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1959 Supreme(SC) 226
SUPREME COURT OF INDIA
16th December, 1959
B.P. SINHA, C.J.I., P.B. GAJENDRAGADKAR, K SUBBA RAO, K.C. DAS GUPTA AND J.C. SHAH, JJ.
1. Union of India and others, Appellants (In Cri. As. Nos. 36 and 37 of 1955) and 2. State of Delhi (Now Delhi Administration) and others. (In Cri. A. No. 38 of 1955)
Versus
M/s. Bhanamal Gulzarimal Ltd., and others. Respondents.
Criminal appeals Nos. 36 to 38 of 1955.
Advocates appeared
Mr. C. K. Daphtary, Solicitor-General of India and Mr. N. S. Bindra, Senior Advocate, (Mr. R. H. Dhebar, Advocate, with them), for Appellants; Mr. N. C. Chatterjee, Senior Advocate, (M/s. A. N. Sinha and N. H. Hingorani, Advocates, with him), for Respondents.
A.N.SINHA, C.K.DAFTARY, N.C.CHATTERJI, N.H.Hingorani, N.S.BINDRA, R.H.Dhebar
Delegation of power to fix maximum prices for essential commodities is valid and not "excessive" if the parent statute provides a clear legislative policy, such as ensuring equitable distribution at fair prices, thereby providing sufficient guidance to the delegate.
Headnote:(A) Essential Supplies (Temporary Powers) Act, 1946 - Sections 3 and 4 - Constitution of India - Articles 19(1)(f), 19(1)(g) and 31 - Validity of delegation of power to fix prices - Where the legislature has declared that certain commodities are essential for the national economy and expressed a determination that their supply should be maintained for equitable distribution at fair prices, such a policy provides sufficient guidance to the Central Government in prescribing price structures. Delegation of power to regulate production, supply, and distribution is not excessive if the delegate is guided by a clear legislative policy. (Paras 4 and 7)
(B) Administrative Law - Delegated Legislation - Excessive Delegation - A clause empowering an authority to fix maximum prices is not unconstitutional on the ground of excessive delegation if it is part of a composite scheme designed to effectuate the policy of the parent Act. The absence of a specific "base price" or a rigid formula does not render the power uncanalised or unguided, as the delegate must evaluate varied factors like production, demand, and foreign supply. (Paras 7 and 8)
(C) Constitution of India - Article 19 - Reasonable Restrictions - A provision empowering an authority to fix maximum prices does not, by itself, violate the fundamental rights to property or the freedom to trade and business. Such a clause is valid if it is consistent with the legislative object of the parent Act. A challenge based on Article 19 would typically lie against the actual price structure fixed in a specific instance, provided it is shown to be unreasonable or confiscatory in general effect, rather than against the empowering clause itself. (Paras 9, 10 and 13)
Facts of the case:
A private company registered as a stockholder was prosecuted for selling steel at prices exceeding the maximum limits prescribed by a notification issued by the Controller under a control order. The company challenged the validity of the clause in the order that empowered the Controller to fix maximum prices, contending that it was ultra vires the parent Act and violated fundamental rights guaranteed under the Constitution. The High Court had previously declared the clause unconstitutional and quashed the criminal proceedings.
Findings of Court:
The court found that the empowering clause was valid as it was part of an integrated scheme to ensure the equitable distribution of essential commodities at fair prices. The power conferred was not unbridled but was canalised by the legislative policy enshrined in the parent Act. The court further held that the clause did not violate the fundamental rights under Article 19.
Issues: Whether the clause empowering the Controller to fix maximum prices of iron and steel was void due to excessive delegation of power or because it imposed an unreasonable restriction on fundamental rights under Articles 19(1)(f) and 19(1)(g) of the Constitution.
Ratio Decidendi: The court ruled that delegation of power is valid when the legislature provides a clear policy framework (such as "equitable distribution at fair prices"). A general power to fix prices is not per se an unreasonable restriction on trade; only a specific, unreasonable price structure could be challenged. Since the clause was consistent with the parent Act's objective, it did not suffer from the vice of excessive delegation or unconstitutionality.
Result: Appeals allowed.
GAJENDRAGADKAR, J. : These three appeals which have been filed in this Court with certificates issued by the Punjab High Court under Art. 132(1) of the Constitution are directed against the orders passed by the said High Court by which cl. 11B of Iron and Steel (Control of Production and Distribution) Order, 1941 (hereinafter called the Order) has been declared unconstitutional and inoperative, and the criminal proceedings commenced against M/s. Bhana Mal Gulzari Mal and others under the said clause 11B read with S.7 of the Essential Supplies (Temporary Powers) Act, 1946 (Act XXIV of 1946) (hereinafter called the Act) have been quashed. M/s. Bhana Mal Gulzari Mal Ltd., is a private limited company having its registered office at Chawri Bazar, Delhi. Since 1948 it has been registered as a stockholder by the Iron and Steel Controller (hereinafter called the Controller) under cl. 2(d) of the Order. It appears that under cl. 11B of the Order notifications had been issued from time to time giving a schedule of base prices in respect of iron and steel. On December 10, 1949, the Controller issued a notification under cl. 11B decreasing by Rs. 30 per ton the prices already fixed for all categories of steel Several criminal cases were instituted (Nos. 385-410 of 1954) against the said company, its three directors, its general manager & two salesmen (hereinafter called respondents 1 to 7) on the allegation that they had sold their old stock of steel for prices higher than those prescribed by the said notification of December 10, 1949. When the respondents had thus to face several criminal proceedings they filed three writ petitions in the Punjab High Court against the Union of Indian, the State of Punjab and others (hereinafter called the appellants). By their Writ Petition No. 36 of 1954 (23-3-54) they prayed for a direction, order or writ restraining the appellants from enforcing or giving effect to cl. 11B or the said notification, as well as a writ or order quashing the criminal proceedings commenced against them. The decision in this writ petition has given rise to Criminal Appeal No. 36 of 1955. Writ Petition No, 37 of 1954 (23-3-54) prayed for a similar order specifically in respect of the criminal cases Nos. 385-410 of 1954 then pending against the respondents, and asked for an interim stay of the said proceedings. The order passed on this writ petition has given rise to Criminal Appeal No. 37 of 1955. It appears that under some of the criminal proceedings filed against the respondents orders for search had been passed by the trial Magistrate on May 12, 1953. These orders were challenged by the respondents by their Writ Petition No. 52-D of 1954 (7-4-54). An appropriate writ was asked for quashing the warrants issued under the said orders. From the orders passed on this writ petition Criminal Appeal No. 38 of 1955 arises. In all these writ petitions the respondents contention was that cl. 11B was invalid and unconstitutional as it violated Art. 19(1) (f) and (g) as well as Art. 31 of the Constitution. They also urged that the said clause was ultra vires the powers conferred on the Central Government by S. 3 of the Act. The notification issued by the Controller on December 10, 1949, was challenged by the respondents on the ground that it was issued under a clause which was invalid and was otherwise unreasonable and void. In substance the High Court has upheld the respondent s plea that cl. 11B is ultra vires as it is violative of the fundamental rights guaranteed under Art. 19(1) (f) and (g) of the Constitution. In the present appeals the appellants seek to challenge the correctness of this conclusion. Thus the main point which calls for our decision in this group of appeals is whether cl. 11B of the Order is valid or not.
2. The impugned clause forms part of the Order which has been issued by the Central Government in exercise of its powers conferred by sub-r. (2) of R. 81 of the Defence of India Rules. Before considering
