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PETITIONER: STATE OF M.P. & ORS.

       Vs.

RESPONDENT: M/S.  CHHOTABHAI JETHABHAI PATEL & CO. &

DATE OF JUDGMENT10/12/1971

BENCH: MITTER, G.K. BENCH: MITTER, G.K. SIKRI, S.M. (CJ) SHELAT, J.M. DUA, I.D. KHANNA, HANS RAJ

CITATION:  1972 AIR  971            1972 SCR  (2) 838  1972 SCC  (1) 209

ACT: Madhya  Pradesh  Tendu Patta (Vyapar  Viniyaman)  Adhiniyam, 1964 Section 5-Whether restrictions on transport of  tendu leaves imported from outside the State is violative of  Part XIII of the Constitution.

HEADNOTE: The  respondent,  a partnership firm of  which  the second respondent   was   a  partner,  carried   on   business   as manufacturers  of  bidis at various places in the  State  of Madhya  Pradesh.   Being unable to secure  sufficient  tendu leaves  locally, the firm took leases for the collection  of such leaves in Bihar & Maharashtra.  They actually  imported tendu  leaves  under two railway  consignments  from  Bihar. They  informed the Divisional Forest Officer about the  same and  asked  permission for transport of the  leaves  and  to utilise  them  in their factories.  By  letter,  the  D.F.O. informed  the respondents that the leaves must not be  moved for bidi manufacture until permission is given.  Respondents obeyed  the order; but in spite of that, the  Sub-divisional Forest  Officer  seized two quantities of  such  leaves  and filed  a complaint alleging contravention of s. 5 of  Madhya Pradesh Tendu Patta (Vyapar Viniyaman) Adhiniyam, 1964. The  respondent  filed  a petition under  Art.  226  of  the Constitution   for  a  writ  of  certiorari   quashing   the complaint.   The contention of the respondents was that  the Act  did  not prohibit import of tendu leaves  from  outside nor- was there any restriction on a manufacturer to  consume the  same  for the manufacture of bidis or  the  Rules  made under  the Act did not regulate the transport of  the  tendu leaves imported from outside. The State however, contended that transport of tendu  leaves whether   grown  locally  or  imported  from   outside   was completely prohibited under s.     5 of the Act, except by a license-holder in terms of a permit issued. S.5(1)  provides that no person other than the State Government or an Officer of  the  State Government etc. shall purchase  or  transport tendu  leaves.  Further, the Act did not prohibit import  of tendu  leaves and so the Act is not violative of  Arts.  31,

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301 and 304 of the Constitution and the control of  movement of tendu leaves after their import was in no way  repugnant to  Arts.  301  and  304 of  the  Constitution.   The  State contended  that unless the State had the power to check  the purchase  of  tendu  leaves from outside the  State  and  to restrict  the  transport  thereof  within  the  State,   the monopoly  of  State  trading in tendu leaves  would  not  be effective.  The High Court rejected these contentions of the State and hence the appeal.  Dismissing the appeal, HELD  : (1) All the relevant provisions of the Act  and  the rules  made  thereunder show that the  legislature  intended that everybody growing leaves within the State should  offer the same to it to its agents in different units for sale and the  State was bound to purchase every single lot of  usable tendu  leaves.   Prima  facie trade in  tendu  leaves  could consist of dealing in those leaves, i.e., their purchase and sale  but  transport ’of the leaves once purchased  or  sold would  not  prima facie be an organic or  integral  part  of dealing in those leaves. [842 D] 839 Vrajlal Manilal v. M.P. State [1970] 1 S.C.R. 400, followed. (ii) In  the  present case, the transport  of  tendu  leaves purchased  outside but consigned to places within the  State to  be used for the manufacture of bidis is  not  integrally connected  with the State monopoly as envisaged in the  Act. The  Act  ought not to be construed so as to ban  import  of tendu  leaves  from  outside the  State  or  restrict  their movement  once  they  are  within  the  State  unless  clear language was used in that behalf. [844 C] Akadasi  Padhan  v. State of Orissa, [1963] Supp.  2  S.C.R. 691, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 684 of 1968. Y.   S.  Dharmadhikari,  Advocate-General for the  State  of Madhya Pradesh and 1. N. Shroff, for the appellants. M.   C.  Setalvad,  Rameshwar Nath and S. K.  Dholakia,  for respondent No. 1. The Judgment of the Court was delivered by Mitter,  J. This is an appeal from a judgment of the  Madhya Pradesh High Court quashing the proceedings initiated on the complaint filed by the Divisional Forest Officer, Saugor  in the  Court of the Magistrate of the First Class  Saugor  for imposition of a penalty on the respondents. The  matter  arises  thus.  Chhotahhai  Jethabhai  Patel,  a partnership firm of which the second respondent,  Jhaverbhai Bhulabhai  Patel  is  a partner, carried on  business  on  a fairly  large  scale as manufacturers of  bidis  at  various places  in  the State of Madhya  Pradesh  including  Saugor. Being unable to secure sufficient quantities of tendu leaves grown in the forest units in the State, the firm took leases for  the  collection of such leaves in the States  of  Bihar Maharashtra.  They actually imported tendu leaves under  two railway  consignments from Bihar to Saugor.   They  informed the  Divisional Forest Officer about the same and asked  for permission  for transport of the leaves and to  utilise  the said  leaves for manufacture of bidis in their  factories. By  letter  dated  July 27, 1965  the  said  Forest  Officer intimated  the firm that the imported leaves were not to  be moved for bidi manufacture until permission was accorded for so    doing.    The   respondents’   grievance   was    that notwithstanding the above communication and in spite of  the fact that they had not moved the imported leaves from  their

