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PETITIONER: KOTESWAR VITTAL KAMATH

       Vs.

RESPONDENT: K.   RANGAPA BALIGA & CO.

DATE OF JUDGMENT: 09/12/1968

BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA SHELAT, J.M. VAIDYIALINGAM, C.A.

CITATION:  1969 AIR  504            1969 SCR  (3)  40  1969 SCC  (1) 255  CITATOR INFO :  RF         1977 SC 879  (13,14)  D          1986 SC 515  (106)  RF         1988 SC 740  (19)

ACT: Travancore-Cochin  Public Safety Measures Act 5 of 1950,  s. 3-Validity  of--Constitution of India, Art. 304(b)  proviso- Bill introduced in pre-Constitution period-Amended by Select Committee-Moved   again  and  passed  in   post-Constitution period-President’s sanction when  required-Travancore-Cochin Vegetable Oils and Oilcakes (Forward Contracts  Prohibition) Order, 1950--Continuance of.

HEADNOTE: The   Vegetable   Oils  and  Oilseeds   (Forward   Contracts Prohibition) Order. 1119 M.E. prohibiting inter alia forward trading in cocoanut oil, was promulgated by the Maharaja  of Cochin  State in 1944.  The Order continued in  force  under various Cochin Laws including Proclamation 5 of 1122 and Act 8  of 1122.  When the State of Cochin acceded to  India  and the combined State Of Travancore-Cochin was formed, the said proclamation 5 of 1122 and Act 8 of 1122 as also the  orders etc.  passed  thereunder were continued by  the  Travancore- Cochin Administration an Application of Laws Act 6 of  1125. In  exercise of the powers under these laws the  Travancore- Cochin  Government  promulgated  on  8th  March  1950,   the Travancore-Cochin  Vegetable  Oils  and  Oilcakes   (Forward Contracts Prohibition) Order, 1950, whereby the  prohibition against  forward trading in certain oils including  cocoanut oil  was continued.  Then came the Travancore-Cochin  Public Safety  Measures Act 5 of 1950, which with effect from  30th March  1950  repealed  a  number  of  enactments   including Proclamation  5 of 1112 and Act 8 of 1112, but by  s.  73(2) continued the orders etc. passed under the repealed Acts  as if they had been passed under its s. 3. The Bill relating to Act 5 of 1950 was introduced in the State Legislature before the  passing  of  the Constitution, but  thereafter  it  was amended  by the Select Committee, and the amended  Bill  was moved  in  and  passed  by  the  Legislature  in  the  post- Constitution  period.   By  Amending Act  52  of  1950,  the

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Essential  Supplies  (Temporary Powers) Act 24 of  1946  was extended  to Part B States, and became effective  in  Cochin area  from  August  17, 1950.  Section  17(4)  of  the  last mentioned  Act  replealed Act 5 of 1950, but  continued  the orders etc passed thereunder. In  1952  the  appellant  entered  into  contracts  for  the purchase of cocoanut oil on one month’s ’vaida’ through  the agency  of  the  respondent who was  a  Pakka  Adatia.   The contracts  were  entered into in  territory  which  formerly formed  part  of the State of Cochin.  On the due  date  the appellant failed to take delivery of the goods or to pay the difference  in price whereupon the respondent filed  a  suit for damages.  The appellant’s defence was that the contracts in  question, being forward contracts were in  contravention of  the  Prohibition Order of 1950 and  therefore  void  and unenforceable.   The  trial court -and High  Court  rejected this  contention and decreed the suit.  The High Court  took the  view that the earlier laws under which the  Prohibition Order of 1950 was passed were repealed by Act 5 of 1950  and the Orders thereunder could not be deemed to continue  under s.  3  of the latter Act because that section Was  void  for non-compliance  with  the  proviso to  Art.  304(b)  of  the Constitution.   In appeal by certificate to this  Court  the questions that fell for                              41 consideration  were : (i) whether the Prohibition  Order  of 1950  was  void  on the -round that  it  dealt  with  future markets  on  which Parliament had the,  exclusive  power  to legislate;  (ii) whether s. 3 of Act 5 of 1950  fell  within the scope of Art. 304(b) of the Constitution; (iii)  whether sanction of the President was required under the proviso  to Art.  304(b)  when the Bill relating to Act 5  of  1950  was moved  in the Legislature after having been amended  by  the Select Committee. HELD  :  (i)  In the present case it was  not  necessary  to express any opinion on the question whether the  Prohibition Order  of 1950 was void for want of legislative  competence, for  if it was void it would have to be treated as  non  est and the earlier Prohibition Order of 1119 would continue  in force right up to 30th March 1950.  Consequently on the 30th March  1950  either  the  Prohibition  Order  1119  or   the Prohibition Order of 1950 must be held to have been in force in  Travancore-Cochin and to have continued in  force  under Act 5 of 1950. [47 C-E; 48 E-G] Waverly Jute Mills Co. Ltd. v. Raymon & Co. (India)  Private Ltd., [1963] 3 S.C.R. 209, referred to. Firm A. T. B. Mehtal Majid & Co. v. State of Madras &  Anr., [1963] Supp. 2 S.C.R. 435, distinguished (ii) An order prohibiting Forward contracts would clearly be an  order  prohibiting a class  of  commercial  transactions relating  to an essential article which in the present  case was  cocoanut  oil.   The conferment of  power  on  a  State Government  to  prohibit such transactions  clearly  permits imposition  of  restrictions  on the  freedom  of  trade  or commerce and therefore falls within the scope of cl. (b)  of Art. 304 of the Constitution. [49 E-F] (iii)     The High Court was wrong in holding that the  Bill relating to Act 5 of 1950 was again introduced and moved  in the legislature after being amended by the Select Committee. Once  the  Bill was introduced was referred  to  the  Select Committee.   There  was therefore no question  of  the  Bill being introduced again after the  Select Committee had  sub- mitted its report. [50 C-H] The High Court was also wrong in holding that a Bill  within the purview of Art. 304(b) cannot be moved without the prior

