Headnote:
Constitution of India, 1950 - Articles 14 and 19 - Indian Railways Act - Section 27-A - Schemes of Agriculture Department - Cost of pump sets and accessories supplied - Petrol/Kerosene engines manufacture - Heard counsel for parties - Constitutional validity of circular issued by secretary to government of Kerala directing that for distribution of pump sets Comprehensive Coconut Development Programmer and other similar schemes of Agriculture Department and in order to streamline implementation of schemes specifying specific roles and responsibilities different agencies involved Industries Corporation and Regional Agro Industries Development Corporation would arrange supply of pump sets in the districts and in the remaining districts supply will be effected by private dealers along since challenged by appellants but upheld by impugned judgment of High court in question this appeal – Held, Contention that the impugned circular suffers from hostile discrimination meted out to the farmers in northern region of State covered by financial assistance governmental schemes by fastening such assistance with an obligation purchase pump sets only from the two approved dealers cannot be accepted in facts case - Reasons for fastening the farmers of northern region with the obligation to purchase pump sets from two dealers have been indicated by and in our view it cannot be held that such reasoning suffers from lack of objectivity - Law is court settled that even in matter of grant of largesse award of job contracts etc - the government is permitted to depart from the general norms set down by it in favour of particular group of persons by subjecting such persons with different standard or norm if such departure is not arbitrary but based on some valid principle which in itself is not irrational unreasonable or discriminatory – Appeal dismissed

Judgement Key Points

Key Points: - Government can impose reasonable restrictions on Article 19(1)(g) rights if such restrictions are based on valid principles and not arbitrary (!) (!) . - Farmers receiving government subsidies must accept obligations to purchase from approved dealers as a condition of assistance (!) (!) . - Selection of only two dealers for pumpset supply in specific regions is valid if aimed at preventing malpractices and ensuring effective scheme implementation (!) (!) . - Restrictions must have direct impact on trading activities, not merely incidental effects, to be constitutionally relevant (!) (!) . - Policy decisions on dealer selection are not subject to judicial review unless demonstrably capricious or discriminatory (!) (!) .

What is the scope of reasonable restrictions on fundamental trading rights under Article 19(1)(g) when the government grants financial assistance to farmers?

Can the government select preferred dealers for distributing agricultural pumpsets without violating Article 14 and Article 19(1(g)?

What constitutes objective and non-discriminatory basis for government to fasten obligations on farmers to purchase from specific dealers?

JUDGMENT

G.N. RAY, J.

(1) LEAVE granted.

(2) HEARD learned counsel for the parties. The constitutional validity of the circular dated 19-5-1995 issued by the secretary to the government of Kerala directing that for distribution of pumpsets under Comprehensive Coconut Development Programme and other similar schemes of the Agriculture Department and in order to streamline the implementation of the schemes specifying specific roles and responsibilities for different agencies involved, M/s Kerala Agro Industries Corporation (KAICO) and Regional Agro Industries Development Corporation (RAIDCO) would arrange supply of pumpsets in the districts of Kesarkoda, Kanner, Vyanad, Kozhikode, Malaopuram, Palekkad, Trissur and Kottayam and in the remaining districts, supply will be effected by private dealers along with KAICO and RAIDCO, since challenged by the appellants in OP No. 16115 of 1995, but upheld by the impugned judgment of the High court dated 7/2/1996 is in question in this appeal. Such writ petition was disposed by a common judgment along with other writ petitions being OAs Nos. 13936 and 14454 of 1995. In the said other writ petitions, the constitutional validity of the circular dated 30/3/1989 issued by the Registrar of Cooperative Societies inter alia directing that all the Land Development Banks, District Cooperative Banks and Service Cooperative Banks in the State of Kerala would patronise RAIDCO to the fullest extent in preference to private dealers in the matter of purchase of Agro Machine under the scheme financed by the Banks/Societies and at any rate not less than 75 of total requirement of such Agro Machines should be purchased through RAIDCO, was challenged. The High court has also upheld the validity of such circular by the impugned judgment.

(3) IT may be stated that in the circular dated 19-9-1995 issued by the secretary to the government of Kerala it was also indicated that pumpsets and accessories of the farmers choice alone should be supplied and after- sales service facility should be provided by suppliers/dealers. It was also indicated that the cost of pumpsets and accessories supplied would be at a lesser price than that fixed by the State-Level Technical Committee and necessary advance amount would be provided to KAICO and RAIDCO for taking advance action for implementing the scheme.

(4) IT will also be appropriate to state that in the circular dated 30-3-1989 issued by the Registrar of Cooperative Societies, it was indicated that RAIDCO was the only cooperative in the State under the Cooperative Department, having a network of branches for distribution of all sorts of pumpsets etc. RAIDCO has dealership of almost all important pumpset manufacturers in the country and RAIDCO was sole distributor for villagers, Petrol/Kerosene engines manufactured by M/s Enfield India Ltd. In addition, RAIDCO has set up its factory at Palghat with NCDC assistance for the manufacture of pumpsets in collaboration with M/s Kirloskar Bros. Explaining the jurisdiction of the said circular, it was also indicated:

"THOUGH this is a Cooperative Institution, it is felt that the Cooperative Bank including the Land Development Banks in the State do not patronise, this society faces stiff competition with private dealers. The District Cooperative Banks, Cannanore and Kasargode have taken policy decisions to the effect that the loans sanctioned by them to the primary societies, for the purchase of agricultural implements shall be routed only through this Cooperative. This being a society assisted by the government substantially, it is necessary in the interests of government also that it functions properly with good business. In the circumstances, all the Land Development Banks, District Cooperative Banks and Service Cooperative Banks in the State are directed to patronise RAIDCO to the fullest extent in preference to private dealers. At any rate not less than 75 of the total requirement o

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1996 Supreme(SC) 1698

What is the scope of reasonable restrictions on fundamental trading rights under Article 19(1)(g) when the government grants financial assistance to farmers?

Can the government select preferred dealers for distributing agricultural pumpsets without violating Article 14 and Article 19(1(g)?

What constitutes objective and non-discriminatory basis for government to fasten obligations on farmers to purchase from specific dealers?

Cases Referred (11)