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godowns, the Sub Divisional Forest Officer Saugor seized two quantities of such leaves of 9007 bags imported from  Garwah Road,  Bihar  and  256 bags of tendu  leaves  imported  from Bindoumaganj,  Bihar  and followed the same up by  filing  a complaint  alleging  contravention  of s. 5  of  the  Madhya Pradesh Tendu Patta Wyapar Viniyaman) 84 0 Adhiniyam,  1964, hereinafter referred to as the  Act.   The respondents   filed  a  petition  under  Art.  226  of   the Constitution  before the High Court for the issue of a  writ of certiorari quashing the complaint.  The contention of the respondents (importers of the leaves) before the High  Court was that the Act did not prohibit the import of tendu leaves from places outside the State nor was there any  restriction on  a  manufacturer importing such leaves with  the  express object  of consumption of the same, in his factory  for  the manufacture  of bidis and in any event the Act or the  Rules made thereunder did not purport to regulate the transport of tendu leaves imported from places outside the State. On  behalf of the State it was contended that  transport  of tendu leaves whether grown in the State or outside the State was  completely  prohibited  by  s.  5(2)  of  the  Act  and regulation and control of transport of such imported  leaves was  necessary  for  the successful  working  of  the  State monopoly in the trade of tendu leaves envisaged by the  Act. Further the Act did not prohibit the import of tendu  leaves and was not therefore violative of Arts. 31, 301 and 304  of the Constitution and the control of movement of tendu leaves after  their import from another State was in no way  repug- nant to Arts. 301 and 304. The High Court rejected the contentions of the State.  Hence the appeal. In  order  to  find out whether the  action  of  the  Forest Officer  was  justified, we have to look into  the  relevant provisions of the Act and the rules framed thereunder.   The Act  as  its  preamble shows is one to  make  provision  for regulating in the public interest the trade of tendu  leaves by creation of State monopoly in such trade.  By s. 1(2)  it was to extend to the whole of the State and under sub-s. (3) of s. 1 it was to come into force in such area or areas  and on  such  date  or dates as the  State  Government  may,  by notification, specify.  The broad scheme of the Act  appears to  be  as  follows.  Under s. 3 the  State  Government  was empowered to divide every specified area defined in cl.  (h) of s. 2 into such number of units as it may deem fit.  S.  4 empowered the State Government to appoint agents in  respect of different units for the purpose of purchase of and  trade in tendu leaves on its behalf.  Under s. 5(1);               "On  the  issue of a notification  under  sub-               section  (3)  of  section 1  in  any  area  no perso n other than-               (a)   the State Government;               (b)   an    officer   of   State    Government               authorised in writing in that behalf; or               841               (c)   an agent in respect of the unit in which               the leaves have grown;               shall purchase or transport tendu leaves." The  two Explanations to this subsection show that  purchase of tendu leaves from the State Government or its officers or agents   was  not  to  be  deemed  to  be  a   purchase   in contravention of the Act and a person having no interest  in a  holding but acquiring the right to collect  tendu  leaves grown  on  such holding was to be deemed to  have  purchased such leaves in contravention of the Act.  Sub-s. (2) of  the