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sanction of the President.  In the relevant articles of  the Constitution  whatever prohibition is laid down  relates  to the introduction of a Bill in the Legislature.  There is  no reference  at  any stage to a Bill being moved in  a  House. The language thus used in the Constitution clearly points to the interpretation that in the proviso to Art. 304 the  word ’introduced’  refers  to the Bill, while  the  word  ’moved’ refers to the amendment. [52 B-C] The proviso to Art. 304(b) will have to be complied with  at the  initial stage of the introduction of the Bill if it  is applicable  at  that  stage,  whereas  compliance  will   be required  either at the stage when amendments are  moved  in the  Select Committee, or when the Bill with  amendments  as reported  by the Select Committee is moved in the House  for consideration,  it  any amendment is covered  by  Art.  304, because  of the requirement that no amendment can  be  moved without the previous sanction of the President. [54 D] (iv) In  the present case the original introduction  of  the Bill was valid because at that stage the proviso to Art. 304 was not in force at all as Sup CI/69- -4 42 the  Constitution  had,  not  yet  come  into  force;  while subsequently  when  the  Bill  was  pending  in  the   State Legislature  no  amendment  was moved in  respect  of  which sanction  of the President was required under  the  proviso. Section 3 of Act 5 of 1950 was passed by the House as it was contained  originally  in the validly  introduced  Bill  and cannot,  therefore,  be held to be void  for  non-compliance with  the  proviso to Art. 304.  This  section  being  valid either  the  Prohibition Order of 1119  or  the  Prohibition Order of 1950, must be held to be validly continued in force by  this  Act 5 of 1950 and to have continued to  remain  in force  thereafter  under  the proviso to  s.  17(4)  of  the Essential Supplies (Temporary Powers) Act 24 of 1946.  Under either of these orders the transactions entered into between the appellant and the respondent were prohibited and  having been  entered into against the provisions of law,  no  party could  claim any rights in respect of the contracts  in  the suit. [54 D-C]

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeal No. 693 of 1965. Appeal from the judgment and decree dated August 9, 1963  of the Kerala High Court in Appeal Suit No. 153 of 1959. M.   C. Chagla and R. Gopalakrishnan, for the appellant. H.   R. Gokhale, R. V. Pillai and Subodh Markandeya, for the respondent. The Judgment of the Court was delivered by Bhargava,  J. This appeal by certificate has been  filed  by Koteswar  Vittal Kamath who was defendant in  Original  Suit No.  12 of 1958 instituted in the Court of  the  Subordinate Judge,  Cochin,  by the  respondent-plaintiff,  K.  Rangappa Baliga  &  Co.,  for  recovery  of  damages  for  breach  of contracts  in respect of goods, purchased by the  respondent on  behalf of the appellant, of which the appellant  refused to take delivery on the due dates.  There is no dispute that the respondent was carrying on business as commission agents and  was  governed by the trade usage known as  Pakka  Aadat System, and the appellant under the same System was  placing orders  with the respondent for purchase of goods.   In  the course of these dealings, the appellant placed three  orders for purchase of 100 candies of cocoanut oil for one  month’s

