Dwarka Prasad Laxmi Narain vs State Of U. P.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1954 Supreme(SC) 1

SUPREME COURT OF INDIA
11th January, 1954
M.C. MAHAJAN, C.J.I., B.K. MUKHERJEA, BOSE, GHULAM HASAN AND JAGANNADHA DAS, JJ.
Messrs. Dwarka Prasad Laxmi Narain, Petitioners
Versus
State of U.P. and others, Respondents.
Petn. No. 326 of 1953.
Advocates appeared
Shri S. C. Isaacs, Senior Advocate, (Shri. S. K. Kapur, Advocate, with him), instructed by Shri Ganpat Rai, Agent, for Petitioners; Shri H. J. Umrigar, Advocate, instructed by Shri C. P. Lal, Agent, for Respondents.

Advocates:
C.P.LAL, GANPAT RAI, H.J.Umrigar, S.C.ISAACS, S.K.KAPOOR

Headnote:U. P. Coal Control Order (1953)-Validity-Constitution of India, Art. 19 (1) (g).
       1. Reversing A.I.R. 1948 All. 199. - (435) Article 19 (I) (g) and (6)-Reasonable restrictions-D.P.
       Coal Control Order, 1953, clauses 3 (2) (b), 4(3), 7 and 8-Validity.
       Held: (1) For ensuring equitable distribution of commodities Considered essential to the community and their availability at fair prices, it is quite a reasonable thing to regulate sale of these commodities through licensed vendors to whom quotas are allotted in specified quantities and who are not permitted to sell them beyond the prices that are fixed by the controlling authorities. The power of granting or withholding licenses or of fixing the prices of the goods would necessarily have to be vested in certain public officers or bodies and they would certainly have to be left with some amount of discretions in these matters.
       (2) The phrase "reasonable restriction" connotes that the limitation imposed upon a person in enjoyment of a right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public. Legislation, which arbitrarily or excessively invades the right, cannot be said to contain the quality of reasonableness, and unless it strikes a proper balance between the freedom guaranteed under Article 19 (1) (g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in reasonableness.
       (3) The provision contained in clause 3 (1) of the Order that "no person shah stock, sell, store for sale or otherwise utilize or dispose of coal except under a licence granted under this Order" is quite unexceptional as a general provision. Exception embodied in sub-clause (2) (b), however, provides that nothing in clause 3 (1) shall apply to any person or class of persons exempted from any provision of the above sub-clause by the State Coal Controller, to the extent of such exemption. The Control Order nowhere indicates what the grounds of exemption are, nor have any rules been framed on this point. An unrestricted power has been given to the State Controller to make exemption, and even if he acts arbitrarily or from improper motives, there is no check over it and no way of obtaining redress. Clause 3 (2) (b) of the Control Order is therefore prima facie unreasonable. This portion of the Control Order, even though bad, is, however, severable from the rest.
       (4) Clause 4 (3) of the Control Order relates to the granting and refusing of licences. The licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify any licence under this Order and the only thing be has to go is to record reasons for the action he takes. Not only so the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. This provision cannot be held to be reasonable. No rules have been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer. Practically the order commits to the unrestrained will of a single individual the power to grant, withhold or cancel licences in any way he chooses and there is nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same. The fact that the licensing authority has got to record reasons for what he does is hardly effective as a safeguarri, for there is no higher authority prescribed in the order who could examine the propriety of these reasons and revise or review the decision of the subordinate officer. The reasons, therefore, which are required to be recorded are only for the personal or subjective satisfaction of the licensing authority and not for furnishing any remedy to the aggrieved person. The action or non-action of officers placed in such position may proceed from enmity or prejudice, from partisan zeal or animosity, from favoritisms and other improper influences and motives which are easy of concealment arid difficult to be detected and exposed, and consequently the injustice capable of being unsought under cover of such unrestricted power becomes apparent to every man, without the necessity of detailed i nvestigation.1
       As this provision forms an integral part of the entire structure of the U. P. Coal Control Order, the order cannot operate properly unless the provision of clause 4 (3) is brought in conformity with the constitutional requirements indicated above. The licence of the petitioners having been cancelled in pursuance with the above clause of, he Control Order, the cancellation itself should be held to be ineffective.
       (5) Clause 7 empowers the State Coal Controller to direct, by written order, any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provisions of clause 8. Clause 8 (1) provides that no licence in Form B shall sell or agree to sell at a price exceeding the price to be declared by the licensing authority in accordance with the formula given in Schedule III. Clauses 7 and 8 of the Control Order do not impose unreasonable restrictions upon the freedom of trade enjoyed by the petitioners.

