1998 Supreme(SC) 967

1998(7) Supreme 367
Supreme Court of India
(Allahabad High Court)
M.M. Punchhi, CJI & Mrs. Sujata V. Manohar, J.
M/s. Siel Ltd. & Ors. etc. -Appellants
versus
Union of India & Ors. -Respondents
Civil Appeal Nos. 4726-4741 of 1998
(Arising out of SLP (C) Nos. 4162-4177 of 1996)
With
Civil Appeal Nos. 4742-4743 of 1998
(Arising out of SLP (C) Nos. 14670 and 16925 of 1995)
Decided on 11-9-1998
Counsel for the Parties :
For the Appearing Parties : F.S. Nariman, Sudhir Chandra, D.A. Dave, N.N. Goswami, S.B. Sanyal, Sr. Advocates, Mrs. R. George, Subhash Sharma, Jayant Bhushan, H. Devarajan, Praveen Kumar, Anil Aggarwal, (Rakesh Dwivedi) Advocate General, State of U.P., R.B. Mishra, Kamlen­dra Mishra, Mrs. Nandini Gore, (Bhaskar Pradhan) Advocate for Mrs. M. Karanjawala, Ms. Sushma Suri, A.K. Srivastava, B.B. Singh, Advocates.

Important Point
Uttar Pradesh Sheera Niyantran Adhi­niyam, 1964 and Bihar Molasses (Control) Act, 1947 are constitutionally valid.

Headnote:(i) Uttar Pradesh Sheera Niyan­tran Adhiniyam, 1964-Challenge to its constitutional validity-Con­stitution of India-Art. 254 and Seventh Schedule List I-Entries 7, 52, List II-Entries 24, 26, 27 and List III-Entry 33-Legislative competence-Whether State Legislature lacked competence to pass the Act? (No)-Industries (Development and Regulation) Act, 1951-Whether repugnant? (No).

       Held : If we apply the same principle of harmonious construction to Entries 24, 26 and 27 of List II, the term “industry” in Entry 24 would not take within its ambit trade and commerce or production, supply and distribution of goods which are the express province of Entries 26 and 27 of List II. Similarly, Entry 52 in List I which deals with industry also would not cover trade and commerce in or production, supply and distribution of the products of those industries which fall under Entry 52 of List I. For the industries falling in Entry 52 of List I these subjects are carved out and ex­pressly put in Entry 33 of List III. (Para 14)

       In the light of these entries if one looks at Section 2 of the Industries (Development and Regulation) Act, 1951, Section 2 clearly declares an industry which is in the First Schedule as an industry falling under Entry 52 of List I. Section 18G, however, deals with control over supply, distribution, price etc. of certain articles or products of such industry. Section 18G empowers the Central Government to provide by notification for regulating the supply and distribution of a product of such industry and trade and commerce therein. Section 18G is, therefore, an exercise of the powers of legislation conferred by Entry 33 of List III. By its express language, Section 18G is clearly covered under Entry 33 of List III and is excluded from Entry 52 List I. Any notification, therefore, issued under Section 18G would be an exercise of a power conferred by Entry 33 of the Concurrent List. Since the exercise of power under Section 18G falls under the Concurrent List in the Seventh Schedule of the Constitution and not under Entry 52 of List I, the State Legislature is equally competent to legislate in respect of the same subject matter, subject to Article 254 of the Constitution. (Para 17)

       The contention of the appellants, therefore, that by the enactment of Section 18G the power of the State Government to legislate under Entry 33 of List III is taken away, is untenable. (Para 19)

       The respondents have also rightly contended that the enactment of Section 18G by the amending Act does not create by itself any repug­nancy between the Parliamentary Legislation and the State Legislation, namely, the U.P. Sheera Niyantaran Adhiniyam of 1964. (Para 20)

       In the premises the U.P. Sheera Niyantaran Adhiniyam of 1964 is within the legislative competence of the State Government. (Para 25)

       (ii) Uttar Pradesh Sheera Niyan­tran Adhiniyam, 1964-Challenge to its constitutional validity-Res­trictions imposed as sale of molasses under the Act and the orders made thereunder-Whether impose unreason­able restrictions violative of Art. 19(1)(g)? (No) [or Art. 301 (No)].

       Held : In order to keep a proper balance over distribution of molasses to the industries which had come up over a period of time, when decontrol was announced by the Government of India, it was not possible for the State of Uttar Pradesh to announce a total decontrol. Nevertheless by the first notification of 13.10.1993, 70 of molasses were freed from control. However, it had an immediate adverse effect on the chemical and down stream industries in U.P. As a result, the subsequent State notifications were issued in October, 1993 and January, 1994 reducing substantially the percentage of molasses which were made free of control and increasing the percentage of controlled molasses. Simultaneously, the price of controlled molasses was also enhanced by the State Government. The State has followed a fair eco­nomic policy. In fixing, from time to time, the percentage of free and controlled molasses and the prices for controlled molasses, the over­all market position had also been borne in mind and the extent of availability, and the price of imported petro feed stock and chemical products had also to be borne in mind. In other words, the State has submitted that price fixation of molasses and the percentage of free and controlled molasses is essentially a matter of economic policy and the same should not be the subject matter of challenge under Article 19(1)(g) of the Constitution when the policy is fair and has been in force for a long time. This submission has much force. This Court has held that in examining the reasonableness of an economic measure, the State should have more latitude in formulating economic policy as well as appropriate legislation in comparison to legislating relating to fundamental rights. (See in this connection Delhi Science Forum & Ors. etc. v. Union of India & Anr. etc. (JT 1996(2) SC 295) and Dalmia Cement (Bharat) Ltd. & Anr. etc. v. Union of India & Ors. etc. (JT 1996(4) SC 555). (Para 29)

       It has also been pointed out by the respondents that in public interest an industry, in the present case, the sugar industry, can be required to make a supply to another industry of their product or by-product. Looking to all the circumstances, the U.P. Sheera Niyantaran Adhiniyam 1964 and the State notifications of 13.8.1993, 22.10.1993 and 1.1.1994 having been held by the High Court as not violative of Article 19(1)(g) of the Constitution, we are inclined to agree with the findings so arrived at by the High Court. (Para 30)

       Held finally : In the premises these appeals are dismissed with costs. (Para 31)

       (iii) Bihar Molasses (Control) Act, 1947-Whether constitutionally valid? (Yes). (Para 36)

       Held : The challenge to these orders and the Bihar Molasses (Control) Act, 1947 are similar to the challenges in the appeals pertaining to the State of U.P. For reasons which we have set out in our judgment in the appeals pertaining to the State of U.P., these appeals are also dismissed with costs. (Para 36)