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vaida’  and,  in  accordance with those  three  orders,  the respondent  purchased 100 candies of cocoanut oil  on  three different dates, 14th February, 1952 (a) Rs. 455 per  candy, 16th  February,  1952  @  Rs. 477/8/-  per  candy  and  18th February,  1952 @ Rs. 432/8/- per candy.  The  period  fixed for  delivery under these contracts was one month,  so  that the  due dates for performance of the contracts  were  15th, 17th  and  19th  March, 1952  respectively.   The  appellant refused to take delivery of the goods on the due dates.   It appears  that  the closing market rates on those  due  dates were Rs. 330, Rs. 335 and Rs. 352/8/- respectively 4 3 which  were much lower than the prices at which  these  con- tracts   had  been  entered  into  a  month  earlier.    The respondent,  therefore,  instituted the  suit  claiming  the difference  in  the two, sets of prices by  way  of  damages together with the usual commission and brokerage. The  suit was resisted on various grounds, but we  are  con- cerned  with one of those grounds which has  been  canvassed before us in this appeal.  This plea taken on behalf of  the appellant  was that all these three contracts  were  Forward Contracts and were void and unenforceable, because they were made  in contravention of the prohibition contained  in  the Travancore  Cochin  Vegetable  Oils  and  Oilcakes  (Forward Contract  Prohibition) Order, 1950 (hereinafter referred  to as  "the  Prohibition Order of 1950").  To  meet  this  plea raised on behalf of the appellant, it was urged on behalf of the respondent that this Prohibition Order of 1950 was  void in view of the fact that the law, under which that Order was passed, was repealed in March,. 1950 and its continuance  by the  repealing  law did not save its validity,  because  the provision of that law, under which it was deemed to continue in  force, was itself void.  We shall presently  explain  in detail the situation as to the laws relating to this subject which prevailed in Travancore-Cochin from time to time;  but it  may here be mentioned that this plea of  the  respondent was accepted by the trial Court as well as the High Court of Kerala.  As a result of this view taken by those courts, the suit  for damages was held to be maintainable, so  that  the trial  Court decreed the suit for a sum of Rs.  18,750  with interest  thereon at 6 per cent per annum, and  that  decree was  upheld by the High Court.  It is against this  decision of  the High Court that the present appeal has been  brought to  this Court; and the only question argued before  us  has been  confined to the validity of the contracts, the  breach of  which was the cause of’ action for the claim of  damages by the respondent. The contracts, which were the subject-matter of the dispute, were entered into between the parties at Mattancherry  which was  situated in the territory of Cochin State before  India achieved  Independence.   On the 18th  February,  1940,  the Maharaja  of Cochin, who was exercising sovereign powers  in the  State, made a Proclamation No. 8 of 1115  applying  the provisions  of  the  Defence of India Act  No.  35  of  1939 together  with the rules and all amendments to the  Act  and the  rules  mutatis  mutandis  in  Cochin  State.    Another provision  in the Proclamation also brought into  force  all the  rules  and notifications issued under  the  Defence  of India  Act.  There was also a provision that even the  rules or notifications issued in future would automatically  apply in the State.  Under the Defence of India Act and the 44 rules   framed  thereunder,  Vegetable  Oils  and   Oilcakes (Forward  Contracts Prohibition) Order, 1944 was  passed  by the  territory  of  British India and,  consequently,  as  a

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result of Proclamation 8 of 1115, it came into force in  the State of Cochin.  Subsequently, however, the Maharaja, under that  Proclamation 8 of 1115, passed the Vegetable Oils  and Oilcakes   (Forward  Contracts  Prohibition)   Order,   1119 (hereinafter referred to as "the Prohibition Order of 1119") on  the 14th April, 1944.  This Order, thus, superseded  the earlier  Order which had been passed for British  India  and which  had become applicable in Cochin State as a result  of Proclamation  8 of 1115.  The Prohibition Order of 1119,  in clause  3,  laid  down  that "no  person  shall,  after  the specified date for any article to which this Order  applies, enter into any forward contract in that article." The  Order applied, inter alia, to cocoanut oil, which was the subject- matter  of the three contracts, the breach of which was  the cause  of  action  in the suit.   Thereafter,  on  the  27th September,   1946,  the  Maharaja  promulgated  the   Cochin Essential   Articles  Control  and   Requisitioning   Powers Proclamation  3  of  1122,  and  under  clause  9  of   this Proclamation,  the  orders  already  made  by  the   ,Cochin Government  under  the Defence of India Act  and  Rules,  as applied by Proclamation 8 of 1115, were continued in  force, so that the Prohibition Order of 1119 continued to remain in force.  On the same date, the Maharaja also promulgated  the Temporary  Emergency (Powers) Proclamation 5 of  1122,  and, under  clause 2 of this Proclamation, the Defence  of  India Act  and the Rules were continued in force in the  State  of Cochin  together  with all orders and  notifications  issued under  the provisions of that Act and the Rules.   This  was followed  by  the  ,Cochin Essential  Articles  Control  and Requisitioning  Powers Act 8 of 1122 promulgated on the  4th January, 1947.  Under section 9 of this Act, again, all  the rules  and  orders made under the Defence of  India  Act  or under  the  Rules were continued in force in  the  State  of Cochin.   This was the position of the law in the  State  of Cochin before India achieved Independence. Subsequently,  the  State of Cochin acceded to India  and  a combined  State  of Travancore-Cochin came  into  existence. Thereafter, the Travancore-Cochin Administration and  Appli- cation of Laws Act 6 of 1125 was passed and came into  force in  the  State of Travancore-Cochin with  effect  from  28th December,   1949.   This  Act  defined  "Existing   law   of Travancore"  and  "Existing  law  of  Cochin".   The  latter expression included "any Proclamation, Act, law, order, bye- law,  rule,  regulation  or notification  in  force  on  the appointed  day (which was 1st July, 1949) in any portion  of the  territories  of the State  of  Travancore-Cochin  which immediately before the appointed day formed the territory of the State of Cochin.  By section 4(1) of this Act, 45 the  existing laws of Cochin were continued in  force  until altered,  amended,  or repealed by the  Legislature  of  the State  of Travancore-Cochin or other competent authority  in that portion of the territories of the State of  Travancore- Cochin which previously formed the territory of the State of Cochin.   Thus,  under  this Act,  the  Temporary  Emergency (Powers)  Proclamation 5 of 1122, and the  Cochin  Essential Articles Control and Requistioning Powers Act 8 of 1122 were continued  in  force.  At the same time, the  Public  Safety Measures  Ordinance 5 of 1125 was also promulgated.  It  was in  exercise of the powers conferred by these laws that  the Travancore-Cochin  Government  promulgated  the  Prohibition Order  of  1950  on  the  8th  March,  1950.   Lastly,   the Travancore-Cochin  Public  Safety  Measures Act  5  of  1950 (hereinafter referred to as "Act 5 of 1950") came into force on the 30th March, 1950.  This Act, by s. 73(1), repealed  a

