of the Constitution. Quite clearly the dealers and manufacturers are by these principles placed in different classes and while some manufacturers are eligible for permits dealers are not. It is equally clear however from what has already been said about that the differentia which distinguish dealers as a class from manufacturers placed in the other class have a reasonable connection with the object of the legislation. There is therefore no substance in the contention that the specification of the principles violates Art. 14 of the Constitution. While however cl. 3 of the Order is clearly within the Act, the question whether cl. 4 read with the principles is within the Act or not is not free from difficulty. If the principles had been specified in the Order itself and/or had been notified in the Official Gazette and laid before both the Houses o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of Parliament. It may be necessary from time to time to specify new principles in view of the changed circumstances; these have again to be notified in the Gazette and laid before the Houses of Parliament, in order to be effective. So long as new principles do not come into operation, by being specified by Government, and thereafter notified in the Gazette and laid before Houses of Parliament, the previous principles last specified, notified in the Gazette and laid before Houses of Parliament, will remain effective. As, however, the principles specified in the letter of the 18th April have not been notified in the Gazete, nor laid before Houses of Parliament, and no principles appear to have been specified before or after that date, cl. 4 of the order, as it now stands, must be struck down as void. The petitioners are therefore entitled to relief only in respect of cl. 4 of the order. We direct that an order be issued restraining the respondents from enforcing cl. 4 of the Non-ferrous Metal Control Order, so long as principles in accordance with law, are not published in the Official Gazette and laid before the Houses of Parliament in accordance with sub-s. (5) and subs. (6) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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