25 March 1964
Supreme Court


Case number: Appeal (civil) 429 of 1962






DATE OF JUDGMENT: 25/03/1964


CITATION:  1964 AIR 1781            1964 SCR  (7) 456  CITATOR INFO :  RF         1967 SC 997  (22,34,45,51)  R          1989 SC2105  (7)

ACT: Madras  Essential  Arcticales  Control   and  Requisitioning (Temporary)  Powers  Act, 1949 (Mad. 29 of 1949),  ss.  3(1) (2)Applicability  of  the  Act to  electricity  supplied  by State-Intention  of Legislature,  consideration  of-Notified orders enhancing agreed rate by State-Whether valid under s. 3-Regulate, meaning of-Increase of tariff-If reasonable  and in  interest of general public-Whether contravenes Arts.  14 and  19(1)-Constitution of India, Arts. 14 and 19(1)(g)  and (f).

HEADNOTE: Electricity  was supplied to the appellants by  the  respon- dent-state  for  many  years past,  and  several  individual agreements  were passed between them prescribing  the  terms and   conditions  for  the  supply.   One  of  these   terms stipulated  the rate at which the supply had to be  charged. These  agreements did not contain any provision  authorising the State to increase the rates during their operation.  The respondent-state  issued two notified orders  enhancing  the agreed  rates.   The orders indicated that the  main  reason which   inspired   the  increase  was  that   the   existing electricity  tariffs  which were  formulated  several  years before,   had   become  completely  uneconomic   and   meant continuously  growing loss to the State.  A large number  of consumers  challenged the validity of the two orders in  the High Court under Art. 226.  The writ petitions were  allowed and the respondent was restrained from enforcing the revised rates.  These decisions were challenged by the respondent by appeals  in the High Court, which took a different view  and dismissed the writ petitions.  On appeals to this Court,  it was  contended,  inter  alia  that  the  respondent  had  no authority to increase the rate changing this important  term of the contract by taking recourse to s. 3(1) of the  Madras Essential  Articles Control and  Requisitioning  (Temporary) Powers  Act,  that  the  power to  regulate  the  supply  of



essential   articles  had  to  be  applied  in   regard   to transactions between citizens and citizens and could not  be applied  to  an  essential article which  the  State  itself supplied;  that  the  power to  regulate  conferred  on  the respondent  by  s.  3(1)  could not  include  the  power  to increase  the  tariff rate, that the  notified  orders  were invalid as they contravened the provisions of Art.  19(1)(f) and (g) and that of Art. 14 of the Constitution. Held:     (i) The challenge to the validity of the notified orders on the ground that they were outside the purview of s. 3(1) of the Act could not be sustained. The State is not bound by a statute unless it is so provided in  express terms or by necessary implication.  In  applying this rule, the court must attempt to ascertain the intention of   the  Legislature  by  considering  all   the   relevant provisions of the statute together and not concentrating its attention on a particular provision which may be in dispute. Where the question is not so much as to whether the State is bound  by the statute, but whether it can claim the  benefit of the provision of a statute, the same rule of construction 457 may  have  to be applied’ Where the statute may be  for  the public  good and by claiming the benefit conferred on it  by its  provisions the State may allege that it is serving  the public  good,  it  would still  be  necessary  to  ascertain whether  the  intention of the legislature Was to  make  the relevant provisions applicable. Director  of  Rationing and Distribution v.  Corporation  of Calcutta,  [1961]  1 S.C.R. 158 and Province  of  Bombay  v. Municipal Corporation of the City of Bombay, [1945-46]  L.R. 73 I.A. 271, applied. (ii) In construing s. 3 of the Act of the usual rule of con- struction  must  be  adopted,  s. 3  must  not  be  read  in isolation, but must be considered in its proper setting  and due  regard must be had for the other provisions of the  Act and its general scheme and purpose. (iii)  The  purpose of the Act is to secure  the  supply  of essential articles at fair prices, it would be irrelevant as to who makes the supply; what is relevant is to regulate the supply at a fair price. (iv) It is well-settled  that  the function of a clause like cl. (2) of s. 3 is merely illustrative.  In other words  the proper approach to adopt in construing cls. (1), and (2)  of s.  3 is to assume that whatever is included in cl.  (2)  is also included in cl. (1). King  Emperor v. Sibnath Banerjee, 72 I.A. 241  and  Santosh Kumar Jain v. State, [1951] S.C.R. 303, applied. (v)  The  word ’regulate’ is wide enough to confer power  on the  State to regulate either by increasing the rate or  de- creasing  the  rate,  the  test being what  is  it  that  is necessary  or expedient to be done to maintain, increase  or secure  supply of the essential articles in question and  to arrange for its equitable distribution and its  availability at fair prices. (vi) Having  regard to all the circumstances in  this  case, the change made in the tariff were reasonable and in the in- terests of the general public. (vii)  There was absolute no material on the record  of  the appeals  on which a plea under Art. 14 of  the  Constitution could even be raised.