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number   of  enactments,  including  the  Cochin   Temporary (Emergency Powers) Proclamation 5 of 1122, and the Essential Articles.  Control and Requisitioning Powers Act 8 of  1122. However,  the order passed under those Acts or continued  by those  Acts  were,  by s. 73(2) of Act 5  of  1950,  further continued  in force and were to be deemed to have been  made and were to have effect as if they had been made under  this Act  5 of 1950.  The provision, under which they were to  be deemed to be made and to have effect, was section 3 of  this Act.  It was in these circumstances that the validity of  s. 3 of Act 5 of 1950 was challenged in the trial Court and  in the  High  Court.  The High Court has declared s.  3  to  be void,  while  holding that s. 73 is valid.  The  High  Court concluded   as  a  result  that  the  various   orders   and notifications, including the Prohibition Orders of 1119  and 1950.  ceased  to  be  in  force,  so  that  there  was   no prohibition at all invalidating forward contracts after  the 30th  March, 1950.  It was on this view that the  contracts, which  were the basis of the claim of the  respondent,  were held  to be valid justifying the passing of the  decree  for damages  for  breach of those contracts.  The  question,  in these  circumstances, which falls for determination in  this appeal  is whether the High Court was right in holding  that s. 3 of Act 5 of 1950 is void. In this connection, our attention was also drawn by  learned counsel  for  the  -appellant  to  the  Essential   Supplies (Temporary  Powers) Act 24 of 1946, to which  reference  was not  made  by the High Court.  This Act was amended  by  the Essential  Supplies (Temporary Powers) Amendment Act  52  of 1950 and a new sub-section (4) was introduced in section  17 to the following effect :-               " (4) If immediately before the day, on  which               this  Act comes into force in a Part B  State,               there is in force 46               in  that  State any law which  corresponds  to               this Act, such corresponding law shall on that               day stand repealed in so far as it relates  to               any  of the essential commodities governed  by               this Act :               Provided  that  any order made  and  in  force               immediately before that day in the said  State               shall continue in force and be deemed to be an               order   made   under   this   Act,   and   all               appointments   made,   licences   or   permits               granted, and directions issued, under any such               order and in force immediately before that day               shall  likewise  continue  in  force,  and  be               deemed  to  be  made,  granted  or  issued  in               pursuance of this Act." The Essential Supplies (Temporary Powers) Act 24 of 1946, by the same Amending Act 52 of 1950, was extended to the  whole of  India  except the State of Jammu & Kashmir, but  with  a direction that it shall come into force in a Part B State to which  the  Act  extends only on such date  as  the  Central Government  may,  by notification in the  Official  Gazette, appoint in this behalf, and different dates may be appointed for  different  Part B States.  In exercise  of  this  power conferred  on  the Central Government,  a  notification  was issued on 17th August, 1950, S.R.O. 391 appointing 17th  day of  August, 1950 as the date on which that Act was  directed to  come  into  force  in all Part  B  States  to  which  it extended.  This notification was published in the Gazette of India Extraordinary Part II-section 3. The result was  that, under  the  principal clause of S. 17(4) of this Act  24  of

