The court held that the Retention Order was validly made under the E. C. Act and did not violate Articles 19(1)(g) or 300-A of the Constitution.

Sarwar Ali, J.

1. In this writ application the petitioner, partner of a registered firm, challenges the validity of Sugar (Retention and Sale of recognised Dealers) Order 1979 (the "Retention order"). He also prays that the demand notice (Annexure 3 issued by respondent No. 5, in the purported exercise of power under the Retention Order) should be directed to be cancelled or withdrawn.

2. The petitioner carries on business in sugar. He purchases sugar from different Sugar Mills in the State of Bihar and Uttar Pradesh. The sugar so purchased is sold by him in wholesale to various dealers. On 17-12-1979 when the Retention Order came into force the petitioner had a stock of 770 bags. On 22-12-1979 the petitioner was told, in Annexure-3, that 65 percent of sugar in the stock of petitioner and the quantity that had been despatched to him should be sold to the State Government. The rest of the stock could otherwise be sold by the petitioner. As already stated the Retention Order and Annexure-3 are both under challenge in this writ application. The Legal Background:

3. The Essential Commodities Act, 1955 as the preamble itself indicates, is a law promulgated "in the interest of general public for the control of production, supply and distribution of trade and commerce in certain commodities. "Sec.3(1) of the Act confers wide powers. Its states:

If the Central Government is of the opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity for securing their equitable distribution and availability at fair prices, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.

Sub-section (2) says that without prejudice to the generality of the power conferred by Sub-section (1) an order may be made to provide for matters enumerated therein. Sec.3(2)(c) empowers the making of order "for controlling the price at which any essential commodity may be bought or sold". Sub-clause (f) authorises the making of an order "for requiring any person holding stock in any essential commodity to sell the whole or a specified part of the stock to the Central Government or a State Government or to an officer or agent of such Government or to such other person or class of persons and in such circumstances as may be specified in the order." Sec.3(3) which deals with the price which is to be paid to a person selling an essential commodity in compliance with an order made with reference to Section (2)(f) of the Act, is as follows;

Where any person sells any essential commodity in compliance with an order made with reference to Clause (f) of Sub-section (2), there shall be paid to him the price therefor as herein provided (a) where the price can, consistently with the controlled price, if any, fixed under this section, be agreed upon the agreed price;

(b) where no such agreement can be reached, the price, calculated with reference to the controlled price, if any;

(c) where neither Clause (a) nor Clause (b) applies the price calculated at the market rate prevailing in the locality at the date of sale.

4. I would now mention the relevant provisions of the Retention Order. The preamble of the Order states that the making of the order is necessary and expedient for securing equitable distribution and availability of sugar at fair price and that the order has been issued in exercise of powers under Section 3(2)(f) of the Essential Cammodities Act (hereinafter referred to as the E. C. Act).

Clause 2 (a) defines recognised dealer as follows: 2 (a) recognised dealer means a person carrying on the business of purchasing, selling or distributing sugar, and licensed under the Order relating to licensing of sugar dealers for the time being in force in a State or Union Territory.

Clause 3 States that every recognised dealer shall retain 65 percent of the stock of sugar held by him at the close of business on the commencement of the Ret