591,  592, 597, 689, 694, 724, 725 and 727 of 1962  and  15, 139,  140,  159, 267 to 269, 331, 334, 337, 340,  342,  343, 347, 352, 389, 746 and 748 of 1963.  Appeals from the  judg- ments  and  order dated December 19, 1958,  March  7,  1959, March  11,  1959,  April 22, 1959, April 24,  1959  in  Writ Appeals Nos. 135, 122 of 1957 etc. T.   V. R. Tatachari, for the appellants (in C.A. Nos. 429 to 434 and 694 of 1962 and C.A. No. 269/63). M.   C.  Setalvad, P. Kodandaramayya, E. V.  Bhagarathi  Rao and T. V. R. Tatachari, for the appellants (in C.A. Nos. 438 and 439/62). M.   C. Setalvad, and R. Ganapathi Iyer, for the  appellants (in C. A. Nos. 436, 437, 724, 725 and 727/62). 458 K. Srinivasamurthy and Naunit Lal, for the appellants (in  C. As.  Nos. 591, 582, 597, and 689/62 and 140, 267 and   268/63). K.  Jayaram and R. Thiagarajan, for the appellants (in  C.A. Nos.  139,  159,  330,  334, 337, 340,  342,  343,  347  and 352/63). K.   R.  Chaudhuri, for the appellants (in C.A. Nos. 15  and 389 of 63). A.   Vedavalli and A. V. Rangam, for the appellant (in C.   As. Nos. 746, and 748 of 63). D.   Narsaraju, T. Anantha Babu, M. V. Goswami and B.  R. G. K. Achar, for the respondents (in C. As.  Nos. 435437,  724, 725 and 727/62). D.   Narsaraju, T. Anantha Babu, Yogeshwar Prasad and B.  R. G.  K. Achar, for the respondents (in C. As.   Nos.  429434, 438, 439 and 694/62 and 269 of 63). D.   Narsaraju,  T. Anantha Babu, M. S. K. Sastri and B.  R. G. K. Achar, for the respondents (in C.A. Nos. 591, 597  and 689/62  and  140, 267 and 268/63) and respondent No.  1  (in C.A. No. 592/62).  J.V.K. Sharma and T.Satyanarayana, for respondent No. 2 (in C.A. No. 592/62). D.   Narsaraju,  T. Anantha Babu, R. Gopalakrishnan and  BR. G.  K. Achar, for the respondents (in C. As.  Nos. 15,  139, 331, 334, 337, 340, 342, 343, 347, 352, 159, 389 and 746-748 /63). March 25, 1964.  The judgment of the Court was delivered by GAJENDRAGADKAR,  C. J.-The principal question of  law  which arises  in  this group of 37 civil appeals  relates  to  the construction  of section 3 of the Madras Essential  Articles Control and Requisitioning (Temporary Powers) Act, 1949 (No. 29  of  1949) (hereinafter called ’the Act’).   The  dispute which  has  given rise to these appeals  centres  round  the validity  of two notified orders issued by  the  respondent, State of Andhra Pradesh on the 28th January, 1955, and  30th January, 1955 respectively, and it is the contention of  the appellants  that  the said notified orders are  outside  the purview  of  s. 3. The appellants in all these  appeals  are supplied electricity by the respondent for many years  past, and  several individual agreements have been passed  between them  and  the  respondent during the period  1946  to  1952 prescribing  the  terms  and conditions on  which  the  said supply would be made to them.  One of these terms stipulated the  rate  at  which the supply of  electricity  had  to  be charged 459 against  the consumers.  The impugned orders have  purported to  increase this rate, and the appellants contend that  the respondent had no authority to change this important term of the  contract  to their prejudice by taking recourse  to  s. 3(1)  and issuing notified orders in that behalf.  That,  in substance,  is  the nature of the  controversy  between  the