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section  allowed a grower of tendu leaves to transport  them from any place within the unit wherein such leaves had grown to  any other place in that unit and tendu leaves  purchased from  the  State Government or any officer or agent  of  the Government by any person for manufacture of bidis within the State  or by any person for sale outside the State could  be transported by such person in accordance with the terms  and conditions  of a permit to be issued in that behalf.   S.  7 empowered the State Government to fix prices at which  tendu leaves were to be, purchased by it or its agent and under s. 9 the State Government or their authorised officer or  agent was  to be, bound to purchase at the price fixed under s.  7 leaves  offered for sale at the depot, subject to the  right of  rejection  of  such  leaves as  were  not  fit  for  the manufacture  of  bidis.  Under s. 1 1 all  manufacturers  of bidis  and  all  exporters  of  tendu  leaves  had  to   get themselves registered in such manner as might be prescribed. S.  12  enabled the State Government to sell or  dispose  of tendu  leaves  purchased  by  it or  its  agent  as  therein prescribed.  Under s. 1 5 any person contravening any of the provisions of the Act or the rules thereunder was liable  to punishment, both with imprisonment and fine and tendu leaves in  respect  of  which such contravention  took  place  were liable  to  forfeiture  by  Government.   S.  19  gave   the Government  power to make rules to carry out the  provisions of the Act. Rule 4 framed under the Act lays down the kinds of transport permits which may be issued.  They are to be, of four  types (i)  for transport from collection depot to storage  godown; (ii) for transport from one storage godown to another or  to distribution centre; (iii) for transport from a distribution centre  to  Sattedars or Mazdoors’ and  (iv)  for  transport outside  the State.  The application for a transport  permit is  to  be  under rule 9 in form ’M’ and the  permit  to  be issued is to be in form ’M.  Form ’M’ gives the quantity  of tendu leaves purchased, the place or places where they  were stored, the destination to which they were to be transported and the place or places where transported leaves were to  be stored.  Similar particulars are to be contained in a permit in form ’N’. 842 It was contended on behalf of the State that the High  Court had gone wrong in taking the view that the object of the Act was  confined to trading in tendu leaves grown in the  State as disclosed by the above provisions.  It was urged that the embargo  on purchase and transport of tendu leaves by  s.  5 was  necessary  for creation and preservation of  the  State monopoly  in tendu leaves.  It was submitted that there  was nothing  in  the Act, which on the face of  it  showed  that tendu  leaves mentioned in the different provisions were  to be  confined to leaves grown in the State.  It  was  further submitted  that unless the State had the power to check  the purchase  of tendu leaves from outside the State and in  any event  to restrict the transport thereof within  the  State, the  monopoly would not be effective.  It was urged  further that transport of goods within the State was so  essentially integrated with the trade in the goods that the  restriction on  transport should be upheld in the interest of the  State monopoly. We  find  ourselves  unable to accept  the  contentions  put forward by counsel on behalf of the State.  All the relevant provisions  of the Act and the rules referred to above  show that the legislature intended that everybody growing  leaves within  the State should offer the same to it or its  agents in  different  units  for sale and the State  was  bound  to