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1946, Act 5 of 1950, which was in force in Travancore-Cochin on the 17th August, 1950, stood repealed; but rules,  orders and  notifications  under that Act, or  which  continued  in force  under  that Act, were to further  continue  in  force under the proviso to S. 17(4) notwithstanding the repeal  of Act  5 of 1950.  Thus, in the year 1952, when the  contracts in suit were entered into, the Essential Supplies (Temporary Powers) Act 24 of 1946 wasin  force in Travancore-Cochin and only those orders made earlier could be held to be effective which  had been continued by this Act and the previous  Acts applicable in that State. The  question  of  validity  of  the  contracts,  in   these circumstances,   will  clearly  depend  on  whether   future contracts  in  cocoanut oil were prohibited by  any  law  or orders  or  notifications which continued in force  in  1952 after  the Essential Supplies (Temporary Powers) Act  24  of 1946  had come into force in the State of  Travancore-Cochin on  17th August, 1950.  This opens the question whether  any prohibitory  order was validly in force on the 17th  August, 1950.   In turn, the answer to this question will depend  on whether  a  valid  prohibitory order was in  force  on  30th March, 1950 which could continue in force under S.                              47 73(2)  of Act 5 of 1950.  The only two  earlier  prohibitory orders   were  the  Prohibition  Order  of  1119   and   the Prohibition  Order  of 1950.  On this aspect,  reliance  was placed on behalf of the respondent on the circumstance that, under  Entry  48 of List 1 of the Seventh  Schedule  to  the Constitution,  the  Parliament had the  exclusive  power  to legislate  on  the  subject of stock  exchanges  and  future markets,  and  this Court has already held in  Waverly  Jute Mills Co. Ltd. v. Raymon & Co. (India) Private Ltd.(1)  that a legislation on Forward Contracts would be a legislation on future  markets,  so  that  a  State  Legislature.  is   not competent to legislate in respect of Forward Contracts under its  power of legislation conferred by Entry 26 of  List  II which  relates to trade and commerce within the  State.   On this basis, it was argued that the State Government, on  8th March,  1950,  was not competent to  issue  the  Prohibition Order  of  1950, as that Order was very clearly a  piece  of legislation on forward contracts.  It appears to us that, in the  present case, we need not express any final opinion  on this  question.   If  it  is held  that  the  Government  of Travancore-Cochin  was  competent to pass  this  Prohibition Order of 1950, because the power was derived under Act 8  of 1122  which was validly in force in the State on 8th  March, 1950, then that would be- the Order which would continue  in force under s. 73 (2) of Act 5 of 1950.  On the other  hand, if   it  be  held  that  the  State  Government  could   not competently  pass the Prohibition Order of 1950, because  it was a piece of legislation on forward contracts, that  Order would  have to be treated as void and non  est.   Thereupon, the  earlier  Prohibition Order of II 19 would  continue  in force  right  up  to 30th March, 1950.  Act 8  of  1122  had continued  in force the Prohibition Order of 1119  with  the qualification  that it was to remain in force until  it  was superseded or modified by the competent authority under  the provisions of this Act 8 of 1122.  When the Prohibition  Or- der  of 1950 was purported to be issued on 8th March,  1950, it  was  not  laid down that it was being issued  so  as  to supersede the earlier Prohibition Order of 1119.  If it  had been a valid Order, it would have covered the same field  as the  Prohibition  Order of 1 1 19 and,  consequently,  would have  been  the effective Order under which the  rights  and obligations  of  parties had to be governed.  On  the  other

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hand, if it be held to be void, this Order will not have the effect  of  superseding the earlier Order of  1119.  Learned counsel   for  the  respondent,  however,  urged  that   the Prohibition  Order of 1119 cannot, in any case, be  held  to have continued after 8th March, 1950, if the principle  laid down  by  this Court in Firm A.T.B. Mehtab Majid  &  Co.  v. State of Madras and Another ( 2 ) is applied.  In that case, rule  16  of  the  Madras  General  Sales  Tax  (Turnover  & Assessment) Rules, (1) [1963] 3S.C.R.209. (2) [1963] Supp. 2S.C.R.435. 48 1939 was impugned.  A new r. 16 was substituted for the  old r. 16 by publication on September 7, 1955, and this new rule was  to be effective from 1st April, 1955.  The  Court  held that the new r. 16(2) was invalid, because the provisions of that  rule contravened the provisions of Art. 304(a) of  the Constitution.   Thereupon,  it was urged  before  the  Court that, if the impugned rule be held to be invalid, the old r. 16  gets revived, so that the tax assessed on the  basis  of that rule will be good.  The Court rejected this  submission by holding that :               "Once the old rule had been substituted by the               new  rule, it ceases to exist and it does  not               automatically get revived when the new rule is               held to be invalid." On  that  analogy, it was argued that, if we hold  that  the Prohibition   Order  of  1950  was  invalid,  the   previous Prohibition  Order  of 1119 cannot be held  to  be  revived. This  argument ignores the distinction between  supersession of a rule, and substitution of a rule.  In the case of  Firm A. T.B. Mehtab Majid & Co(1), the new r. 16 was  substituted -for the old r. 16.  The process of substitution consists of two  steps.  First, the old rule is made to cease  to  exist and,  next,  the new rule is brought into existence  in  its place.   Even if the new rule be invalid, the first step  of the old rule ceasing to exist comes into effect, and it  was for this reason that the Court held that, on declaration  of the  new rule as invalid, the old rule could not be held  to be   revived.   In  the  case  before  us,  there   was   no substitution  of  the  Prohibition Order  of  1950  for  the Prohibition  Order of 1119.  The Prohibition Order  of  1950 was  promulgated independently of the Prohibition  Order  of 1119, and because of the provisions of law it would have had the   effect  of  making  the  Prohibition  Order  of   1119 inoperative   if  it  had  been  a  valid  Order.   If   the Prohibition Order of 1950 is found to be void ab initio,  it could never make the Prohibition Order of 1119  inoperative. Consequently,   on   the  30th  March,  1950,   either   the Prohibition  Order of 1119 or the Prohibition Order of  1950 must be held to have been in force in Travancore-Cochin,  so that  the provisions of s. 73 (2) - of Act 5 of  1950  would apply  to that Order and would continue it in  force.   This further continuance after Act 5 of 1950, of course,  depends on  the validity of section 3 of Act 5 of 1950,  because  s. 73(2)  purported to continue the Order in force  under  that section, so that we proceed to examine the argument relating to the validity of s. 3 of Act 5 of 1950. The  validity  of this section is challenged on  the  ground that it is hit by the prohibition laid down in clause (b) of Art.  304  of the Constitution and is not protected  by  the proviso  to that article.  The relevant provisions  of  that article are as follows (1)  [1963] Supp. 2 S.C.R. 435. 49