parties before us. It appears that the Government  of Madras, and subsequently, its  successor,  the  respondent, had a  single  power  grid system  for  the  whole  State  comprising  Tungabhadra  and Machkund  Hydro  Electric System and the Thermal  System  of Nellore.   The entire energy was integrated into  one  power system.   The Government of Madras entered  into  agreements with   several  consumers  in  the  State,   including   the appellants,  for  the  supply  of  energy  in  bulk  at  the specified  rates  which were called tariffs, for  the  years 1951 and 1952.  These agreements were to be in operation for ten  years.  It is common ground that these  agreements  did not  contain  any provision authorising  the  Government  to increase  the  rates during their  operation.   The  charges fixed  were calculated at graded regressive rates  according to  increasing slabs of consumption units, and  the  overall unit rates including the demand charge were not to exceed 66 annas  without prejudice to the monthly minimum payment  and the  guaranteed consumption.  The Government of Andhra  then issued  the  two impugned orders relating  to  Machkund  and Nellore,  and  Tungabhadra  and  Chittoore  District   areas respectively,  enhancing the agreed rates.   These  enhanced rates  were specified in Schedules A and B attached  to  the said  orders.   According to these orders,  these  increased tariffs  were  to take effect from the date on  which  meter readings were to be taken in the month of February, 1955 and were  to operate for the future.  The increase in the  rates effected   by   these  orders  was  thus  to   operate   not retrospectively,  but  prospectively.  The  impugned  orders indicate that the main reason which inspired the said orders was  the  knowledge that the  existing  electricity  tariffs which  were  formulated nearly 15 years before,  had  become completely  uneconomic; the charges of labour and the  price level of all material had enormously increased; and that in- evitably meant continuously growing loss to the  Government. The  Accountant-General  made  queries in  respect  of  this recurring  loss  and  drew pointed attention  of  the  State Government  to  the  deficits in the working  of  the  Power System.   Accordingly, the question of revision  of  tariffs was  considered in the State of Madras, but was not  decided because   reorganisation   of  the  States   was   then   in contemplation.   After the respondent State wits  born,  its Chief Engineer sumbitted proposals for 460 revisions  of  tariffs  in  all the  areas  covered  by  the relevant schemes.  That is how the impugned notified  orders came to be issued by the respondent. The  appellants  were naturally aggrieved by  these  orders, because  they added to their liability to pay the rates  for the  supply  of  electricity  by  the  respondent  to  them. Accordingly,  a large number of consumers moved  the  Andhra Pradesh  High Court under Art. 226 of the Constitution,  and challenged  the  validity of the two impugned  orders.   The learned  single Judge who heard these writ petitions  upheld the  appellants’  plea and came to the conclusion  that  the impugned   orders  were  not  justified  by  the   authority conferred  on  the respondent by s. 3 of the Act,  and  were unauthorised,  illegal and inoperative.  In the result,  the writ petition filed by some of the appellants before us were allowed  and  an appropriate order was  issued  against  the respondent restraining it from enforcing the revised  tariff rates. These  decisions  were  challenged  by  the  respondent   by preferring  several  Letters Patent Appeals.   The  Division Bench  which  heard  these Letters  Patent  Appeals  took  a