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purchase  every single lot of tendu leaves unless  the  same could  be  said to be unfit for the  manufacture  of  bidis. Prima facie trade in tendu leaves as was held by this  Court in  Vrajlal  Manilal  v. M. P.  State(1)  would  consist  of dealing  in  those leaves i.e. their purchase and  sale  but "transport  of the leaves once purchased or sold  would  not prima  facie  be an organic or integral part of  dealing  in those leaves." It was further held in that case:               :..a   permit  system  which   regulates   the               movement of leaves purchased by a manufacturer               of   bidis  from  the  unit  where  they               are  purchased to his warehouse, then  to  the               branches  and  to the sattedars cannot  up  to               that stage be regarded as unreasonable in  the               light  of the object of the Act, the  economic               conditions  prevailing in the State,  and  the               mischief which it seeks to cure.  At the  same               time to expect the manufacturer to get permits               issued  to his sattedars for  distribution  by               them   to   the   innumerable   mazdoors    of               comparatively small quantities of these leaves               would    not   only   be   unreasonable    but               frustrating." In  that case there was no question of import of  any  tendu leaves from outside the State or the issue of any permits in that  regard.  What was objected to was the insistence  upon transport  permits for the leaves to be distributed  by  the manufacturers  to  his innumerable sattedars  and  mazdoors under s. 5 of the Act.  It was held that though the  section "is couched in apparently wide language, (1)  [1970] 1 S.C.R. 400 at 408. 843 the very object of the Act, as disclosed by its long  title, contains  inherent  limitations against an  absolute  or  as strictly regulated a ban as it would at first reading of the section   appear."  Though  the  Court  there   upheld   the provisions  relating to the creation of the monopoly in  the public interest in the matter of sale and purchase of  tendu leaves,  it was not disposed to uphold the  restrictions  on movement  to the extent it was sought to be enforced by  the State in that case. In  coming to the above conclusion the Court relied  on  the dictum in Akadasi Padhan v. State of Orissa(1)               "A law relating to a State monopoly cannot, in               the   context,  include  all  the   provisions               contained  in the said law whether  they  have               direct  relation  with  the  creation  of  the               monopoly   or   no                 the    said               expression should be construed to mean the law               relating  to  the monopoly in  its  absolutely               essential  features.   If  a  law  is   passed               creating  a State monopoly, the  Court  should               enquire  what are the provisions of  the  said               law   which  are  basically  and   essentially               necessary for creating the State monopoly.  It               is  only those essential and basic  provisions               which are protected by the latter part of Art.               19(6).  If there are other provisions made  by               the  Act which are subsidiary,  incidental  or               helpful to the operation of the monopoly, they               do  not  fall under the said  part  and  their               validity  must be judged under the first  part               of Art. 19(6).  In other words, the effect  of               the amendment made in Art. 19(6) is to protect               the  law relating to the creation of  monopoly

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             and that means that it is only the  provisions               of   the   law  which   are   integrally   and               essentially connected with the creation of the                             monopoly that are protected.  The rest  of  the               provisions which may be incidental do not fall               under the, latter part of Art. 19(6) and would               inevitably  have  to satisfy the test  of  the               first part of Art. 19(6)." It  is  settled  law  that  where  two  constructions  of  a legislative  provision are possible one consistent with  the constitutionality  of  the measure impugned  and  the  other offending the same, the Court will lean towards the first if it be compatible with the object and purpose of the impugned Act,  the mischief which it sought to  prevent  ascertaining from relevant factors its true scope and meaning. It  was in the light of this principle that the  High  Court observed :               "If  s. 5 of the Act or any of its  provisions               were to be construed as prohibiting the import               of tendu leaves into (1)  [1963] Supp. 2 S.C.R. 691. 844               the  State or restricted within the  State  of               imported  leaves,  then  the  provision  would               clearly  be invalid as violative of Arts.  301               and 304 of the Constitution." Without expressing our views on the subject we hold that the entire  provisions of the Act and the rules  are  consistent with  and  aim at the State monopoly in the trade  of  tendu leaves in case of leaves grown or _produced in the State and the  legislature never intended that the monopoly should  be operative  even  to the extent of banning  import  of  tendu leaves  from outside or stalling the tendu leaves once  they found their way into the State from outside.  The  transport of  tendu leaves purchased outside but consigned  to  places within the, State to be used for the manufacture of bidis is not   integrally  connected  with  the  State  monopoly   as envisaged   in   the  Act.   It  stands   to   reason   that manufacturers of bidis in the State of Madhya Pradesh  would not  think  of importing tendu leaves  from  distant  places like,  Bihar  and Maharashtra if they could help it  and  it must  be  the  exigencies of the situation  which  drives  a manufacturer  of  bidis to such course of  action.   In  any event, the Act ought not to be construed so as to ban import of  tendu  leaves from outside the State or  restrict  their movement  once  they  were within  the  State  unless  clear language was used in that behalf.  If and when such  express embargo  is imposed, a question may arise as to  whether  it offends  the  different  provisions  of  Part  XIII  of  the Constitution. In the result the appeal fails and is dismissed with costs. S.C.                             Appeal dismissed. 845