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             "304.  Notwithstanding anything in article 301               or article 303, the Legislature of a State may               by law-               (a)...............................................;a nd               (b)impose such reasonable restrictions on  the               freedom  of  trade, commerce  or  inter-course               with  or within that State as may be  required               in the public interest :               Provided  that  no Bill or amendment  for  the               purposes of clause (b) shall be introduced  or               moved  in the Legislature of a  State  without               the previous sanction of the President." The  first point that was urged by learned Counsel  for  the appellant  was  that s. 3 of Act 5 of 1950 did  not  require compliance  with the proviso, because it was not a piece  of legislation for purposes of clause (b) of Art. 304; but  -we are  unable  to  see any force in this  submission.   It  is enough  to refer to clause (f) of section 3(2) which is  the provision  under  which  a  Prohibition  Order  relating  to Forward   Contracts   could  have  been  passed,   and   the Prohibition  Order of 1119 or the Prohibition Order of  1950 can  be held to be continued in force.  Under s. 3 (2)  (f), power is conferred on the State Government to make an  order which may provide for regulating or prohibiting any class of commercial   or  financial  transactions  relating  to   any essential  article which, in the opinion of the  Government, are,  or  if unregulated are likely to  be,  detrimental  to public  interest.   An Order prohibiting  Forward  Contracts would clearly. be an Order prohibiting a class of commercial transactions relating to an essential article which, in this case, was cocoanut oil.  The conferment of power on a  State Government  to  prohibit such transactions  clearly  permits imposition  of  restrictions  on the  freedom  of  trade  or commerce  and, therefore, falls within the scope  of  clause (b) of Art. 304 of the Constitution.  This argument advanced on behalf of the appellant must, consequently, be  rejected. However,  the  question that has to be further  examined  is whether this Act 5 of 1950 was void, because the  provisions of  the proviso to Art. 304 were attracted and the  Act  was passed  without  complying  with  the  requirements  of  the proviso. It appears that the Bill, which emerged ultimately as Act  5 of 1950, was first introduced in the Legislative Assembly of the  State  on 13th December, 1949, and was  referred  to  a Select Committee on 14th December, 1949.  That was at a time when the Constitution had not come into force and there  was no  requirement  under the Government of  India  Act,  1935, which  was  applicable,  similar to that laid  down  by  the proviso to Art. 50 304.  The Bill was subsequently modified and  re-drafted  by the  Select Committee and was presented before the  Assembly on  23rd  March, 1950 after the Constitution had  come  into force.  The Minister-in-charge moved that the Bill be  taken into   consideration,  whereupon  discussion  on  the   Bill proceeded and it was finally passed by the Assembly on  29th March, 1950.  The Bill received the     assent  of  the  Raj Pramukh of the State and was brought into    force,   having been published by notification dated 30th March,  1950.  The point urged on behalf of the appellant was that the    Bill was  introduced in the State Legislature on a date prior  to the  date of the Constitution when Art. 304 and the  proviso to it had not come into force, so that no prior sanction  of the  President  was required for introduction of  the  Bill.