different view; it held that on its fair and reasonable con- struction,  s. 3 did confer authority on the  respondent  to issue the impugned orders, and so, the challenge made to the validity of the said orders could not be sustained.  That is why  the Letters Patent Appeals preferred by the  respondent were allowed and the writ petitions filed by the  appellants were dismissed.  It is against these orders that the  appel- lants  have come to this Court with a certificate issued  by the said High Court. After the Division Bench had pronounced its decision on this point,  several  other writ petitions were  filed  by  other consumers,  and  naturally the single Judge who  heard  them followed  the decision of the Division Bench  and  dismissed the  said writ petitions.  The consumers who were  aggrieved by the decision of the learned single Judge were then allow- ed to come to this Court directly by special leave,  because the points which they wanted to raise were exactly the  same as  were raised by the other consumers who had come to  this Court against the principal decision of the Division  Bench. The present group of appeals thus consists of matters  which have been decided by a Division Bench of the Andhra  Pradesh High  Court, as well as those which have been decided  by  a learned  single  Judge, and they all raise the  same  common question about the construction of s. 3 of the Act, and  the validity of the impugned notified orders. Before addressing ourselves to the question of construing s. 3,  it is necessary to recapitulate the legislative  history of  the  Act.  It will be recalled that  during  the  Second World 461 War, the Government of India passed the Defence of India Act (No. 35 of 1939) on the 29th of September, 1939.  By  virtue of the powers conferred on the Central Government by s. 2 of the  said  Act, several Rules came to be framed  by  Central Government  known  as the Defence of India  Rules.   Amongst these  Rules  was  Rule  81(2)  which  clothed  the  Central Government  with power to issue orders which may  appear  to the  Central  Government to be necessary  or  expedient  for securing  "the  defence of British India, or  the  efficient prosecution  of  the war, or for  maintaining  supplies  and services  essential  to the life of the  community".   These Rules  were in operation during the continuance of the  war. After the war came to an end, it was realised that the  eco- nomic situation in the country continued to be serious,  and for  the  proper  regulation of  economic  affairs,  it  was thought  necessary to continue the orders issued  under  the Defence  of India Rule 81(2), because shortage of supply  of essential  articles  was very much in  evidence  then.   The purpose of continuing the orders was to ensure the supply of essential  articles to the community at large at  reasonable prices  and to secure their equitable distribution.  In  due course, the Defence of India Act came to an end in 1946, but the Central Legislature thought it necessary to pass another Act  to take its place and that was the  Essential  Supplies (Temporary Powers) Act, 1946 (No. 24 of 1946).  On the  same lines, the Madras Legislature passed an Act in 1946 (No.  14 of 1946).  Later, it was replaced by Act No. 29 of 1949 with which  we are concerned in the present appeals.   After  the respondent   State   was  created  under   the   Scheme   of Reorganisation  of States, it passed Act No. 1 of  1955  and this Act received the assent of the President on the 21st of January,  1955.   By  this  Act,  the  Legislature  of   the respondent  State  virtually adopted the Madras Act.   As  a result, the impugned orders are, in substance, referable  to s. 3 of the Madras Act.



Before  we  part with this topic, it may be  mentioned  that when the Madras Act was passed, its Schedule gave a list  of the  essential  articles  as defined by s.  2(a)  and  these articles  were  12 in number.  When the  Andhra  Legislature passed Act No. 1 of 1955 and adopted the Schedule of  essen- tial articles for its purpose, the number of these  articles was reduced to two; they are charcoal and electrical energy. The  Andhra Act was originally intended to be  in  operation until  the  25th January, 1956, but it was  later  continued from  time  to  time.  It is common  ground  that  when  the impugned  orders  were passed, section 3 of be  Act  was  in operation  and the present appeals have been argued  on  the basis  that the said section is constitutionally  valid,  so that  the  main point which calls for our  decision  is  the construction of the said section. 462 Mr. Setalvad for the appellants contends that in  construing s. 3, we ought not to concentrate on the words used in s.  3 in  isolation, but must look at the said section along  with the  other  provisions of the Act.  The rule  of  harmonious construction,  he urges, requires that we must  so  construe all  the provisions of the Act as to avoid any  conflict  or repugnancy between them.  So construed, section 3, according to  him, cannot be said to confer power on the respondent to enhance the tariff rate chargeable against the appellants in respect  of the supply of energy made by the  respondent  to them.   The whole scheme of the Act indicates  clearly  that the  power  to regulate the supply of an  essential  article which  has been conferred on the State Government has to  be applied  in  regard  to  transaction  between  citizens  and citizens  and  cannot be applied to  an  essential  article: which  the  State  itself supplies.  It  would  be  odd,  he suggests,  if  the State Government is given  the  power  to issue  a  notified order regulating the rates  at  which  it should  supply energy which it itself produces.   Therefore, the dealings by the State Government in the matter of supply of  energy to the consumers should be deemed to  be  outside the  provisions  of s. 3, and that would make  the  impugned orders invalid. The  question  as to whether the State Government  would  be bound by the provisions of legislative enactments passed  by the  State  Legislature has sometimes led to  difference  in judicial  opinion;  but the decision of this  Court  in  the Director of Rationing and Distribution v. The Corporation of Calcutta  and  Ors.(1) must be taken to  have  settled  this question.   The effect of the majority decision rendered  in that  case  is  to recognise the validity  of  the  rule  of interpretation  of statutes enunciated by the Privy  Council in  Province of Bombay v. Municipal Corporation of the  City of  Bombay (2) and that rule is that the State is not  bound by a statute unless it is so provided in express terms or by necessary  implication.   In  applying  this  rule,  it   is obviously necessary that the Court must attempt to ascertain the  intention  of the Legislature by  considernig  all  the relevant   provisions  of  the  statute  together  and   not concentrating its attention on a particular provision  which may  be in dispute between the parties.  If,  after  reading all  the  relevant provisions of the statute, the  Court  is satisfied  that  by  necessary  implication  the  obligation imposed by the statute should be enforced against the State, that conclusion must be adopted.  If there are express terms to  that  effect, there is, of course,  no  difficulty.   In dealing with this vexed question, sometimes it is  necessary also to enquire whether the conclusion that the State is not bound by the specific provision of a given statute,



