MP High Court Upholds Gwalior Trade Fair's Policy Prioritizing Non-Local Brands, Cites 'Reasonable Classification'

Gwalior, MP – The Madhya Pradesh High Court, Gwalior Bench, has dismissed a writ petition challenging the constitutionality of a policy that restricts automobile dealers from outside the Gwalior-Chambal region from participating in the historic Gwalior Trade Fair if their brand already has a local presence. A division bench of Justice Anand Pathak and Justice Pushpendra Yadav held that the policy constitutes a "reasonable classification" aimed at the better management of the fair and does not violate the fundamental rights to equality and trade under Articles 14 and 19(1)(g) of the Constitution.

---

Background of the Dispute

The petition was filed by M/s Jeewan Motors Private Limited, a Bhopal-based authorized dealer for Maruti Suzuki. The company sought to set up a stall at the Gwalior Trade Fair, a popular event known for offering significant tax rebates on vehicle sales.

However, their application was denied based on a resolution dated August 1, 2023, passed by the Gwalior Vyapar Mela Pradhikaran (Gwalior Trade Fair Authority). The resolution stipulated that stalls in the automobile section would be allotted to dealers of companies that do not have an existing dealership in the Gwalior and Chambal divisions. Since Maruti Suzuki already has several dealers in the region, the Bhopal-based petitioner was excluded.

Aggrieved, Jeewan Motors challenged not only the resolution but also the constitutional validity of Section 6 of The Gwalior Vyapar Mela Pradhikaran Adhiniyam, 1996, the act governing the fair's management.

Arguments Presented

Petitioner's Contentions: - Violation of Fundamental Rights: Senior Advocate Shri Shekhar Sharma, representing the petitioner, argued that the policy is discriminatory and arbitrary, violating the right to equality (Article 14) and the right to carry on trade and business (Article 19(1)(g)).

- Creation of Monopoly: The policy creates a monopoly for local Gwalior dealers, which is against the public interest.

- Unguided Power: It was argued that Section 6 of the Adhiniyam, 1996, grants excessive and unguided powers to the Authority, rendering it unconstitutional.

Respondents' Defence:

- Presumption of Constitutionality: Senior Advocate Shri Arvind Dudhawat, for the respondents, countered that there is always a presumption in favour of a statute's constitutionality.

- Reasonable Classification: The policy is a measure for the "better management and control" of the fair, given the limited space. The objective is to introduce new automobile brands to the region that do not have a local presence.

- Petitioner Not 'Similarly Situated': The respondents highlighted that the petitioner's own dealership agreement restricted its sales territory to the Bhopal region, meaning it was not on an equal footing with Gwalior-based dealers.

- Right to Trade is Not Absolute: The right under Article 19(1)(g) is subject to reasonable restrictions, and this policy qualifies as one in the interest of managing a public event.

Court's Analysis and Ruling

The High Court conducted a thorough analysis of the principles of judicial review and the grounds for challenging a statute's constitutionality. The bench affirmed that a law can be struck down only for lack of legislative competence or for violating a constitutional provision.

The court found that the petitioner's primary grievance was with the resolution, not Section 6 of the Act, which it deemed a procedural provision for vesting management in the Authority.

On the core issue of discrimination, the court held that the policy was a valid exercise of "reasonable classification." It observed: > "Article 14 of the Constitution of India forbids classification, however, it does not forbid reasonable classification... Here, reasonable classification is imperative for the authority to allot shops with discretion otherwise, Trade Fair would loose its sheen and other vendors would not get any space left for display and sale of their products."

The court established a clear nexus between the classification and the objective of the Act—the effective management of the fair. It reasoned that with limited space, the Authority's decision to prioritize brands not available locally was a conscious policy choice to enhance variety and control the event.

The bench also noted the petitioner's territorial sales limitations in its dealership agreement, stating: > "When the dealer itself has sale limitation then dealer cannot be a similarly situated entity vis a vis dealers situated at Gwalior."

Regarding the right to trade under Article 19(1)(g), the court reiterated that this right is not absolute and can be subjected to reasonable restrictions in the public interest, as permitted by Article 19(6). The policy did not prevent the petitioner from conducting its business within its designated territory of Bhopal.

Final Verdict

Finding no merit in the petitioner's claims, the court dismissed the writ petition, upholding both the constitutionality of the Act and the validity of the Authority's resolution.

In its concluding remarks, the court advised the Gwalior Trade Fair Authority to ensure that future allotment of stalls is conducted "fairly and in a transparent manner" and well in advance to avoid inconvenience to vendors.