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The Bill having been validly introduced remained pending  in the  State  Legislature under Art. 389 and  the  proceedings taken  in the Legislature before the Constitution came  into force  were  to  be  deemed  to  have  been  taken  in   the Legislature  of  the State which became seized of  the  Bill after  the enforcement of the Constitution.  It was  further urged  that no amendment was moved in the State  Legislature after the Constitution came into force which could be hit by the   restriction   laid  down  in  Art.   304(b)   of   the Constitution.  The material provisions, including section  3 were  enacted  in the original form in which  the  Bill  had already  been  introduced  in  December,  1949.   In   these circumstances,  it was submitted that no occasion arose  for complying  with the requirements of the proviso.   The  Bill was validly introduced without the previous sanction of  the President  and no amendment was moved subsequently  to  that Bill   requiring   the  President’s   sanction   after   the Constitution  came  into  force, so that Act 5  of  1950  as passed  by the Legislature on 29th March, 1950  and  brought into force on 30th March, 1950 cannot be held to be void for non-compliance with the requirements of the proviso to  Art. 304. On behalf of the respondent, however, reliance was placed on the  view expressed by the High Court in the judgment  under appeal  that  the  mere fact that the  Bill  was  originally introduced  on a date prior to the date of the  Constitution will  not  save s. 3 from the operation of  the  proviso  to clause  (b) of Art. 304.  The High Court relied on the  fact that it was only subsequent to the coming into force of  the Constitution that the Bill in its final form as redrafted by the  Select Committee was introduced and moved in the  State Legislature.  We are unable to accept the view taken by  the High  Court.   Once  the  Bill  was  validly  introduced  in December, 1949, it remained pending in the Legislature  even when  it was referred to the Select Committee.   There  was, therefore, no question of the Bill being introduced again 51 after the Select’ Committee had submitted its report.   Even if  the  Bill  was  modified and  redrafted  by  the  Select Committee,  that will make no difference.  That would  be  a modification and redrafting of the Bill at a stage when  the Bill  was  still pending in the Legislature, so  that  there would be no fresh introduction of the modified or  redrafted Bill. The  High Court, in this connection, relied on  two  earlier decisions   of  the  same  Court  in  George  v.  State   of Travancore-Cochin,(1) and State v. Philipose Philip(2).   In fact,  the  High Court, in the present case,  expressed  its decision in almost the same language as was contained in the case of George v. State(1).  In the second case of State  v. Philipose   Philip  (2  )   this  aspect  was  not   clearly discussed.  The point, however, was considered in detail  by a  Full  Bench  of that High Court in  Ulahannan  Mathai  v. State(3).   The  High Court interpreted the  expression  "No Bill  or  amendment  shall be introduced or  moved"  in  the proviso  as  requiring  that  the  Bill  should  neither  be introduced  nor  moved  without the prior  sanction  of  the President, and, since in the case of Act 5 of 1950, the Bill was  moved for consideration, without the prior sanction  of the  President, on 23rd March, 1950, after the  Constitution had come into force, there had been non-compliance with  the proviso.   The  Court rejected the  contention  put  forward before it that what the proviso really stipulates is that no Bill  "shall  be  introduced" or "amendment  moved"  in  the Legislature of a State without the previous sanction of  the

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President.   That argument was advanced on the basis of  the maxim  ’Reddendo  singula  singulis’  which,  according   to Black’s Interpretation of Laws, means :               "Where  a  sentences  in  a  statue   contains               several an tecedents and several consequences,               they are to be read distributively; that is to               say,  each  phrase  or  expression  is  to  be               referred to its appropriate object." The  Court  based  its decision on the  view  that,  if  the interpretation  urged  before it was accepted, it  would  be possible to introduce a Bill which required no  Presidential sanction, get it amended by a Select Committee in such a way as  to make it require the Presidential sanction in case  it was originally introduced in the amended form and then  pass it  into  law, and thus escape the necessity for  the  prior Presidential   sanction   provided  by  Art.  304   of   the Constitution.   It was held that there can be no doubt  that such  a result could never have been intended by the  makers of the Constitution.  In our opinion, the High Court did not correctly  appreciate  the position.  The  language  of  the proviso cannot be interpreted in the manner accepted by  the High Court (1) A.I.R. 1954 Tra-Co. 34.          (2) A.I.R. 1954 Tra-Co. 257. (3)  A.I.R. 1955 Tra-Co. 82. 52 without  doing  violence to the rules of  construction.   If both the words "introduced" or "moved" are held to refer  to the Bill, it must necessarily be held that both those  words will also refer to the word "amendment".  On the face of it, there  can  be  no question  of  introducing  an  amendment. Amendments  are  moved and then, if accepted by  the  House, incorporated  in  the Bill before it is  passed.   There  is further  an  indication  in  the  Constitution  itself  that wherever  a  reference  is made to a  Bill,  the  only  step envisaged  is  introduction  of  the  Bill.   There  is   no reference  to  such  a  step as a  Bill  being  moved.   The articles,  of which notice may be taken in this  connection, are  Articles  109,  114, 117, 198 and 207.   In  all  these Articles,  whatever prohibition is laid down relates to  the introduction  of  a Bill in the Legislature.   There  is  no reference  at  any stage to a Bill being moved in  a  House. The language thus used in the Constitution clearly points to the  interpretation that,- even in the proviso to Art.  304, the  words "introduced" refers to the Bill, while  the  word "moved" refers to the amendment. So far as the danger of evasion of this proviso envisaged by the High Court is concerned, it appears that the High  Court ignored the circumstance that, even when the Bill is  before a Select Committee, it continues to be pending in the House, so that, if it is modified or redrafted, there is  amendment of  the: Bill at that stage.  If an amendment is  introduced at that stage while it is under consideration of the  Select Committee,  the  proviso may become applicable  and,  for  a valid proposal to introduce such an amendment in the  Select Committee,   prior  sanction  of  the  President  will   be- necessary. In  this  connection,  we may take notice of  the  Rules  of Procedure  and Conduct of Business in Lok Sabha, because  we have  been assured by learned counsel for parties  that  the Rules of Procedure for the State Legislature in  Travancore- Cochin  were  similar.   The  Rules  of  Procedure  we   are referring  to are those which were adopted by the Lok  Sabha on  28th  March,  1957.   Rules  64  to  73  deal  with  the introduction  and publication of Bills, and Rules 74  to  78