(1) [1961] 1 S.C.R. 158. (2)73 I.A. 271. 463 would  hamper the working of the statute, or would  lead  to the  anomalous position that the statute may lose its  effi- cacy,  and  if the answer to either of these  two  questions indicates that the obligation imposed by the statute  should be  enforced against the State, the Court would be  inclined to  infer by necessary implication that the State, in  fact, is bound by the statute. Where,  however, the question is not so much as  to  whether the State is bound by the statute, but whether it can  claim the benefit of the provision of a statute, the same rule  of construction may have to be applied.  Where the statute  may be  for  the  public  good,  and  by  claiming  the  benefit conferred on it by its provisions the State may allege  that it  is serving the public good, it would still be  necessary to ascertain whether the intention of the legislature was to make the relevant provisions applicable to the State.   This position  is also established by the decision of  the  Privy Council  in Province of Bomboy(1) and it still continues  to be a law in this Country. Incidentally, we may add that where the Crown seeks to  take advantage of a statute and urges that though it is not bound by  the statute, it is at liberty to take advantage  of  it, English  Law does not easily entertain such a  plea,  though there are observations made in some judicial  pronouncements to the contrary.  As Halsbury points out, "it has been  said that,  unless it is expressly or impliedly  prohibited  from doing  so,  the Crown may take advantage of a  statute  not- withstanding that it is not bound thereby." Having made this statement, Halsbury has added a note of caution by  ,,saying that  "there  is only slender authority for this  rule,  and since  both the rule and such authority as does  exist  have also been doubted, the rule cannot, perhaps, be regarded  as settled law(2)". To  the same effect is the comment made by Maxwell  when  be quotes  with approval the view expressed by Sir  John  Simon that the decisions which recognise the right of the Crown to take  advantage  of  a statutory  provision  "start  with  a passage  in an unsuccessful argument of a law officer  which was  not  even relevant to the case before  the  court,  but which  has been taken out by a text-writer and repeated  for centuries  until  it  was believed that it  must  have  some foundation(3)". Therefore,  in construing s. 3 of the Act, we cannot  permit the respondent to rely upon the artificial rule that since (1) 73 T.A. 271. (2)", Halsbury’s Laws of England, Vol. 36, p. 432, para 654. (3) Maxwell on Interpretation of Statutes, 11th Ed. p. 136 464 the  respondent claims a benefit under s. 3, that  construc- tion  should be adopted which supports such a claim.   Thus, the  position is that when we construe s. 3, we  must  adopt the  usual  rule of construction; we must not read s.  3  in isolation,  but must consider it in its proper  setting  and must  have due regard for the other provisions of  the  Act, and its general scheme and purpose. Reverting  then to Mr. Setalvad’s main argument, it  may  be conceded  that when the Act was passed in 1949,  mainly  and primarily  the  power  conferred  by  s.  3  on  the   State Government must have been intended to regulate the supply of essential  articles  made by one citizen  to  another.   The State had not then entered commercial activities on a  large scale  and when s. 3(1) contemplated notified orders  issued