Judgment

MUKHERJEA, J. : This is an application presented by the petitioners under Article 32 of the Constitution, complaining of infraction of their fundamental rights guaranteed under Article 14 and Clauses (f) and (g) of Article 19 (1) of the Constitution and praying for enforcement of the same by issue of writs in the nature of mandamus .

2. To appreciate the contentions that have been raised on behalf of the petitioners, it would be necessary to give a short narrative of the material facts. The petitioners are a firm of traders who had, prior to the cancellation of their licence, been carrying on the business of retail sellers of coal at a coal depot held by them in the town of Kanpur. It is said, that the District Magistrate of Kanpur as well as the District Supply Officer, who figure respectively as respondents Nos. 2 and 3 in the petition, had been for a considerable time past issuing directives from time to time upon the petitioners as well as other coal depot holders of the town, imposing restrictions of various kinds upon the sale of coal, soft coke, etc.

It is stated that prior to the 14th of February 1953 the prices that were fixed by the District Officers left the coal dealers a margin of 20 per cent. profit upon the sale of soft coke and 15 per cent. profit on the sales of hard coke and steam coal, such profits being allowed on the landed costs of the goods up to the depot. The landed costs comprised several items and besides excolliery price, the middleman s commission and the railway freight, there were incidental expenses of various kinds including labour duty : loading and unloading charges, cartage and stacking expenses.

After making a total of these cost elements, an allowance was given for shortage of weight at the rate of 5 Mds. and odd seers per ton in the case of soft coke and 3 Mds. & odd seers in the case of hard coke and steam coal, and it was on the basis of the net weight thus arrived at that the price was calculated. On the 14th of February 1953, the District Supply Officer issued a directive reducing the selling prices of coke, coal, etc. much below the existing rates. This reduction was effected in a thee-fold manner. In the first place, the allowance for shortage of weight was made much less than before: secondly, a sum of Rs. 4-12-0 only was allowed for all the incidental expenses, and thirdly, the margin of profit was cut down to 10 per cent.

On the 22nd of May 1953, a representative petition was filed by seven colliery depot holders of Kanpur including the present petitioners challenging the validity of the executive order dated the 14th of February 1953 mentioned above inter alia on the ground that it infringed the fundamental rights of the petitioners under Articles 14 and 19 of the Constitution. There was an application for ad interim stay in connection with this petition which came up for hearing before the learned Vacation Judge of this Court on the 1st July 1953. On that day an undertaking was given by the State of Uttar Pradesh to the effect that they would withdraw the order of the 14th February 1953 and apparently the consideration that weighed with the State in giving this undertaking was that it was a purely executive order without any legislative section behind it.

The order of the 14th February was in fact withdrawn, but on the 10th of July 1953 the State of Uttar Pradesh promulgated by a notification an order intituled "The Uttar Pradesh Coal Control Order, 1953" purporting to act in exercise of the powers conferred upon it by Section 3(2) of the Essential Supplies Act, 1946 read with the notified order of the Government of India issued under Section 4 of the Act. As the constitutionality of this Coal Control Order is the main object of attack by the petitioners in the present proceeding, it would be convenient to set out the material provisions of the order in respect of which the controversy between the parties primarily centers :

"THE UTTAR PRADESH COAL CONTROL ORDER, 1953.

....