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with motions after introduction of Bills.  Rules relating to amendments  to clauses, etc. and consideration of Bills  are Nos.  79  to  92.  Rule 65(2) ensures  compliance  with  the proviso  to  Art.  304  of  the  Constitution  where  it  is applicable by laying down that:               "If  the  Bill  is  a  Bill  which  under  the               Constitution cannot be introduced without  the               previous  sanction  or recommendation  of  the               President,  the  member  shall  annex  to  the               notice   such   sanction   or   recommendation               conveyed  through a Minister, and  the  notice               shall  not be valid until this requirement  is               complied with." 53 Similarly,  Rule  81  deals  with  the  procedure  when   an amendment is moved by laying down that :               "If  any member desires to move  an  amendment               which  under the Constitution cannot be  moved               without     the    previous    sanction     or               recommendation  of  the  President,  he  shall               annex  to the notice required by  these  rules               such   sanction  or  recommendation   conveyed               through a Minister and the notice shall not be               valid  until  this  requirement  is   complied               with." Thus, the requirement of previous sanction of the  President under  the  proviso  to  Art. 304 has  to  be  satisfied  by producing the sanction either before introducing the Bill or before moving the amendment, as the case may be. Rules relating to Select Committees on Bills are Nos. 298 to 305,  amongst  which Rule 300 is of importance  and  may  be reproduced : "300.  (1)  If notice of a proposed amendment has  not  been given before the day on which the Bill is taken   up by  the Select Committee, any membermay object  to the moving of the amendment and -such objection shall   prevail   unless   the Chairman allows the amendment to be moved. (2) In other respects, the procedure in a Select  Committee shall, as far as practicable, be the same as is followed  in the  House  during the consideration stage of a  Bill,  with such  adaptations, whether by way of modification,  addition or  omission,  as  the Speaker  may  consider  necessary  or convenient." This Rule makes it clear that, before a Bill can be modified or redrafted by the Select  Committee, amendments have to be moved by the members of the Committee and when any amendment is moved, the    procedure in the Select Committee is to  be the   same   as  is  followed  in  the  House   during   the consideration stage of a Bill as far as practicable,  though subject  to  such adaptations as the  Speaker  may  consider necessary or convenient. This Rule, thus, envisages that the requirement of r. 81 in  respect  of an amendment  moved  in the  House  will  have to be complied with  when  a  similar amendment  is moved in the Select Committee Learned  counsel appearing for the respondent urged that, in interpreting  r. 300, we should not enlarge its scope so as to include in  it the applicability of such Rules as r. 81 which, according to him, can only be attracted when an amendment is moved in the House  of  the Legislature itself. Even if  this  submission were  to be accepted by us, it appears that it will  not  be possible  to evade the applicability of the proviso to  Art. 304, because, when the Bill as reported by the Select 54 Committee  comes  before the House again,  the  Minister-in- charge  or the member moving the Bill will have to move  the

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Bill for consideration in the House.  At that stage, when he moves  the  Bill  for  consideration of  the  House  in  the modified or redrafted form the move made by him will  amount to moving the original Bill with the amendments reported  by the Select Committee.  In such a case, obviously r. 81 would apply at that stage, so that, before the modified or amended Bill  is moved in the House for consideration, the  sanction of   the  President  will  have  to  be  produced   if   the modification  or redraft has the result of incorporating  an amendment  covered  by the proviso to Art.  304.   In  these circumstances,  we  do not think that the  language  of  the proviso requires to be interpreted in the manner accepted by the  Full  Bench of High Court of Travancore-Cochin  in  the case of Ulahannan Mathai v. State(1).  The proviso will have to be complied with at the initial stage of the introduction of  the  Bill  if it is applicable at  that  stage,  whereas compliance  will  be  required  either  at  the  stage  when amendments  are moved in the Select Committee, or  when  the Bill  as  reported by the Select Committee,is moved  in  the House for consideration, because of the requirement that  no amendment can be moved without the previous sanction of  the President.   In the present case, the original  introduction of  the Bill was valid, because, at that stage, the  proviso to Art. 304 was not in force at all as the Constitution  had not yet come into force; while, subsequently, when the  Bill was pending in the State Legislature, no amendment was moved in  respect of which sanction of the President was  required under the proviso. Section 3 of Act 5 of 1950 was passed  by the  House  as it was contained originally  in  the  validly introduced  Bill and cannot, therefore, be held to  be  void for noncompliance with the proviso to Art. 304. This section being  valid,  either the Prohibition Order of 1119  or  the Prohibition Order of 1950 must be held to have been  validly continued  in  force  by  this Act 5 of  1950  and  to  have continued to remain in force thereafter under the proviso to s. 17(4) of the Essential Supplies (Temporary Powers) Act 24 of 1946. Under either of those   Orders,  the   transactions entered  into between the appellant and the respondent  were prohibited  and,  having  been  entered  into  against   the provisions of law, no party can claim any rights in  respect of the three contracts in suit.   The claim for damages  for breach  of  those contracts by the  respondent  against  the appellant was, therefore, not maintainable.      The   appeal  succeeds  and  is  allowed   with   costs throughout. The decree passed by the High Court is set aside and the suit is dismissed. G.C.                                 Appeal allowed. (1)  A.I.R. 1955 Tra-Co. 82. 5 5