for  the  purpose  of securing  equitable  distribution  and availability  at  fair  prices of  essential  articles,  the legislature  could not have in its mind supply of  essential articles  made  by the State itself.  That is one  point  in favour  of Mr. Setalvad’s construction.  If we  examine  the scheme of the Act, it may also have to be conceded that some of the provisions may not be applicable to the State.  Take, for  instance,  the provision of s. 4 which  relate  to  the powers of requisitioning and acquisition of properties,  and the  subsequent  two  sections that  deal  with  payment  of compensation  and  release  from  requisition  respectively; these provisions may not be applicable to the State.   Take, again,  the control of agriculture which is contemplated  by s.  7; it would not be applicable to the State.  Section  12 which  deals with penalties may also be inapplicable to  the State, and so, would s. 13 be inapplicable, because it deals with  abetment  and  assistance  of  contravention  of   the provisions of the Act.  Therefore, the general scheme of the Act  and  some of its provisions seem to  suggest  that  the State may not have been within the contemplation of the Act. But  it is obvious that the rule of harmonious  construction on  which  Mr. Setalvad has solely rested his case,  can  be invoked  successfully by him only if the words used in s.  3 are  capable of the construction which he suggests.  If  the said  words  are capable of two constructions one  of  which supports the appellants’ case and the other that of the res- pondent, it would be legitimate to adopt the first construc- tion, because it has the merit of harmonising the provisions of s. 3 with the general scheme and purpose of the Act.   On the other hand, if the words used in s. 3(1) are not reason- ably  capable of the construction for which  the  appellants contend, then it would be unreasonable and illegitimate  for the  Court  to limit the scope of  those  words  arbitrarily solely for the purpose of establishing harmony between the 465 assumed object and the scheme of the Act.  Therefore, it  is necessary to examine the words used in s. 3 very  carefully. Let us first read s. 3(1):-               "The State Government so far as it appears  to               them   to  be  necessary  or   expedient   for               maintaining,  increasing or securing  supplies               of  essential  articles or for  arranging  for               their equitable distribution and  availability               at fair prices may, by notified order, provide               for  regulating  or  prohibiting  the  supply,               distribution   and  transport   of   essential               articles and trade and commerce therein". Sub-section (2) provides that without prejudice to the gene- rality of the powers conferred by sub-section (1), an  order made thereunder may provide for objects specified in clauses (a) to (k).  The majority of these objects may not be appli- cable  to the State, while, conceivably, some may be  appli- cable to it. Section  3(1)  is obviously intended to secure  supplies  of essential  articles  and  to  arrange  for  their  equitable distribution and availability at fair prices.  If electrical energy  is  one of the essential articles mentioned  in  the Schedule,  there  can  be no difficulty in  holding  that  a notified  order can be issued under s. 3(1)  for  regulating the  supply of the said energy and making it available at  a fair  price.   Indeed,  it is not  disputed  and  cannot  be disputed that if electrical energy is produced by a  private licensee  and  is  then supplied to the  consumers,  such  a supply  would fall within the mischief of s. 3(1),  and  the terms  on which it can and should be made to  the  consumers



can be regulated by a notified order.  There can also be  no serious  dispute that the terms of a contract  entered  into between  a  private supplier of electrical  energy  and  the consumer  could  be modified by a notified  order.   Section 3(1)  undoubtedly confers power on the State  Government  to vary  and modify contractual terms in respect of the  supply or distribution of essential articles.  If that be so, on  a plain  reading of s. 3(1) it seems very difficult to  accept the  argument that the supply of electrical energy which  is included  in  s. 3(1) if it is made, by a  private  producer should go outside the said section as soon as it is produced by  the State Government.  The emphasis is not on  who  pro- duces and supplies, but on the continuance of the  equitable distribution  and  supply  of  essential  articles  at  fair prices.   If  the object which s. 3(1) has in mind  is  such equitable  distribuiton and availability at fair  prices  of essential articles, then that object would still continue to attract the provisions of s. 3(1) even though the  essential article may be produced by the State and may be supplied  by it to the consumers. 466 The words used in s. 3(1) are so clear, unambiguous and wide that  it  would be unreasonable to limit their  scope  arti- ficially  on  the ground that by giving effect to  the  wide language  of the section, we might reach a result  which  is not  completely  harmonious or consistent with  the  assumed object  and  purpose of the Act.  Indeed, as  we  have  just indicated, if the purpose of the Act is to secure the supply of essential articles at fair prices, it would be irrelevant as to who makes the supply; what is relevant is to  regulate the supply at a fair price.  Therefore, we are not  prepared to  accede to Mr. Setalvad’s argument that s. 3(1) does  not confer  on the respondent the power to modify the  terms  of agreements between it and the appellants. Mr.  Setalvad,  no doubt, contended that  in  construing  s. 3(1),  we  may  have regard to the fact  that  most  of  the clauses   under  s.  3(2)  would  be  inapplicable  to   the respondent  State, and so, he virtually suggests  that  even though the words in s. 3(1) may be wide, their width  should be controlled by the limited scope of the clauses prescribed by  subsection  (2).   We are not prepared  to  accept  this argument.   After the decision of the Privy Council in  King Emperor v. Sibnath Banerjee(1), it is well-settled that  the function  of  a  clause  like clause  (2)  of  s.  3  merely illustrative (vide also Santosh Kumar Jain v. The State(3)). In  other words, the proper approach to adopt in  construing clauses  (1) and (2) of s. 3 is to assume that  whatever  is included in clause (2) is also included in clause (1).  That is  not  to  say that if the words of clause  (1)  are  wide enough  to  include cases not included in clause  (2),  they must,  for  that reason, receive  a  narrower  construction. Therefore,  we  must  ultimately go back to  clause  (1)  to decide  whether the supply of electrical energy made by  the respondent to the appellants can be regulated by a  notified order  issued  under  it  or not, and  the  answer  to  that question must, in our opinion, be in the affirmative. In  this  connection,  it may be pertinent to  refer  to  s. 3(2)(b)  which provides for controlling the prices at  which any essential article may be bought or sold.  It is not easy to see why this clause cannot take in articles which may  be purchased  or  sold by the State.  The clause is  so  worded that the transactions of sale and purchase of all  essential articles would be included in it.  It is true that where the State  wants to sell its essential articles, it may be  able to  regulate  the  prices and control them by  means  of  an



executive  order; but that is not relevant and  material  in construing the effect (1) 72 I.A. 241 at p. 248. (2) 1951 S.C.R. 303. 467 of the words; if the words take within their sweep essential articles sold by the State, there is no reason why it should not be competent to the State to issue a notified order con- trolling the prices in that behalf. In  regard  to  the purchase of essential  articles  by  the State, the position is still clearer.  If the State wants to purchase essential articles, power to regulate the prices of such,  articles  would  seem to be clearly  included  in  s. 3(2)(b).  In-’ deed, during the course of his arguments, Mr. Setalvad   did   not  seriously   dispute   this   position. Therefore,  when  the  State  wants  to  purchase  essential articles, it can regulate the price in that behalf by  means of a notified order issued under s. 3(1) and that shows that in the cases of both sale and purchase of essential articles by the State, s. 3(2)(b) read with s. 3(1) would clothe  the State with the power to issue the relevant notified order. Then,  it was faintly argued by Mr. Setalvad that the  power to  regulate conferred on the respondent by s.  3(1)  cannot include  the  power to increase the tariff  rate;  it  would include the power to reduce the rates.  This argument is en- tirely misconceived.  The word "regulate" is wide enough  to confer  power  on the respondent to regulate either  by  in- creasing  the rate, or decreasing the rate, the  test  being what  is  it that is necessary or expedient to  be  done  to maintain,  increase,  or  secure  supply  of  the  essential articles  in  question  and to  arrange  for  its  equitable distribution  and  its  availability at  fair  prices.   The concept  of  fair prices to which s. 3(1)  expressly  refers does  not mean that the price once fixed must either  remain stationary, or must be reduced in order to attract the power to  regulate.   The power to regulate can be  exercised  for ensuring the payment of a fair price, and the fixation of  a fair  price would inevitably depend upon a consideration  of all  relevant and economic factors which contribute  to  the determination  of  such  a fair price.  If  the  fair  price indicated  on a dispassionate consideration of all  relevant factors  turns  out to be higher than the  price  fixed  and prevailing,  then  the  power to  regulate  the  price  must necessarily include the power to increase the price so as to make  it fair.  That is why we do not think Mr. Setalvad  is right in contending that even though the respondent may have the power to regulate the prices at which electrical  energy should be supplied by it to the appellants, it had no  power to  enhance the said price.  We must, therefore,  hold  that the  challenge  to  the validity of  the  impugned  notified orders on the ground that they are outside the purview of s. 3(1) cannot be sustained. That  takes  us to the next question as to whether  the  im- pugned notified orders are invalid, because they contravene 468 the provisions of Art. 19(1)(f) and (g) of the Constitution. The  impugned  orders have been notified by  virtue  of  the fore, be treated as law for the purpose of Art. 19.  We  may also  assume in favour of the appellants that the  right  to receive the supply of electricity at the rates specified  in the  agreements is a right which falls within Art.  19(1)(f) or  (g). Even so, can it be said that the impugned  notified orders  are  not  reasonable and in  the  interests  of  the general  public’?  That is the question which calls  for  an answer  in dealing with the present contention.  It is  true



that by issuing the impugned notified orders, the respondent has  successfully  altered  the  rates  agreed  between  the parties  for  their  respective contracts  and  that,  prima facie,  does appear to be unreasonable.  But, on  the  other hand,  the  evidence shows that the tariff which  was  fixed several  years ago had become completely out of date and  he reports  made  by the Accountant-General from time  to  time clearly   indicate   that  the  respondent   was   supplying electricity  to  the  appellants at the  agreed  rates  even though it was incurring loss from year to year.   Therefore, it cannot be said that the impugned notified orders were not justified on the merits.  The prices of all commodities  and labour charges having very much increased meanwhile, a  case had.  certainly been made out for increasing the tariff  for the  supply  of  electrical energy.  But  it  could  not  be possible  to  hold  that  the  restriction  imposed  on  the appellants’  right  by  the increase made in  the  rates  is reasonable and in the interests of the general public solely because  the impugned orders have saved the  recurring  loss incurred  by the respondent under the contracts.  If such  a broad  and general. argument were accepted, it may  lead  to unreasonable and even anomalous consequences in some  cases. This question, however, has to be considered from the  point of view of the community at large; and thus considered,  the point which appears to support the validity of the  impugned orders is that these orders were passed solely for the  pur- pose  of assuring the supply of electrical energy  and  that would  clearly  be for the good of the community  at  large. Unless prices were increased, there was risk that the supply of electrical energy may itself have come to an end.  If the respondent thought that the agreements made with the  appel- lants were resulting in a heavy loss to the public  treasury from  year to year, it may have had to consider whether  the supply should not be cut down or completely stopped.  It may well be that the respondent recognised its obligation to the public at large and thought that supplying electrical energy to  the  consumers  who  were  using  it  for  profit-making purposes,  at  a loss to the public exchequer would  not  be reasonable  and  legitimate,  and it  apprehended  that  the legislature  may  well question the propriety or  wisdom  of such 469 a course; and so, instead of terminating the contracts,  de- cided  to assure the supply of electrical energy at  a  fair price  and  that is why the impugned  notified  orders  were issued.   We ought to make it clear that there has  been  no suggestion  before us that the prices fixed by the  impugned notified   orders  are,  in  any  sense,   unreasonable   or excessive,  and  it  is significant that  even  the  revised tariff  has  to come into operation  prospectively  and  not retrospectively.   Therefore,(  having  regard  to  all  the circumstances in this case, we are disposed to hold that the change  made  in the tariff by the notified orders  must  be held  to be reasonable and in the interests of  the  general public. Mr. Setalvad also attempted to challenge the validity of the impugned  orders on the ground that they contravene Art.  14 of  the  Constitution.  In support of  this  contention,  he invited  our  attention  to  the  allegation  made  in  Writ Petition No. 923 of 1956.  In that writ petition, one of the petitioners stated that the rate prescribed under the agree- ments had not changed and had remained stationary as far  as consumers  under  the  State  Government’s  licensees   were concerned.   The affidavit appears to concede  that  certain ,other  licensees  had  increased  their  rates,  but   that



increase, it is claimed, was negligible or nominal; and  so, the  argument was that the rates which are widely  divergent between consumer and consumer constitute a contravention  of Art. 14. Mr. Setalvad fairly conceded that these allegations are vague and indefinite and no other material has been pro- duced either by the petitioner who has made this  affidavit, or by any of the other petitioners who moved the High  Court for  challenging  the validity of the impugned  orders.   In fact,  we  do  not  know what the  rates  charged  by  other licensees  are and have been, and how they compare with  the rates  prescribed by the original contracts as well  as  the rates enhanced by the impugned notified orders.  We ought to add that the Division Bench of the High Court appears to  be in  error when it assumed that the respondent was  the  sole supplier of electrical energy in the State of Andhra.  It is true that the bulk of the energy is supplied by the  respon- dent;  but there are some other private licensees which  are licensed to supply electrical energy to the consumers and in that  sense, at the relevant time the respondent was  not  a monopolist  in  the matter of supply of  electricity.   This Court  has repeatedly pointed out that when a citizen  wants to challenge the validity of any statute on the ground  that it contravenes Art. 14, specific, clear and unambiguous alle gations  must  be made in that behalf and it must  be  shown that  the  impugned statute is based on  discrimination  and that   such   discrimination  is  not   referable   to   any classification 470 which  is rational and which has nexus with the  object  in- tended to be achieved by the said statute.  Judged from that point of view, there is absolulety no material on the record of  any of the appeals forming the present group on which  a plea under Art. 14 can even be raised.  Therefore, we do not think it is necessary to pursue this point any further. The result is the appeals fail and are dismissed with costs. One set of hearing fees. Appeals dismissed. 471